This week, we look at the global smart thermostats market and how the technology has been adopted in utilities’ demand response initiatives to meet growing energy demands.
We discuss factors driving trends within the market and how the utilities’ industry is addressing challenges, which are negatively impacting on the market.
Smart thermostats market drivers
By using smart thermostats, utility companies especially in developed economies have been able to help consumers to improve their energy management and reduce energy bills.
The technology helps utilities to remotely control smart appliances in consumer homes for customers to shift heavy energy usage from peak periods to when energy demand is low.
According to Nest, smart thermostats help US consumers achieve up to 12% energy savings in heating and 15% in cooling.
This in turn is helping energy companies to delay investing in new energy generation infrastructure to meet growing energy demand. The use of smart thermostats allows power companies to increase portfolios of renewable energy and to meet carbon emission reduction targets.
The global smart thermostats market grew by 20% between 2012 and 2017. Revenue generation within the sector reached $1.36 billion by the end of 2017, according to Research and Markets.
Factors including rising government regulation on energy efficiency and IoT expansion, increased the demand for smart thermostats.
Improvements to existing technologies and the emergence of new smart thermostats models is expected to drive the 35.29% growth forecasted in the market between 2017 and 2022.
In addition, increases in urbanisation, rising carbon emission, growing internet users and smart phone penetration will expand the market.
On the other hand, the high costs of smart thermostats and lack of communications networking standards have negatively affected the market growth.
This has resulted in smart thermostats and communication technology companies increasing focus on reducing the prices of thermostats and developing robust communications technologies.
North America has over the past decade dominated the market and is expected to continue dominating through to the mid-2020s.
Bloomberg New Energy Finance (BNEF) forecasts annual sales in the US and Canada to reach 14 million units by 2021 owing to reductions in prices by Nest and Ecobee.
The Asia-Pacific region is expected to be the fastest growing market between 2015 and 2019, according to Market Research Reports.
Increases in population and growths in economies in China and India will drive the market growth. Technological improvements in Singapore, South Korea and Vietnam will also drive the market growth.
Early this month, Nest announced that it plans to deploy some 1 million smart thermostats in low and moderate income households across North America.
The devices will be deployed in partnership with governments, non-profit organisations and utility companies under efforts to tackle energy poverty. US utility ComEd will be the first to partner with Nest under the initiative.
Matt Rogers, Chief Product Officer at Nest, said: ”Since 2011, we have helped millions of customers across the world save over 15 billion kWh of energy -- the equivalent of providing electricity to all the homes in New York State for over 100 days."
Val Jensen, Vice President of Customer Operations at ComEd, said: “The goals of this initiative align with ComEd’s commitment to ensuring all of our customers have access to energy savings technology.”
In Europe, BNEF predicts 14 million in annual sales in the mid-2020s.
A survey conducted by Parks Associates highlights that 30% of US broadband households believe smart thermostats are affordable. 18% of US consumers say they will buy a smart thermostat at $250 each. In a separate survey, Parks Associates found that 40% of US broadband households are familiar with smart thermostats, but only 11% own one.
Tom Kerber, Director of IoT Strategy at Parks Associates, said: "Utilities are actively working with device manufacturers to drive adoption of energy-saving solutions.
"Smart thermostats have demonstrated significant energy savings, and financial incentives have a dramatic impact on the value judgement made by consumers. Offering a $100 rebate on a smart thermostat more than doubles the percentage of homes that intend to purchase the product."
Image credit: Stock.