EXECUTIVE SUMMARY   As the…

EXECUTIVE SUMMARY

 

As the government of Ontario seeks input in the development of the province’s Long-Term Energy Plan (LTEP), Nest Labs is pleased to participate and provide recommendations for improvement specifically targeted at energy efficiency and conservation and customer engagement.  Nest is also encouraged to note the linking of the LTEP to the Ontario Climate Change Action Plan (CCAP).  Due to Ontario’s energy mix, it is critical that both objectives are addressed simultaneously and seamlessly.

 

It is timely for the Province to consider “Smart Thermostat” technology for the home. “Smart Thermostats” are one example of home technology that provides both energy savings and carbon reduction potential. Thermostat technology has greatly evolved over the last few years and can be part of the solution to help Ontario meet its energy reduction and climate change goals, while at the same time reducing consumers’ bills.

 

As a leader in this segment, the Nest Learning Thermostat not only delivers on its customer promise of smoothly regulating temperatures while adapting to the needs of each house, but provides real, proven savings in both gas for heating and electricity for cooling.  The Nest Learning Thermostat has proven that it delivers positive results in energy savings (10-12% heating savings, and about 15% cooling savings [1]) and CO2 reductions (0.5 tonnes per thermostat installed [2]) Therefore, Smart Thermostats represent an important, tangible opportunity for the Ontario government as it seeks to deal with climate change at the residential level.

 

As part of the LTEP and CCAP implementation strategy, Nest recommends:

 

1.A province wide “One Million Thermostat Initiative” providing rebates to consumers who install Smart Thermostats, building on the success of the Demand Side Management and Conservation Demand Management programs.

 

2.Make sure that residential customers can participate in the demand response markets of the Ontario ISO using Smart Thermostats.

 

3.Amend the Ontario Building Code to require the installation of Smart Thermostats in all new residential construction.

 

More detailed description of these recommendations is provided below.

 

Questions about these comments can be directed to:

 

Utilia Amaral

 

Consultant (Regulatory Affairs, Canada)

 

Nest Labs

 

416 802 8041uamaral@nestlabs.com

 

OVERVIEW OF NEST LABS

 

Nest Labs is focused on creating the “thoughtful home” that takes care of the people inside it and the world around it. By making simple, delightful objects from home products (i.e. the thermostat, smoke alarm), Nest offers customers intuitive hardware, software and services that save energy and keep their home comfortable and safe. After starting with a handful of employees in May of 2010, the company has since grown to over 1,000 employees and has an international product footprint. Today, Nest products are sold in the United States, Canada, United Kingdom, Ireland, France, Belgium, and the Netherlands, and are installed in more than 120 countries.

 

Since introducing the original Learning Thermostat in 2011, Nest has been uncompromisingly focused on creating a user experience that delivers customer satisfaction. The Nest Learning Thermostat is a highly popular “Smart Thermostat,” based largely on its award-winning design, ease of operation, and overall attention to the customer experience. It is a Smart Thermostat equipped with sensors, Wi-Fi capability, and processors, to help customers consume less energy: it learns their preferences, adjusts the temperature when the house is empty, and automatically lowers air conditioner runtime when humidity conditions permit, helping people lower their energy use without sacrificing comfort.  Nest is designed to enable “Do It Yourself” installation, and to date approximately 90% of Nest Learning Thermostat customers have done the installation themselves, most in under 30 minutes. [3]

 

Independent energy savings studies show Nest Learning Thermostat saves about 10%-12% of heating usage and about 15% of cooling usage in homes with central air conditioning. In Ontario, for example, this equates to 345 m3 of natural gas heating savings and 293 kWh electric savings, or approximately 0.5 tonnes of CO2 per thermostat per year. Nationally, Nest anticipates an approximate reduction of 0.5 tonnes of CO2 per thermostat installed.

 

In addition to reaching energy efficiency and CO2 reduction targets, the Nest thermostat is a successful platform for utilities to address load management needs. Since 2012, these energy programs have helped our gas and electric utility partners achieve their conservation targets, shift electricity load and attract customers in highly engaged energy conversation.

 

Delivering on its vision for the “thoughtful or connected home”, Nest launched the “Works with Nest” (WWN) platform in 2014. It offers customers a rapidly expanding ecosystem of products that work thoughtfully together in the home. Examples include LED lighting, appliances, plug load controls, load control switches applicable to water heating, and electric vehicle chargers. The WWN platform has been open for less than one year and, already, 1-in-8 Nest customers have a device paired to their thermostat via WWN and over 15,000 developers registered.  WWN can use the Nest thermostat as a gateway to communicate load control signals to a wide range of compatible devices, including pool pump controllers, electric vehicle (EV) chargers, lighting, appliances, and ceiling fans.

 

RESIDENTIAL THERMOSTAT OPTIONS ARE RAPIDLY EVOLVING

 

Traditional manual thermostats allow the occupants of a home to simply turn the heating or cooling up or down.  The result is that many residences “set it and forget it”, resulting in unnecessary heating and cooling, and correspondingly higher energy bills.

 

Traditional programmable thermostats (PTs) allow customers to set up a pre-programmed schedule for raising or lowering the temperature in the home.  This enables occupants to ensure that the heating or cooling is not on high when they are away at work, for example.

 

While the ability to pre-program thermostats can be a convenience feature and save energy for some households, there are challenges and difficulties with programmable thermostats.   For many people, they are not intuitive and hard to program; therefore, some people never establish a correct schedule.  In that case, they may be used like non-programmable manual thermostats with people turning them up or down ad hoc.  Even if PTs are programmed initially, they are often overridden or placed on “hold” at some point in the future and then not reprogrammed.  This override could happen for any number of reasons; a house full of guests, unusual weather, daylight savings time, change in season, etc., and may erode the energy savings of programmable thermostats.  The U.S. Environmental Protection Agency (EPA) originally had an ENERGY STAR specification for PTs but suspended it in 2009 as a result of continuing questions concerning the actual energy savings and environmental benefits achieved by PTs in the real world. [4]

 

A new category of thermostats, of which Nest is one player, known as “Smart Thermostats”, have a number of advantages over traditional programmable thermostats when it comes to energy efficiency assurance and persistence, demand response capabilities and ease of use. Smart Thermostats can learn a household’s habits and preferences and create a customized schedule without programming. Through motion sensors and/or geofencing technology, Smart Thermostats can recognize when occupants have left the home and automatically adjust temperature settings. They can also connect to the Internet, enabling them to receive software updates, be controlled remotely by the user, and receive signals from a utility, energy aggregator or other home energy management system.

 

BENEFITS OF A SMART THERMOSTAT IN ONTARIO

 

There are many benefits to the creation of a Smart Thermostat province-wide program in Ontario namely:

 

1.Proven energy savings for consumers. Third party studies of the Nest thermostat have found

 

10-12% heating savings, and about 15% cooling savings [5]

 

2.Average CO2 reductions of 0.5 tonnes per thermostat installed

 

3.Positive customer engagement/experience [8]

 

4.Potential for additional energy efficiency savings (Seasonal Savings) and the ability to offer demand response (Rush Hour Rewards)

 

1.  Proven Energy Savings

 

There have been a number of studies of the Nest Learning Thermostat energy savings based on comparisons of utility bills from before and after installation. Three studies relevant to Ontario were independently funded, designed and evaluated by utilities in Oregon and Indiana.  The energy savings results of the studies were similar -- showing Nest Learning Thermostat savings equal to about 10%-12% of heating usage and electric savings equal to about 15% of cooling usage in homes with central air conditioning. Furthermore, the Oregon study noted that the majority of participants reported feeling more comfortable after the Nest Learning Thermostat was installed and all studies found high levels of customer satisfaction.

 

Although the average savings were similar across the three studies, it is important to note that thermostat savings in any given home can vary from these averages, due to differences in occupancy patterns, housing characteristics, heating and cooling equipment, and climate.

 

2.  Estimated Energy Savings and GhG Reduction Calculations: The Case in Ontario

 

The Nest learning thermostat can provide energy savings and help in GhG reductions across Ontario with 0.5 tonnes GhG per thermostat. In this section, it will be illustrated how Nest estimated energy savings calculations and GhG reductions, provide a case study for Ontario. Ontario is deploying energy efficiency and load management strategies and Smart Thermostat technology, such as the Nest Learning Thermostat, can play a role.

 

Ontario’s Case Study:

 

Nest estimated the energy savings from thermostat installations in Ontario based on heating and cooling savings from the US studies applied to the heating and cooling energy use of current Nest customers in Ontario. Savings values consistent with the aforementioned studies (11% of heating and 15% of cooling) are used.

 

Heating and cooling system energy-use were calculated based on the average actual hours of heating and cooling system run-time during 2015, multiplied by the estimated energy input rates of the heating and cooling systems.  In 2015, Nest customers in Ontario used an average of 918 hours of heating and 556 hours of cooling (for the 91% of thermostats that controlled a central air conditioner).  Nest employed an HVAC system sizing estimation algorithm based on climate data and other factors to estimate an average 99 kbtu/hr input rate for gas heating systems and 2.66 kW input for central air conditioners.  It was also estimated the electricity use of the gas heating systems (air handler fan plus other fans, pumps, etc.) at 0.77 kW. (Please see Table 1: Energy and CO2 Emissions Reductions per Thermostat for a complete summary.)

 

Table 1: Energy and CO2 Emission Reductions per Thermostat in Ontario

 

Ontario                       Natural Gas m3/yr         Electricity kWh/yr

 

% of Homes          UsageSavings         UsageSavings

 

Heating       99%               2831           350           706    84

 

Cooling       91%                  -             -                 1,314   232

 

Total Energy

 

per thermostat               2794           345                   293

 

Total CO2 tonnes

 

avoided                                  0.52                  0.01

 

●The table treats all home heating as natural gas, ignoring the fact that a small fraction use of other fuels -- 1.3% fuel oil, 2.9% propane, and 3% heat pumps (primarily dual fuel). ●Fuel oil and propane emit more CO2 per unit of energy than natural gas (propane 19% greater and fuel oil is 38% greater), making the values in the table more conservative.

 

●CO2 emission reductions were calculated based on standard CO2 emission factors for natural gas and an estimated 0.029 kg/kWh for electricity (based on the low carbon emissions of the Ontario power grid).

 

3. Positive Customer Engagement and Experience

 

Nest places customer engagement, satisfaction and data privacy at the center of its business strategy. Nest recognizes that a positive consumer engagement and experience is critical to the success of an energy management program.  In an effort to ensure maximum positive outcomes for the customer and the utility or government agency, Nest offers several mechanisms to reach the customer.  From personalized customer portals to mobile apps, and “quick tips” through e-mail, Nest provides a variety of tools to encourage customer interaction.

 

Furthermore, when Nest partners with utilities or government agencies, co-branding and integrated marketing strategies can be developed.  Utilities and government agencies can leverage Nest’s marketing ability through a Nest website, use of Nest creative templates, brand training and so on. Using integrated marketing strategies can raise consumer awareness and improve the success rate of an energy management program.

 

4. Potential for Additional Energy Efficiency and Demand Management

 

The savings described above are based on savings from Nests as installed.  However, Smart Thermostats, due to the fact that they can communicate via the internet, have the potential to provide additional ongoing benefits to Ontario.  Smart Thermostats are an enabling technology, especially under circumstances where initiatives such demand response and time of use strategies have been implemented or are in the process of being implemented.

 

Below is a description of some additional programs offered by Nest when sponsored by a utility or a grid operator or government (Ministry of Energy).

 

Seasonal Savings

 

Nest Seasonal Savings is an HVAC tune-up program that can be offered twice a year, at the change of seasons from heating to cooling and cooling to heating. Seasonal Savings boosts the efficiency of a customer’s device without sacrificing comfort or requiring daily behavioral changes. Seasonal Savings is only offered to customers in geographies where a utility or government sponsors the program.  Customer participation is always optional.  Typically, the customer is offered the opportunity to participate without any incentive except the opportunity to reduce their energy usage and therefore their energy bills.

 

How does Seasonal Savings work?

 

Twice annually, prior to the cooling or heating season, Nest sends eligible customers the Seasonal Savings algorithm.  Opting into the program, by simply clicking “Continue”, begins a two- to three-week process of micro-adjustments to their temperature set point.  While customers always maintain control of their schedule and set points, the changes are so small and gradual that most customers do not even notice an impact on their comfort.

 

On average, this saves an additional 3~5% of heating and AC load, 0.1 kW peak reduction.

 

Furthermore, 89% of customers report being just as comfortable as before the adjustments.

 

Seasonal Savings is currently implemented by a number of Nest gas and electric utility partners. In addition, the Department of Energy Resources for the Commonwealth of Massachusetts (analogous to the Ministry of Energy in Ontario) purchased Seasonal Savings for all Nest customers beginning in the winter of 2014-2015 as part of an effort to curb natural gas consumption during a time of critical shortage. [8] This program was deemed a success, with an average of ~4% heating load reduction during the very difficult winter of 2015. Massachusetts felt the program was such a success that it repeated it in the Summer of 2015 and has purchased it again for the 2016 winter. Ontario, or other provinces relying on gas, could do a similar program with the savings primarily coming from reduced natural gas usage for heating.  The more thermostats that are installed, the bigger the benefit of such a program.

 

Demand Response (Rush Hour Rewards)

 

Nest wants to change the way people think about demand response, which has not traditionally been customer-friendly and broadly adopted in the residential space.  Nest’s Rush Hour Rewards is a mass-market demand response offering for customers with air-conditioning that offers utilities and grid operators a way to reduce peak loads during the summer. Rush Hour Rewards is only offered to customers in locations where a utility or government sponsors the program, and while customer participation is always optional, Nest has seen high levels of customer participation and satisfaction.

 

How does Rush Hour Rewards work?

 

Nest sends eligible customers invitations to participate in Rush Hour Rewards along with an offer of a financial incentive.  Once customers opt-in, the sponsor of the program is able to deploy events to their thermostat on peak days.  When the sponsor calls an event, Nest sends a signal to participating customers’ thermostats.  The thermostats employ an algorithm customized to each home that combines pre-cooling, temperature drift and air conditioner cycling in order to reduce load.

 

The net result is that Nest saves between 0.8-1.3kW per thermostat, and reduces air-conditioning usage by over 50% during the peak period.  At the end of the event, the thermostat goes back to its regular set points and schedule.

 

Rush Hour Rewards would be beneficial to Ontario because demand response can reduce peak demand on the electric system.  While this saves only a small amount of kWh, it substantially reduces the system or local peak, thereby reducing the need to run the gas-fired peaker plant used during these times.  Leveraging Rush Hour Rewards will disproportionately reduce CO2 gases compared to carbon content of the average generation mix.  In addition, reducing peak demand can also reduce the need for infrastructure upgrades which can save Ontarians money as well.

 

Time of Use (Time of Savings)

 

The vast majority of Ontario electricity users pay time-of-use prices, which offer differing prices during various hours of the day and times of the year.  Further, the Ontario Energy Board (OEB) is contemplating critical peak pricing and has investigated dynamic pricing, which would introduce additional complexity into rates that many consumers already do not fully understand Nest’s Time of Savings program can help - it understands the price of energy for customers on Time of Use rate plans and will automatically adjust the thermostat’s schedule and set points to help these customers use less electricity when energy prices are most expensive.

 

Time of Savings can also be developed further to support future varying price rates, thereby furthering the OEB objectives and assisting consumers with managing these complex pricing systems.

 

EVOLVING BUILDING CODES

 

Across North America, a variety of regulatory and policy bodies are in the process of defining “Smart Thermostats” as a category. From EPA’s Energy Star program to state utility commission Technical Reference Manuals (Illinois, Pennsylvania, California, Texas), and including California’s Title 24 Building Code, there is great interest in defining this new technology so that it may be included in a variety of efficiency programs.  A definition of “Smart Thermostats” that has been proposed in several proceedings is:

 

Smart Thermostat: A device that controls heating, ventilation, and air-conditioning (HVAC) equipment to regulate the temperature of the room or space in which it is installed, and has the ability to communicate with sources external to the HVAC system. For connection, the device may rely on a home area network (e.g. Wi-Fi) and an internet connection that is independent of the Smart Thermostat. A Smart Thermostat has the functionality to make automatic adjustment decisions regarding heating and cooling, using the following functions:

 

A.Two-way communication between the thermostat and a utility, energy aggregator, or other home energy management service.

 

B.Automatic variations to that schedule driven by local sensors and software algorithms, and/or through connectivity to an internet software service. Data triggers to automatic schedule changes might include, for example: occupancy/activity detection, expected arrival and departure of conditioned spaces, historical and population energy usage trends, weather data and forecasts.

 

This class of products and services are relatively new, diverse, and rapidly changing. Generally, the savings expected for this measure are not yet established at the level of individual features, but rather at the system level and how it performs overall. This measure treats heating and cooling savings independently. Note that it is a very active area of ongoing study to better map features to savings value, and establish standards of performance measurement based on field data so that a standard of efficiency can be developed. That work is not yet complete but does inform the treatment of some aspects of this characterization and recommendations. Energy savings are applicable at the household level; all thermostats controlling household heat and cooling should be Smart Thermostats. Multiple Smart Thermostats per home do not accrue additional savings beyond that associated with the generally higher baseline HVAC energy consumption often found in such homes.

 

Adding a “Smart Thermostat” definition and require “Smart Thermostats” as a minimum standard in new homes in the Ontario Building Code would help fast track the deployment of these devices to help contribute to carbon reduction targets and assist in achieving household energy efficiency.

 

RECOMMENDATIONS

 

Smart Thermostat technology has evolved to a point where it can help governments achieve CO2 emissions reductions and energy management (energy efficiency and demand response).  Nest has outlined how the Learning Thermostat, out of the box, can help achieve Ontario’s dual objectives. To that end, there are logical next steps that could be taken in order to facilitate more substantial deployment of this technology.  They include:

 

Consumer Incentives: A “One Million Smart Thermostat” Campaign

 

While the government of Ontario has made great strides in the areas of energy conservation, the goals outlined in the CCAP and recent statements made by the Minister of Energy at the Empire Club (November 28, 2016) will necessitate acceleration of the work already underway.  The Demand Side Management and Conservation Demand Management are a foundation on which to continue progress made.

 

However, from a Nest perspective, given the geography, population distribution and the composition of the electricity sector, penetration in markets outside of the major centres is currently difficult.

 

The most effective way  to accelerate the deployment of Smart Thermostats is via the development of rebate programs.  Nest recommends that the Ontario government adopt a province-wide rebate program that is centrally administered in order to reach all the citizens no matter what fuels they use or what utility territory they are in.

 

As a case study, we recommend that the government review and replicate the ComED “One Million Smart Thermostat” campaign implemented in Chicago. With a customer base of about three million electric consumers, ComED initiated the campaign in October 2015.   A $100 US rebate on a Smart Thermostat for electric savings was initially offered.  Since launch, an additional $50 from gas companies and $40 demand response incentives have come online for a total potential customer savings of $190 per thermostat.

 

Nest, along with other technology providers, consumers and environmental groups and utilities, came together to make the campaign a success.  Nest, other technology providers and the utilities worked together on an elaborate multi-level communications/marketing campaign that included social/viral/digital marketing, earned media, one of Nest’s largest retail activation plans, TV, YouTube and Hulu ads, radio spots in the Chicago area.  Co-branding and cross-branding was a central feature of this highly co-ordinated marketing campaign.

 

Getting a million Smart Thermostats on people’s walls will have immediate benefits in reducing gas use, electric use and customer bills.  However, once they are on the walls there are additional benefits that can be gained for the electric system such as demand response described below.

 

Implementing a Residential Demand Response Program

 

Demand Response is a cost effective, clean, reliable and flexible resource for electricity systems that can help the government meet its CCAP goals and assist the system operator in meeting its reliability goals. DR is a proven resource that is part of supply mixes throughout the world providing:

 

While Industrial Commercial Demand Response capacity auctions have occurred in the province, the residential demand response market remains untapped resource.  Nest recommends that the province continue to develop a policy regime to encourage and build capacity around a residential demand response program.

 

Amending the Ontario Building Code

 

The Ontario Building Code is currently silent on the “Smart Thermostat”.  To accelerate the adoption of the Smart Thermostats, and the benefits they confer, it is recommended that the Ontario Building Code include a definition of “Smart Thermostat” and require that they be installed in all new homes and major renovations.  This simple policy will make sure that energy conservation is “built-in” to new homes and provide a further platform for demand response to help manage the electric grid.

 

CONCLUSION

 

Ontario’s goals pertaining to energy conservation and climate change are ambitious, but achievable. The government is on the right path as it begins to link the LTEP and CCAP.  It is important to leverage existing DSM and CDM programs (while not duplicating efforts) and enhance their effectiveness through a province-wide centrally co-ordinated rebate and marketing campaign.

 

In addition, amendments to the Ontario Building Code will ensure that new construction will be equipped with the latest technology to conserve energy and ensure climate change goals are being addressed.

 

Nest will continue to develop products and programs that can contribute to the Climate Change Action Plan.   For example, The Works with Nest (refer to Overview of Nest Labs) platform, which was recently launched, will continue to evolve and grow thereby ensuring that each Ontarian has the opportunity to have a “thoughtful home” that takes care of the people inside it and the world around it.

 

Nest looks forward to being engaged in the consultations showing its commitment, and providing advice, support, and in-depth data as programs are developed and enforced.

 

 

 

Endnotes:

 

________________________________________

 

[1] Energy Trust of Oregon;

 

NIPSCO; Vectren;  https://nest.com/downloads/press/documents/energy-savings-white-paper.pdf

 

[2] Ibid.

 

[3] Statistics derived from Nest customer surveys.

 

[4] See: https://www.energystar.gov/index.cfm?c=archives.thermostats_spec

 

[5] Energy Trust of Oregon;

 

NIPSCO; Vectren;  https://nest.com/downloads/press/documents/energy-savings-white-paper.pdf

 

[6] Ibid.

 

[7] http://www.datascienceforsustainability.org/past-talks/measuring-energy-savings-and-other-data-anal ysis-challenges-at-nest-slides, see pages 40-53

 

[Original Comment ID: 207021]