Next generation thermostats: Cool air, cooler savings

Published on August 05, 2013

Thermostats have traditionally been simple machines, but they’ve been getting smarter. Nest, launched by two former lead developers at Apple, bills itself as a “next generation thermostat” that learns the schedule of a home’s occupants and programs itself accordingly—keeping a house cool when residents are likely waking up or coming home, and allowing temperatures to rise when people are sleeping, for example. Nest claims it can lower heating and cooling bills by up to 20 percent.

Two researchers, Chicago Booth Professor Dan Adelman and Argonne National Laboratory’s Canan Uçkun, say that air conditioners could be even smarter than that. Their research suggests people could save money and be more comfortable if they use a thermostat that responds to both occupants’ schedules and changing electricity prices.

At least a third of the 114 million homes in the United States have smart meters, which connect a home to a power company and enable a continuous flow of information between them. Those meters send homes signals about prices and about when it would be helpful to conserve energy.

Meanwhile, appliances are getting smarter too. Manufacturers such as Electrolux, General Electric, LG Electronics, Samsung, and Whirlpool are developing appliances that respond to consumer activities and preferences. Some smarter appliances also respond to the signals that utilities send to homes through smart meters.

So what happens if you attach a smart air conditioner to a smart meter?

In the first large-scale study of a smart appliance that runs on power from a smart grid, the researchers study 3.44 million residential, Midwestern US customers served by Commonwealth Edison. While currently most of the utility’s customers pay a flat price for power, for several years ComEd has been running a pilot program that uses smart meters to offer real time pricing to approximately 10,000 customers. Those households pay fluctuating electricity prices, and the study considers what would happen if ComEd were to roll out that program system-wide.

The researchers use data from July 2011, a period that included a day when temperatures at Chicago’s O’Hare International Airport neared 99 degrees Fahrenheit, an example of a peak-load period when air conditioning use was especially high. The real-time electric rate reached 25 cents per kilowatt hour that day, about five times the average for the full month.

The study looks at two kinds of smart air conditioners, one being price-only units that closely track outside temperatures and disregard the activity of a home’s occupants. Such price-sensitive systems can scale back as surges in demand push electricity rates up, although they do so at the potential expense of residents’ comfort.

The study then looks at occupant-aware units that track residents’ activities and adjust to electricity rates while taking into account the comfort of a home’s occupants. They are more likely to take advantage of lower electricity rates to precool a home when occupants are away, for example, to avoid running the air conditioner at a peak-price time when the occupants are home.

The researchers find that simply switching homes from flat rates to real-time pricing would have saved the residents considered in the study an average of 10 percent on power bills. Homes that had real-time pricing and price-only air conditioners would have saved more money, an average of 15.5 percent, although residents would have had to put up with some added discomfort. Homes that combined real-time pricing with occupant-aware units would have done best—lowered their power bills by a similar amount as the homes with price-only units, while maintaining the same thermal comfort they were used to from older (as in, not smart) air conditioners.

The balance shifted slightly on peak-use days. Had all customers been paying dynamic, real-time electricity prices, power bills would have risen an average 33 percent for homes with regular air conditioners, 16.4 percent for homes with price-only units, and as little as 9.2 percent for occupant-aware units, providing that residents were willing to sacrifice some thermal comfort. Residents with occupant-aware units who were most sensitive to higher indoor temperatures would have seen bills rise up to 18 percent.

The research suggests that when people are unwilling to sacrifice their thermal comfort, occupant-aware air conditioners do not account for the lion’s share of peak reductions from dynamic pricing predicted by government studies.

But the researchers conclude that the units still have benefits for consumers. “Our results suggest that dynamic prices reduce power bills significantly and even more so with price-responsive appliances,” Adelman and Uçkun write. “The best social outcome of dynamic pricing can be achieved by occupant-aware ACs, as it trades off both prices and the comfort of people.” 

—Bruce Blythe

Daniel Adelman and Canan Uçkun, “Smart Homes with Price-Responsive Thermostats,” Working paper, June 2013.