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How Smart Homes Help Energy Efficiency

Grace Dobush

Technology products are constantly becoming more energy efficient — consumer electronics accounted for only 12 percent of residential electricity consumption in the U.S. in 2013, a nine percentage drop in just three years. And creating a smart home that optimizes how and when it uses energy — connecting your home services and devices into a system that lets you control it from anywhere with your smartphone — can have a further positive influence on your budget and the environment.
In October, Deutsche Telekom released a study of the multibillion-dollar smart home market that called out impressive numbers: The number of smart thermostats in North American and European homes increased by 105 percent in 2014 to a total of 3.2 million units, according to Berg Insight and is projected to increase at a compound annual growth rate of 64.2 percent by 2019. Navigant Research predicts global revenue from home energy management to grow from €533 million ($568 million) in 2014 to €2.18 billion ($2.32 billion) in 2023. Deutsche Telekom believes the smart home market will really take off when companies focus on customers’ primary needs, which includes home energy efficiency. The smart home system market is competitive: Consumers can find whole ecosystems of tech products for their homes in systems such as Apple’s HomeKit or Belkin’s WeMo.
The 115 million residences in the United States account for about 22.5 percent of the energy used in the country, according to the Department of Energy, and the typical U.S. family spends about $2,200 a year on home utility bills. By installing a thermostat that learns how to better manage your home’s energy consumption as you use it, you can save some serious money. Smart thermostat maker Nest reports energy savings of 10 to 12 percent on heating and 15 percent on cooling among its users as of February 2015.
A thermostat that adjusts its target temperature based on time of day, the day of the week, the season, the weather and how many people are in the home is just one piece of the bigger energy optimization puzzle. A whole home automation system can adjust window blinds on each side of the home based on the time of day to absorb solar heat or block it, depending on the temperature needs. When you’re on vacation, your appliances and water heater could automatically go into energy saver mode. Deutsche Telekom said in its study on the smart home market that dynamic energy meters that offer better visualization, monitoring and control of energy use are an important next step. Being aware of peak power cost times will allow consumers to run energy-heavy appliances during off-peak hours.
“Homes and the appliances and equipment within them are much more efficient now than in the past,” says Karen L. Palmer, research director and senior fellow at Resources For the Future. Along with higher efficiency standards and improved technology, utility programs to promote consumer adoption have helped.
But with the exception of discounted or subsidized smart thermostats, consumer adoption has been lower than expected. A study from Duke and Harvard Universities examined the adoption of this technology. Getting consumers to adopt highly efficient appliances, where the future energy savings outweigh the higher up-front equipment costs, is challenging for three main reasons, Palmer says. “First there may be non-monetary costs such as searching for a contractor or missing work to be at home that make the investment less appealing,” she says. “Second, there may be uncertainty about the resulting energy savings that keep homeowners from acting. Third, energy costs may just not be as salient to energy users as other features of the new refrigerator or other appliance that they are considering and consumers may focus more on the present cost than on the future savings.” Government agencies and energy utilities’ information campaigns and incentive or subsidy programs can help improve adoption rates, but they’re still lower than they should be.
Perhaps standalone smart home energy tools will be most embraced when tied with an adjacent category, Deutsche Telecom proposes, such as security systems, so when the home alarm is set, the thermostat automatically adjusts itself for an empty house. 
Leon Glicksman is a professor of building technology and mechanical engineering at the Massachusetts Institute of Technology, whose work focuses quite often on building energy efficiency. He points out that the first step to a more energy efficient smart home is still bricks and mortar: “If you’re starting out with a house built 40 years ago, better efficiency in terms of better insulation and windows are the first thing to do,” Glicksman says. When you’ve sealed the cracks, that’s when optimization can really make an impact on energy expenses.  
An MIT startup, Essess, uses infrared photography to determine how and where buildings are leaking heat with Google Street View-style camera cars. Another business, KGS, started by one of Glicksman’s Ph.D. candidates, runs energy diagnostics for commercial buildings. “A building manager might think things are fine because no one is complaining but in one building on MIT’s campus, because of some faults of the operation, both the cooling and heating systems were operating and fighting each other. When they corrected that, the savings was going to be half a million a year,” Glicksman says. “If you go back to an existing building, invariably there are going to be faults in the operation. If you correct those faults, often minor, you can save 10 to 15 percent in costs.”