The HVAC industry is perched on the next piece of cutting-edge technology - the emerging smart grid. Still early in its development, the government is working to integrate and manage a new electricity grid designed to monitor and manage energy usage, much like a thermostat monitors and manages the HVAC system.

In the July 2009 “Smart Grid System Report,” issued by the U.S. Department of Energy (DOE), multiple government departments and smart grid stakeholders examined the status of smart grid deployment, as ordered by Congress. Some of its key findings revealed that connectivity is becoming more standardized and cost effective; and although the technologies to make a smart grid successful have experienced low market infiltration, their markets are beginning to show high growth. The programs coupled with these systems are also in their earliest phases, but demand response initiatives and grid sensitive appliances are increasing.

Bearing these facts in mind, the HVAC industry is steadily advancing its arsenal of communicating applications as product manufacturers endeavor to stay ahead of the smart grid technology curve. Thermostats and controls especially have made an entry into the smart grid arena, but this does not signal the end of the programmable thermostat era. In fact, that era is just beginning to take firm hold. It is the communicating thermostat, however, that will usher in the next evolution of HVAC controls.


The progress report identified key indicators for smart grid success and outlined a metric system to measure the developmental progress and adoption. One of the key indicators mentioned in the report was pricing signals. According to the DOE, a pricing signal empowers the consumer to decide how they will react to grid conditions. It is these pricing signal indicators that are slowly being introduced in multiple appliances across various industries including HVAC.

Emerson Climate Technologies, White-Rodgers Division is one of the companies currently involved with new thermostat technology that is entering the market. The company is participating with a smart thermostat capable of communicating with utilities’ smart meters. According to On World Inc.’s Energy Smart Home report, the 2010 market size for smart thermostats is forecasted at approximately 130,000 units, and the quantity is expected to grow exponentially in the next five to 10 years.

“Consumers are becoming more and more conscious of their energy costs,” said David Drew, energy program leader, Emerson Climate Technologies, White-Rodgers Division. He went on to explain that many of these cost-conscious consumers are joining peak demand shedding programs offered by utilities.

“The consumer usually gets a discount off of their electric bill just to be in the program, but they must have a communicating smart thermostat to participate,” said Drew. “Whenever a utility has a peak event, it can then reduce demand by cycling air conditioners on and off across the service territory. The program is managed in such a way that most homeowners don’t even realize when the load shed is active.”

According to Drew, in the future, many utilities plan to migrate from direct load control to dynamic pricing for demand management. “In this scenario, the utility will align rates with their costs, which are inevitably higher during peak demand,” he explained. “Simple economic theory dictates that when price goes up, demand goes down - it is this principle that will enable utilities to manage demand while empowering consumers to decide when and how they consume electricity.”

Some of the new smart thermostats feature the actual price signal from the utility displayed in real time on the thermostat and can be programmed to set back temperature set point based on the current rate.

“A FERC [Federal Energy Regulatory Commission] study found that in 2008 slightly over 1 percent of all customers received a dynamic pricing tariff, with nearly the entire amount represented by time-of-use tariffs. The amount of load participating based on grid conditions is beginning to show a shift from traditional interruptible demand at industrial plants toward demand-response programs that either allow an energy-service provider to perform direct load control or provide financial incentives for customer-responsive demand at homes and businesses.”


As a strong proponent of the smart grid, the DOE views the technology as socially transformational and compares the change of consumer experience with electricity to the level of change resulting from Internet and cell phone communications. In essence, communicating thermostats and utility programs are just the beginning. Homeowners will be seeing new features that will transform the way they view home comfort, convenience, and control.

“Today, savvy homeowners are looking for more than just a thermostat. They want a product that does more than just control temperature,” said Mimoun Abaraw, product manager, Systems and Controls, Johnson Controls Inc. “They want a product that’s intuitive and easy to use, features innovative technology, and tells them everything that’s happening in their HVAC system.”

Making the title shift from thermostats to comfort controls, manufacturers are releasing products that are more interactive and offer more communicating features. “Today it is common for consumers to pre-program their home comfort system to adjust the comfort within their home to suit their needs,” noted Gordon Wuthrich, vice president - marketing, Trane Residential Solutions. “It is also now possible to do so much more.”

According to Wuthrich, consumers can adjust the comfort remotely from either their computer or hand-held phone, gain remote access to the home, receive notifications of a system malfunction, remotely adjust lights, remotely view in-home monitoring video cameras, and receive alerts on the HVAC system’s performance.

“In the future, the comfort control will emerge as one of several smart interfaces capable of managing, monitoring, and displaying safety, comfort, and energy consumption within the home,” said Wuthrich.


Right now the consumer push in controls is energy. The contractor’s push is driving sales and installation ease. According to Abaraw, contractors are requesting plug-and-play products that are quick and easy to install and contain the fewest amounts of wires. In response to this, manufacturers are venturing into the wireless realm.

“Contractors also want a thermostat that will help them sell complete systems,” said Abaraw. “In this economy, contractors are eager for opportunities to grow existing business and land new business. A more advanced, state-of-the-art communicating thermostat would open doors to more sales, new systems, and bigger profits.”

Wrap these consumer and contractor benefits into one sleek and innovative looking package and another comfort control trend making fast gains is revealed. Beyond communication, consumers are searching for a modern appeal that matches the technology upgrades in their homes and businesses, and are requesting their thermostats have a “premium ‘smart’ look,” said Abaraw.

This new evolution of HVAC controls is connecting the contractor to the consumer, the consumer to the home, and the home to energy use, comfort, and security.

Sidebar: Smart Grid Basics

Selling communicating thermostat technology requires a basic understanding of the new smart grid. The following information, provided by the U.S. Department of Energy’s Website, offers a brief overview of what the smart grid is, what can be expected from it, and who is affected by it.

The electric grid delivers electricity from points of generation to consumers, and the electricity delivery network functions via two primary systems: the transmission system and the distribution system. The transmission system delivers electricity from power plants to distribution substations, while the distribution system delivers electricity from distribution substations to consumers. The grid also encompasses myriads of local area networks that use distributed energy resources to serve local loads and/or to meet specific application requirements for remote power, village or district power, premium power, and critical loads protection.

Electric grid stakeholders representing utilities, technology providers, researchers, policymakers, and consumers have worked together to define the functions of a smart grid. Through regional meetings convened under the Modern Grid Strategy project of the National Energy Technology Laboratory (NETL), these stakeholders have identified the following characteristics or performance features of a smart grid:

• Self-healing from power disturbance events;

• Enabling active participation by consumers in demand response;

• Operating resiliently against physical and cyber attack;

• Providing power quality for 21st century needs;

• Accommodating all generation and storage options;

• Enabling new products, services, and markets;

• Optimizing assets and operating efficiently.

- Source: Department of Energy

Publication date:09/21/2009