Homeowner adoption of smart thermostats across the country is increasing—but not at a pace fast enough to make a significant dent in overall energy consumption, according to Kagan, a media research group within S&P Global Market Intelligence. But that could change as thermostat prices come down.
The U.S. smart thermostat installed base is on course to rise to 18.3% of broadband households in 2022, from 16.6% in 2021, as rising energy prices push consumers to seek ways to cut costs, according to the report. However, even with this accelerated demand, Kagan anticipates smart thermostats will penetrate less than a third of broadband households by 2026, “leaving a substantive energy conservation opportunity untapped at the macro level.”
“Smart thermostats promise a reduction in electricity use and costs by way of granular control options and data analysis,” the authors write. “Such features make a 10% reduction in home heating and cooling per household possible.”
With only 19.6 million smart thermostats installed as of the end of 2021, the United States is “ostensibly” using 1.4% less energy on space heating and cooling than it would without the presence of smart thermostats, according to the report. Should the installed base reach Kagan’s forecast of 38.3 million installed units in 2026, the nation has the potential to cut such energy consumption by 3%, or 15.5 terawatt-hours.
“However, if smart thermostats were able to reach every home with HVAC by the end of the forecast, it could cut annual space heating and cooling energy consumption by 9%, or 45.4 terawatt-hours,” according to the report. “That level of energy conservation is roughly in line with the total energy usage in the state of Mississippi in 2020.”
Kagan’s smart thermostat energy conservation estimates are based on Energy Information Agency statistics indicating the average U.S. household consumed roughly 3,380 kilowatt-hours of electricity for space heating and cooling in 2021. The research arm assumes that per-household usage will grow over the forecast, in step with the trailing five-year compound annual growth rate (CAGR). Kagan’s model also assumes that potential electricity savings per smart thermostat will rise to 11% over the forecast as the technology becomes more mature and user literacy grows.
Kagan defines smart thermostats as Wi-Fi-connected HVAC-control devices that can be adjusted and programmed remotely through a computer or mobile device. The research arm’s analysis does not include programmable thermostats without Wi-Fi functionality. Some of the top smart thermostat vendors in the United States include Amazon.com Inc., Seattle; Alphabet Inc., Mountain View, Calif.; ecobee Inc., Toronto; Emerson Electric Co., Ferguson, Mo.; and Resideo Technologies Inc., Scottsdale, Ariz.
Kagan’s smart thermostat forecast is based on survey data, reported guidance from public companies, Kagan’s occupied and broadband household data, discussions with smart thermostat vendors and other market research. The analysis includes only those smart thermostats in use at residential properties and does not include commercial or industrial equipment.
Specific power-saving applications of smart thermostats include the ability to automatically curtail usage under certain circumstances, the use of sensors for more accurate whole-home readings, the ability to adjust the thermostat remotely and providing users with real-time usage data they can use to adjust settings, according to the report.
“We expect smart thermostat shipments to rise 12% in 2022 to five million units as concerns around inflation and heat waves drive consumers to seek out ways to curb energy consumption,” the authors wrote. “Furthermore, average selling prices are becoming more affordable.”
Kagan expects this new affordable price bracket and persistent concerns around rising temperatures to push adoption further over forecast, growing shipments at a 15.2% CAGR from 2021 through 2026, ending the forecast at 9.1 million units shipped.