Is the Nest Thermostat Worth the Money? That Depends Who You Ask...

The economics of a Nest thermostat are similar to those of almost any energy efficiency upgrade. People tend to think about the cost of a new technology in relation to how much money it will save them on their utility bills.

An Expert Perspective: Is the Nest Thermostat Worth the Money?

Following the line of reasoning above, the people at Nest will tell you, yes: buying a Nest learning thermostat is definitely worth the money. A third generation Nest will cost you somewhere around $250, and according to a study of real world performance released in back in February of 2015, the average home saved 10-12% on heating and 15% on cooling. That adds up to an estimated savings of $131-145/year, which means that the Nest "pays" for itself in less than two years.

So the economics check out. But 10-15%? That's all it can save you? Really?!

That's because, in essence, the core of the Nest's value proposition is its occupancy sensor capabilities. It saves you money by syncing the use of heating and air conditioning equipment to the times when your living space is actually occupied, and automatically adjusting the temperature accordingly.

That's it.

If I were to add functionality really make the Nest thermostat worth the money it costs-beyond basic payback, into the realm of actual efficiency performance-I would make it capable of optimizing the inner workings of the equipment that it controls.

Imagine if, instead of just calculating when to start or stop components from working, your Nest could keep the furnace firing at peak efficiency, or keep AC fans from working harder than they really need to.

Two-Way Communication Automates Optimization

Enabling thermostats to communicate with furnace computers could lend greater control of the entire systems. Say a room is approaching the desired temperature, or every member of a family is about to arrive home on a given night simultaneously. This information could be used to keep HVAC equipment running efficiently for the vast majority of the day.

Theoretically, new high efficiency HVAC systems have the potential to squeeze every bit of energy out of fuel sources like gas and electricity. On paper, the best new technology can approach 98% efficiency. Performance is maximized by onboard computers that make micro adjustments to fan speed, furnace flame intensity or the run time for air conditioning.

However, that's just potential. Optimal performance can really only be achieved under ideal conditions. Real world results can be much lower due to a variety of factors.
Under-sized air ducts or radiators can have a huge impact on the actual performance of a home or business. Systems inevitably attempt to compensate, running fans harder or burning fuel in amounts that exceeds prime efficiency settings.

Manufacturers actually account for this in production. They equip on-board computers with switches and dials, placing the onus on installers to "tune" the system to the realities of the scenario in which it is installed. Altering these overrides can effectively kill the efficiency of expensive new high efficiency equipment.

As the figure above shows, making the wrong adjustments can actually make the equipment perform only slightly better than systems did in the 1970s. The key to really making adding a Nest thermostat to your system worth the money is to add two-way communication between it and HVAC equipment. That way, system optimization, which is an in-process, on-going scenario, can be automated to deliver a higher rate of efficiency more consistently.

The Next Step in Tech-Enabled Energy Efficiency

What's next in this realm? Start-ups like Ecovent are demonstrating that considerable efficiency improvements can be achieved through the deployment of new technology. Specifically, Ecovent is using sensors to expand wireless control to the room level.

Their new monitoring sensors ensure that equipment meets its efficiency potential on a more granular basis. By wirelessly communicating  temperature and pressure data-sometimes even from within air ducts-increases in fan energy and temperature changes are constantly assessed for actual impact on occupant comfort.

So is it Worth It?

In summary, the economic of a Nest thermostat do work out on paper, if all you're concerned about is a fast payback. But what if you could ramp your home or building's efficiency up past 50%?

With the right developments in technology and a progressive approach to implementation, you can. But adding a Nest and going about business as usual won't do it.

In part, that's because the majority of HVAC systems simply can't achieve maximum efficiency-never mind sustain it. A small area of a home being draft or improperly spec'd or installed air ducts can be a deal breaker.

However, the new wave of sensors and wireless connectivity can actually pinpoint problems and take the guess work and assumptions out of upgrades. In fact, nailing down issues allows for more accurate assessments of how much system defects and pain points are costing.

Expanded communication functionality and data aggregation capacity will expand upon the Nest model of simply making sure your heat or AC is on when you need it and off when you don't. It will continue the progress that began with smart thermostats by maximizing the time that HVAC systems spend at peak efficiency. That, in turn, will allow utilities and energy service providers to identify and quantify upgrade project to deliver more successful efficiency project, and more of them across the board.

For you, as a home or business owner, adding a Nest thermostat will certainly be worth the money if it not only pays for itself, but also is part of a system that delivers dramatic energy savings.