Two new features for the Nest thermostat could help customers and utilities reduce energy consumption. At the Bloomberg Energy Finance conference held on Earth Day 2013 in New York City, Nest Labs introduced a set of energy services that will allow electric utilities across the country to manage electricity demand. This concept, known as demand response, allows utilities to manage how much energy its customers are consuming at any given time.

“It’s always been our vision to not just be a thermostat company,” CEO Tony Fadell, former Apple engineer and iPod creator, said during the conference. “It’s always been our vision to be a provider of energy control solutions.”

Nest Labs calls its demand response features Rush Hour Reward and Seasonal Savings. Much like how GPS navigation in a car helps you travel efficiently, Rush Hour Rewards will raise your thermostat by up to 4 degrees during peak times (between 2-7PM, and usually between 4-6PM) roughly a dozen times during the summer. For customers who sign up for the voluntary features, Nest will send a notification a day before a thermostat will be raised. Customers can choose to override the thermostat at any time.

The Seasonal Savings feature tweaks your thermostat settings by a few degrees before each heating and cooling season. Nest Labs expects the feature to reduce energy consumption an additional 5-10% (on top of the existing Nest savings).

Electricity consumption typically reaches a peak in summer afternoons, when air conditioners are working hard to cool off homes and buildings. Grid operators are constantly reaching a balance between load (keeping power plants running) and demand (how much energy is being consumed). Power plants are kept at idle, or not run at full capacity, in order to meet spikes in demand. Too much electricity demand can result in grid failures and higher energy costs for customers and the utilities alike.

Demand response programs can have a large impact on how much a utility spends to deliver electricity each year. In Texas, the statewide grid is overseen by the Electric Reliability Council of Texas (ERCOT), a council tasked with making sure the grid stays up and running – even when it is put under strain in the hot summer months.

Utilities under ERCOT’s jurisdiction pay costs based on their highest peak load – an industry term called 4CP, or four coincident peak. This means that ERCOT allocates costs to all the utilities based on their four highest demand days. It’s in the interest of each utility to reduce their peak loads to receive a smaller share of the bill.

Several utilities are offering the Nest thermostat as part of voluntary demand response programs (link). Energy giant NRG, its subsidies Reliant Energy and Green Mountain, National Grid, Austin Energy, and Southern California Edison will offer rebates or other incentives for customers to participate in the demand response programs.

Austin, Texas’ municipally-owned utility has been offering demand response thermostats for years in an effort to improve the grid’s reliability and to avoid turning on additional power plants to meet additional demand. These thermostats rely on one-way radio communications to signal thermostats when to cycle on or off. In an email, Austin Energy spokesperson Carlos Cordova explained the existing thermostat program:

“With the one-way communicating free thermostats that we have in the old program and that we will still use, we send a radio signal that cycles the air conditioners off for no more than 10 minutes every half hour when we’re cycling. The areas are staggered so you might be cycled only a few times during the 3 p.m. to 7 p.m. peak period and often cycling ends when we get over that 5 p.m. peak or shortly thereafter.”

There are currently 90,000 one-way demand response thermostats in Austin Energy’s service territory, which helps the utility curtail up to 40 MW of power during peak load times.

The addition of Internet-connected, smart thermostats like the Nest is recognition by the utility of advancements in technology for energy conservation. Mr. Cordova again:

"Many of these products and applications are available directly from retailers, vendors and online. Mobile devices, apps, and the Web are putting more power about energy use in the hands of the consumers."

Austin Energy will be offering an $85 rebate for customers who want to purchase a Nest thermostat and allow the utility to periodically raise their thermostats. The Filtrete by 3M Radio Thermostat and Ecobee Thermostat are also eligible for the rebate.

Reliant will pay customers $0.80/kWh during "rush hours", while Southern California Edison customers will receive a credit of $1.25/kWh for participating. Green Mountain Energy is offering the Nest thermostat for free if customers sign up for its Pollution FreeTM Efficient with Nest plan, which sources all electricity from renewable sources. National Grid (of Massachusetts) is offering $100 of the Nest's $249 list price.

Nest Labs hopes to roll out the features to more utilities in the future. Kate Brinks, spokesperson for Nest Labs writes, "we absolutely plan to add more energy companies as partners, and are in negotiations with a number now."

To participate, visit the following links:

Reliant –

Green Mountain – (coming this summer)

Austin Energy –

Southern California Edison –