Thermostat whiz Nest wants to reset your peak power use

After succeeding at the once inconceivable task of making thermostats sexy, Nest is now out to change peoples' relationships with their utility companies, and make the energy industry more efficient in the process.

Today, Nest, the company founded by Tony Fadell -- the "godfather" of the iPod and fellow former top Apple employee Matt Rogers -- rolled out its next big effort.

While many had speculated that the company's follow-up to its Learning Thermostat would be another smart home appliance, the company instead unveiled Nest Energy Services, a broad initiative aimed at attacking the problems of general energy inefficiency that come with peak energy demand.

At the core of the new initiative, Fadell told CNET last week, is the fact that American utility companies spend $9 billion a year trying to incentivize people to reduce power demand at peak times -- say, hot summer days -- and to be smarter about their their personal energy use. That money is spent on rebates, demand response -- shifting energy loads away from peak usage, and bill stopper programs.

Nest thinks it has a better way to approach the problem, and wants a piece of that $10 billion.

Today, 50 percent to 60 percent of Americans' power bills are spent on heating and cooling, Fadell said, and most people have already swapped out older, inefficient appliances and lights for newer ones that significantly cut power use. So utilities know their best chance to make the system work better is to address demand.

In many parts of the country, utilities have incentivized people to install new thermostats that allow the power companies to unilaterally turn off appliances like air conditioners when demand is at peak. But it's expensive to install those thermostats, and customers hate losing control over their home heating or cooling, Fadell said.

Nest, by comparison, has been working with utilities in a number of states to offer instant rewards for anyone buying one of its Learning Thermostats. Essentially, Fadell said, most people whose utility offers the program can get $100 back immediately on any Nest thermostat purchased within the last 60 days, though details will vary by region.

But the real meat of Nest Energy Services is a slate of new technology-driven features available to those whose utility companies join the new program.

Rush Hour Rewards
The first is what is called Rush Hour Rewards. Meant to take advantage of the Nest thermostat's built-in Auto-Tune program -- a system that learns about peoples' homes, their power usage behavior, weather and pricing information, and more, Rush Hour Rewards is designed to automatically reduce power at key moments.

"We understand when peak demand is coming," Fadell said, "and work with your Nest, moving the energy load around so we don't have a peak energy problem."

Traditionally, Fadell explained, people turn on their air conditioners and leave them on all day, when it gets very hot. regardless of whether they're home or not. That uses a huge amount of energy, and can force utility companies to power up special plants that often run on coal, or to buy power from third parties at very expensive rates.

But with Rush Hour Rewards, Nest owners can be part of the solution, Fadell argued. The idea is that the system builds a personal profile based on residents' lifestyles, and then runs the air conditioner in a much more efficient manner, while still maintaining comfort, Fadell said.

Because utility companies track weather patterns, they can warn Nest about upcoming peak demand days, and when that happens, Nest in turns alerts users about 24 hours ahead of time that a Rush Hour day is coming. Then, during the peak demand, the Rush Hour feature kicks in, modulating temperature, but still letting customers take full control if they desire.

Fadell said the Nest will pre-cool peoples' homes before peak demand hits and subsequently turns the air conditioner off and on, maintaining users' ideal comfort levels, but not wasting unneeded energy in the process. By doing so, he explained, Nest can reduce a home's power demand by as much as 40 percent, while only allowing the temperature to rise about 3 percent.

All told, Fadell said, the Rush Hour Rewards program -- which is fully opt-in for those with participating utility companies -- can save Nest users between $20 and $60 per season.

The last piece of Nest Energy Services is called Seasonal Savings. Many people who are already using Nest and saving money can still find additional ways to use energy more efficiently, Fadell said. "We think of it as a tune-up for your schedule," he said. "We go in and change your schedule a little bit, without changing your comfort."

This works by examining a three-week period of Nest usage and looking for places to boost efficiency. The feature, also based on the Nest Auto-Tune system, only kicks in if it finds ways to boost efficiency by 5 percent or more, on top of existing savings. And users can always "back off" any modifications to the heating or cooling schedule they don't like, Fadell added.

Unfortunately, the Nest Energy Services program only benefits customers whose utilities are partnering with the company. But already, Fadell said, Nest has reached deals with some of the biggest power companies in the country. Among them are Reliant, Southern California Edison, Green Mountain Energy, and others. However, each utility makes its own decisions about which parts of the program to offer.