Google + Nest Doesn’t Likely Equal More Energy-Efficiency

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Somewhere in the middle of a long run of work travel and vacation (whew, on the road every day from January 5-22), Google acquired Nest.

It’s certainly interesting. And Nest honcho Tony Fadell has got to be smiling. I’ve seen a lot of excitement in the efficiency community about Nest in general and the acquisition. My friend Peter Troast of Energy Circle wrote an interesting piece on why this bodes well for home performance. Peter makes a good case.

But I’m skeptical. I don’t think this has much to do with efficiency at all. And I don’t think it helps efficiency much. Here’s why.

Peter argues that this might help home performance in part be because the folks at Google see a similar opportunity, a lot of homes that use a lot of energy. He’s right. I think, though, the opportunity they smell on that side aligns more what we’re seeing in various forms around the country. Namely, many smart people are eating the utilities’ lunch by poaching all of the easy opportunity for revenue from the utilities, and they are doing it outside or the regulatory environment that utilities face. Have Tier 4 rates in California? You’re a prime target of behind the meter storage and/or solar. And the economics of dropping you down a tier (or two) make sense. We can sell you that today and take prime revenue from the utility. Even outside of Google/Nest, I think we’ll seem some interesting things in this arena as utility commissions are slow to react to the changing landscape.  (I’m not even talking about the net metering argument here, but there’s closely related.)

Further, with Nest, Google now has hardware to play in the DSM game. Lots of folks want in, including HVAC equipment manufacturers and big players with products that still compete well with Nest’s $250 thermostat (I’d need seven of those in my house–but hey, Google may drop the price to $25 to get in homes) with their own proprietary tech. We’ll see how the wrestling match with utilities goes–they like to plug in their own widgets.

Get a lot of homes connected, and I don’t doubt this could be done for public good. But it doesn’t have to be. Anyone remember Enron and rate manipulation? Clearly, I can’t say that this is where Google is headed, but it’s not beyond my wildest dreams.

I suspect as Google started sending unsolicited email from Google+ to gmail inboxes, it also sees ways to monetize Nest data well beyond anything energy related. Nest provides another lens into how we live in our homes. Now, I’m not so paranoid of Google having my energy bill data. (If they ask, I’ll send them last years’). But I’d be willing to bet they’ll find a way to sell data to folks who want to sell me stuff, and most of it will have nothing to do with efficiency or even energy. Nest is a good foot in the door, but there are others from streaming devices for TV to smart appliances that will be moving increasingly into homes. With that, efficiency’s moment in the spotlight could fade.

Sure, Nest has captured attention. But even pre-acquistion it also could be a distraction. Heck, if your thermostat can fix everything, why insulate, air-seal, or pay more for a high-efficiency air-conditioner or furnace? Why build a Passive House?

Don’t get me wrong. The right controls could make a Hummer use less gas. But controls won’t turn a Hummer into a Prius.

There is no doubt that technology like that in the Nest thermostat could be used in ways to really promote efficiency. But that is not an automatic outcome, nor I think a likely one. Here’s hoping I’m wrong!

In the meantime, the physics of heat transfer still apply, so let’s keep fixing homes and making our customers happy.

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About the Author:

Mike Rogers is the President of OmStout Consulting. A nationally recognized expert in residential energy-efficiency, he works with contractors and programs to scale sustainable market approaches to improving homes. More on Google+

Comments

  1. Mike Rogers  January 29, 2014

    See also this January 23rd piece from Utility Dive, Is Google Becoming an Energy Company?

    reply
  2. Peter Troast  January 24, 2014

    Thanks for the mention, Mike. Coby makes my point more succinctly than I did (thank you!).

    I love the “controls won’t turn a Hummer into a Prius” line and, of course, agree with that 100%. I also concur that there is some danger that unknowing homeowners may think a thermostat is all they need to do, but in the end the savings a Nest can deliver are incremental only. And no matter how much I love my Nest, it is not doing anything for the cold-ass state of our kitchen during single digit temps like today.

    My point is that Nest found its opportunity (and financial success) by identifying things within the home that previously sucked–programmable thermostats and now smoke detectors. From that perspective, if what Google is investing in is the future opportunity that comes from the suckiness of homes, that’s a good sign for all of us.

    reply
  3. Mike Rogers  January 24, 2014

    Just found this interesting collection of reactions on Google/Nest from Stephan Lacy at greentechMedia: http://www.greentechmedia.com/articles/read/The-Best-Reactions-to-Googles-Acquisition-of-Nest

    reply
  4. Coby Rudolph  January 23, 2014

    All great points. There’s another take though that’s less about Google’s plans with Nest and more about how important it is that they got bought by Google, and for such a high amount. Rightly or wrongly, there’s a perception that Nest is clean tech/energy efficiency and that Google just went into the EE sector. And if it helps build momentum for more future investment in EE offerings, that’s a good thing!

    reply
    • Mike Rogers  January 24, 2014

      I’ll agree with that, Coby. It is certainly better than a sharp stick in the eye. I’ll keep my fingers crossed that this leads to increased attention on efficiency–I’m just not betting on it. It looks a lot like a big data market or maybe an energy price arbitrage market. But here’s hoping!

      reply

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