Smart Thermostat, Automation, and Time-Varying Prices

Assistant Professor Casey Wichman
About This Project

headshot of Assistant Professor Casey WichmanBy: Gita Smith

Electricity costs are a central expense for many households, especially in summer when air conditioning runs day and night. A study by Casey J. Wichman, assistant professor in Georgia Tech’s School of Economics, shows how to move a household toward using less electricity and saving money with the help of smart thermostats.

Some electricity companies charge different amounts at different times of day and night to reflect the costs of providing that electricity. A primary requirement for a customer to get a lower bill is for them to know NOT to use power during peak hours in the summer, such as from noon to 5 p.m. It’s possible that smart thermostats can also help save energy if their algorithms can adjust temperature settings automatically as the price of electricity varies over the course of the day.

In the spring of 2019, Wichman and co-authors Derek C. Wietelman, at the University of Maryland, Joshua Blonz at the Federal Reserve Board of Governors, and Karen Palmer, senior fellow at Resources for the Future joined forces with Ecobee, a smart-thermostat company, to design an experiment. They randomly encouraged Ecobee customers in Ontario, Canada, to sign up for a new software algorithm called Eco+, which includes a feature that adjusts temperature settings automatically as the price of electricity varies over the course of the day.

The research team picked Ontario because most residential customers pay time-varying electricity prices. The prices during peak periods are double those during off-peak hours. The experiment focused on 2,133 customers who had Ecobee thermostats and were randomly encouraged to activate the new Eco+ feature through their device and on the Ecobee app on their phones.

The study found that enabling automation leads to pre-cooling during the early-morning hours, when electricity is the cheapest, and leads to substantially less air conditioner use during peak hours. Peak-period air conditioner use fell by roughly 60 percent for the customers using the automated feature for an average savings of about C$4.40 per summer month.

The fully understand the cost of these energy savings, however, the team wanted to understand how the feature affect in-home comfort. The study measured discomfort by calculating the difference between regulated in-home temperature and preferred in-home temperature settings in the month prior to the experiment. To ensure that discomfort was measured only when the occupant was at home, they monitored occupant presence by using the thermostat’s built-in motion sensor. This discomfort effectively means that households are slightly hotter than usual for these occupants, translating to a relatively small average increase in hourly temperature of 0.75 degrees Fahrenheit.

The study also explored whether residents who experience discomfort then disable the automation feature, thereby limiting its longterm effectiveness. Very few customers turned off the feature. Those who were always home during peak hours were no more likely than other customers to disable the feature.

Wichman says, “While the savings per household that we identify are small, they can add up across households. Aggregating across the 2,133 participants in the study yields a reduction of roughly 0.56 megawatts in peak demand during an average peak-period hour.”

Extrapolating their findings to California, which has about 1.6 million smart thermostats and is moving toward widespread residential time-of-use pricing, researchers find a 66-megawatt to 427-megawatt reduction in demand during an average peak-period hour on a warm or hot summer day. Wichman says, “Our work suggests that such programs could deliver important energy savings and be designed in a way to minimize discomfort for customers. Such automation could help pave the way for more widespread acceptance of time-varying electricity prices.”

Read the working paper here:, or learn more about the study in the Resources Radio episode 159 "Smarter Thermostats, Lower Bills, and Lower Emissions, with Casey Wichman." Then, explore more research by SOE faculty on our Featured Project page.