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Illinois Utility Looks to Push Smart Thermostat Adoption by Offering Rebates

While the main selling point for smart thermostats is saving money — annual savings are about 12 percent for most customers — the units have been a tough sell beyond tech-savvy early adopters.

(TNS) -- In the age-old battle over who controls the temperature setting, smart thermostats would seem an intelligent alternative: Let the internet-connected device make automatic adjustments and pocket some savings in the process.

But at $250 per unit for leading models, most consumers aren't buying it, with smart thermostat adoption rates languishing at about 1 in 10 households nationwide.

Hoping to generate more interest, Commonwealth Edison announced an update to its 2-year-old rebate program Tuesday, with up to $100 in instant discounts for smart thermostats purchased through its website and up to $50 in additional rebates available from a customer's gas utility.

"This year, we're committed to doubling the number of customer rebates compared to last year," Anne Pramaggiore, president and chief executive officer of ComEd, said at a joint news conference with consumer advocacy groups in Chicago.

About 82,000 Chicago-area customers have purchased a smart thermostat with a ComEd rebate since the incentive program was introduced in October 2015, Pramaggiore said. Previously, the program required customers to submit forms for rebates after the purchase.

The program set a goal of 1 million smart thermostat installations by 2020 among ComEd's 3.9 million customers. Rebates are funded by energy efficiency charges on all ComEd customer bills.

Consumers have been slow to warm up to the smart thermostat technology, a Wi-Fi connected device that learns your preferences and tracks your presence to adjust temperature settings automatically. Major players include Ecobee, Honeywell and Nest.

While the main selling point for smart thermostats is saving money — annual savings are about 12 percent for most customers — the units have been a tough sell beyond tech-savvy early adopters.

A study released this month by Parks Associates found only 18 percent of consumers would buy a smart thermostat at $250, but offering a $100 rebate more than doubled the pool of interested buyers.

"The market for smart thermostats is still in the early adopter phase," said Tom Kerber, director of internet of things strategy for Parks Associates, a Texas-based consumer technology research and consulting company. "To move beyond early adopters, they have to offer products at a lower price point."

Kerber said prices for the first-generation smart thermostats started at about $400 but have dropped to about $250 for Nest and other leading products. He said breaking through the $150 price point opens it up to a broader market.

Smart thermostats require a broadband connection to be fully functional. About 11.2 million households — or about 11 percent of broadband-connected homes — had a smart thermostat at the end of 2016, Kerber said.

The number of households with smart thermostats is projected to climb to 16.6 million this year, a 16 percent increase, but aggressive rebate programs could speed up adoption.

Chicago has been a hotspot for smart thermostats because of the ComEd rebate program, Kerber said.

"In the ComEd territory, (the adoption rate) is higher as a result of the incentives that the utility has been able to provide the consumers to drive the market forward faster," he said.

Sarah Merryweather, 32, of west suburban Glen Ellyn, bought a Nest on sale at Home Depot last year for $150. She and her husband, who installed the device, got a $100 rebate from ComEd and a $25 rebate from Nicor, bringing the purchase price down to $25.

Merryweather said they like being able to adjust the settings via a smartphone app but are particularly happy with Nest's ability to make energy-saving decisions on its own.

"This week when we were out of town, it kind of noticed that we weren't there, so it changed the thermostat to the eco setting," Merryweather said. "That was nice because I had forgotten to do that."

ComEd has its own incentives for improving the adoption of smart thermostats. The state's Future Energy Jobs Act, which went into effect last month, requires ComEd to achieve 21.5 percent annual energy savings by 2030, with incentives for meeting its targets and penalties for falling short.

Down the road, ComEd may also use smart thermostats to remotely control temperature settings in your home during peak demand.

"We think there's benefits, and customers would be compensated for providing that benefit to the system," Pramaggiore said. "We're still a bit of a ways away from that, but the future will start to look like that."

©2017 the Chicago Tribune Distributed by Tribune Content Agency, LLC.