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Would a Nest Help My Family Save Energy?

Since my husband and I both work in the energy industry, we often exchange energy-themed gifts. He has given me energy books (my favorite was American Power by Mitch Epstein filled with beautiful art-shots of power plants), power plant trading cards, and several times a year, someone in the family jokes about coal in the stocking.
At the beginning of December, my 11-year-old daughter, who loves giving gifts but hates keeping them secret, asked me some pointed questions about Nest Thermostats. Given her track record, I was anticipating a Nest under the Christmas tree and said as much to a reporter, who included that line in her story.

Under pressure and with any secrecy out the window, my husband and I decided to think hard about whether a Nest made sense for our family. (Yes, we are both economists, so even gifts get reduced to costs and benefits…).

The first question we asked ourselves: would a Nest help us save energy?

For the uninitiated, a Nest Learning Thermostat, created by two former Apple designers, is a smart thermostat that learns about your home and your habits and sets the indoor temperature based on what it’s learned. True to its lineage, it appears easy to use, sleek and generally high in cool factor.

The company advertises the energy savings potential of its devices on their home page, exhorting you to, “teach it well and the Nest Thermostat can lower your heating and cooling bills up to 20%.”

How? According to this review, the Nest uses three types of data:

  • Three temperature sensors, designed to get a more precise measurement than a single sensor
  • Motion and light sensors that detect activity in the room at a wide 150-degree angle
  • A WiFi connection to get weather data about your area from the Internet.

The idea is that the Nest will save energy by helping you use less of it when you’re not home. Sounds like a good idea in general. In my house, the Nest would replace a perfectly good programmable thermostat that we have instructed to keep our house warm when we’re home and awake, a little less warm while we’re asleep and a cool 60 degrees between 8AM and 6PM.

So, we are already reducing our heating load quite dramatically when we’re away. Given that we live in Berkeley, the only time I remember the house actually being 60 degrees is when we returned from a vacation. If pet fish could shiver, ours were that day. But most days, our furnace is not working while we’re away.

If we got a Nest and it was really paying attention, though, its motion sensors would detect that I am often home past 8AM, usually coming back from a run (so with natural body heat) and headed out the door after I send a couple emails. On mornings when it’s cold outside and one email turns into ten, it can be chilly in the house by the time I notice.

I suspect that, if anything, the Nest would raise our heating bills. (Like most Berkeley residents, we don’t have air conditioning). It might make me a little warmer on the mornings I stay at home. Given that a Nest can be controlled remotely, we would also probably turn the heat up on the road home from vacation (so the fish would be defrosted by the time we returned home). But, even with the sleek interface, my husband and I decided that neither of those things justified the $250 price tag.

Is there a general lesson here? Probably not about the Nest. My family is idiosyncratic. My colleague, Max Auffhammer, lives 14 miles away in a hotter microclimate and swears by his Nest. A report from Lawrence Berkeley Labs suggests that most people do not actually program their programmable thermostats. So, it may turn out that the Nest can save most people energy.

This example does highlight two important messages about programs and gadgets, like the Nest, designed to make us more energy efficient: they can have both heterogeneous and unanticipated impacts.

Take heterogeneity first. It is highly unlikely that there’s a one size fits all answer with energy efficiency, but, right now, most programs are evaluated based on their average impact. If we can recognize and learn more about cross-customer heterogeneity, policymakers could target programs where they are likely to be most effective.

The possibility that energy efficiency programs will have unanticipated impacts reminds me of the Rumsfeld quote (“…known unknowns…”). We should anticipate that human beings are complicated, which makes it hard to model our behavior. We have limited attention (if I didn’t, I would manually override our thermostat on the mornings I suspected I would be home for awhile), some of us make impulse purchases, and sleek gadgets attract us.

To learn more about how households and businesses actually respond to energy efficiency, we at The E2e Project are encouraging policymakers to consider randomized controlled trials and other robust empirical techniques to measure programs’ impacts.



Catherine Wolfram View All

Catherine Wolfram is Associate Dean for Academic Affairs and the Cora Jane Flood Professor of Business Administration at the Haas School of Business, University of California, Berkeley. ​She is the Program Director of the National Bureau of Economic Research's Environment and Energy Economics Program, Faculty Director of The E2e Project, a research organization focused on energy efficiency and a research affiliate at the Energy Institute at Haas. She is also an affiliated faculty member of in the Agriculture and Resource Economics department and the Energy and Resources Group at Berkeley.

Wolfram has published extensively on the economics of energy markets. Her work has analyzed rural electrification programs in the developing world, energy efficiency programs in the US, the effects of environmental regulation on energy markets and the impact of privatization and restructuring in the US and UK. She is currently implementing several randomized controlled trials to evaluate energy programs in the U.S., Ghana, and Kenya.

She received a PhD in Economics from MIT in 1996 and an AB from Harvard in 1989. Before joining the faculty at UC Berkeley, she was an Assistant Professor of Economics at Harvard.

10 thoughts on “Would a Nest Help My Family Save Energy? Leave a comment

  1. I considered the Nest but ruled it out because it is still binary – the heating is off or on.
    Instead I opted for a weather station thermostat that specifies what temperature the water going from the boiler to the radiators should be. It uses an outside (as well as an optional inside) thermostat to determine what the water temperature should be. It uses these inputs and a heat curve to determine this.

    Keeping the water temperature down means that the Natural Gas boiler (I am in the UK) is allowed to do as much condensing as possible meaning that the boiler efficiency is around 95-98%. It also maintains a more stable temperature throughout the house.

    Obviously this is only an appropriate solution if you are using Natural Gas or Propane to heat your home.

  2. Since you and Max have come to different conclusions about the value of a NEST, it seems like an RCT where some households get a NEST and others a conventional programmable thermostat would have real value. Maybe NEST would fund the experiment?

  3. For anybody reading this who is particularly nerdy / curious, or if they might have a clever / curious teenager living in the house, you can build your own thermostat very easily using the Arduino platform. At a minimum, you’d need an Arduino, a temp sensor, and a relay.

    The beauty is that you can program whatever algorithm you want into the device, whatever display you want, whatever number of sensors, Internet connectivity, data logging — whatever you can imagine. And it’s fun!

  4. I’m thinking about cooling with a Nest, since I live in the Central Valley near Sacramento. Right-sized air conditioners don’t have a lot of excess capacity, which can make things hard to cool on hot days, particularly in my 1884 Victorian which has ceiling insulation and not much else (though its 11 foot ceilings keep it cooler later in the day). I could see a Nest either leaving me sweltering at 84 degrees because it erroneously thinks it can cool the house quickly, or alternatively, running all day anyway to keep it at 78 or 80 where I’d like it to be when I come home. And, I don’t think Nests have been programmed to interact with UC Berkeley economists’ dream rates – time of use rates with critical peak pricing? And is there an alarm feature to remind me to turn off the AC, open the windows and turn on the whole house fan on more clement summer evenings?

  5. Very insightful post and completely agree about the Nest’s energy saving benefits. I love its aesthetic appeal and the ability to remotely control the thermostat. BUT, this also means my wife can much more easily lower the thermostat in the summer when it gets too hot in our bedroom, and we can bump it up in the winter when we get a slight shiver of cold. So, while we’re more aware of the house temperature at any time, I don’t think it has been successful at reducing our energy use. We previously had an offset thermostat so the Nest didn’t change that aspect of our behavior. Randomized controlled trials make sense to test its efficacy for saving energy.

  6. I think you’ve hit on all the themes already, but I want to extend an offer to come to the home of any EI blogger who so requests and install and program a cheapie $30 programmable thermostat on their behalf. Then you get the energy savings benefits at a significant discount. 🙂

    I’d really be surprised if a Nest does much better at saving money in most cases than a programmable thermostat programmed with fairly aggressive setbacks. However, as you point out, the motion sensing and other goodies might increase your comfort, or allow you to edge closer to your efficiency frontier without decreasing comfort. I can think of at least two scenarios. I suspect that there are more.


    Imagine you like to come home to a warm house. You know that it usually takes your heating system one hour to come up to normal temperature from your setback temp. But your house is drafty, so on the coldest, windiest days it takes two hours. You set the dumb programmable thermostat to start heating two hours in advance. You always come home to a toasty house, but on many days, you used more energy than was needed, as one hour would have been sufficient. The nest can learn how quickly your system can heat the house,and it can adjust for outdoor conditions. So that could be a net energy win. The same reasoning might allow the Nest to make its own decisions and choose more aggressive setback temperatures.

    (My cheapie Honeywell 7-day also attempts to learn the recovery time for our house, but it must make its guess without the external weather input variable.)


    Some heating systems’ heat sources can be throttled as well as turned on and off. Control systems that can take outside temperature into account can allow the heat source to run at only the most appropriate level for the temperature required and this is generally more efficient. This is often called “outdoor reset.” Here, weather data can be energy-saving, but I don’t see how the Nest’s weather data would be any better than the same-place same-time info data coming directly from locally installed outdoor thermometer. And most systems don’t work this way, anyway, usually only newer systems that use boilers — not many of those in Berkeley.

    We just started up an aquarium at our house. I thought a fair amount about whether lowering the house temp would stress the fish. I didn’t do any serious analysis; I got a tank heater. That’s definitely more efficient than heating a whole house!

  7. We live up at Lake Tahoe in a home we built four years ago. It doesn’t have air conditioning but it does have radiant heating in the floors, with a total of eleven separate thermostats and heating zones – one for nearly every room. I’ve replaced the relatively simple single-setpoint thermostats in two bathrooms and my wife’s office with programmable units because those are the places were night setback makes sense. Guest rooms are allowed to stay at 50 degrees when they are unoccupied, and temperatures the other rooms rarely, if ever, get cold enough for the heat to come on.

    Like you, we’d probably end up worse off with NESTS than the single-setpoint units, in part because a NEST would probably drive itself and us nuts dealing with the slow response of all the thermal mass in our home. I’m also not sure where I’d put it (them?). I wouldn’t mind having thermostats for out guests rooms I could adjust without having to walk downstairs, but at over $100 apiece, well let’s just say I’m better off getting some exercise.

    I hope policymakers understand your point, because if we had to install programmable communicating thermostats in our home in place of what we have now, they’d do a lot of harm (including burning a nice hole in our wallets) and absolutely no good. Your post also points up the fact that consumers have to educate themselves a bit, and perhaps device manufacturers need to resist the temptation to oversell the capabilities of their products, which may work in the majority of cases but won’t work well in all cases.

  8. Nice, personal touch, holiday appropriate post.
    For my family/ home a nest would add to the energy cost; we use localized space heaters with timers. So no need to get the whole house up to 60 or 70 or whatever your thermal inclinations.
    The other scary thing I have heard about automation, specially about the Nest, if it malfunctions you could have a dead/ overheated AC and-or furnace [check out some reviews at Amazon … assuming they are not ‘trolls’ posting negatives].
    When houses have multiple independent zones, each with its own nest-like sensor, THEN it starts making sense.

    By the way, I have known for years that I get coldest in my feet [and then it spreads upwards] and I get ‘hottest’ [not angry] in the head [the brain is the most energy consuming organ especially of a body at rest]. So if we could have warmth at floor level, and ‘coldness’ at head level we would save tremendous amounts of energy. Lower ceilings, anyone?

    [When I saw the title of the post “Would a Nest Help My Family Save Energy?”, I thought you might be talking of something like a home design like a bird-nest]

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