I'm all for helping lower peak demand, but if the utilities are going to be saving billions, I think this should reflect an ongoing savings for the customers, too.
The consumer clearly benefits from not air conditioning an empty home.
But, the article conflates this with "demand response" -- which is more about time-shifting your electrical usage to avoid peak times than it is about reducing your energy usage. The meter will read the same, but it's a huge benefit to the utilities.
A simple way to fix this: price energy more expensively during peak times.
In Chicago you can opt into a program where you pay real-time pricing for electricity. This price can swing from 0.0c/kWh during overnight summer hours when peaker plants need someone to burn off wattage, and I've seen it go over $1.00/kWh during heat waves or when the south is having a freezing snap and everyone is running their heat pumps down there. Standard users pay about 7.5c/kWh.
While the Nest doesn't connect to this pricing, ComEd also offers an optional breaker box (connected via cellular radio) to cycle power to your A/C compressor for short periods of time when the price exceeds a certain level (i.e peak summer demand). So this kind of automatic control exists without needing the Nest infrastructure in place.
In the meantime, I've saved about 15% off my standard bill with a little bit of diligent dumb-thermostat programming. I'm planning a more intelligent system of my own that can watch pricing, house occupancy, and weather forecasts to try and beat that statistic.
No wonder it's not particularly popular.
This is where a more intelligent system than the Nest could be beneficial. I'm not for the power company modulating your use but if you had a system that cooperated locally with your habits I think there's a lot of potential. Nest is 50% there.
But if you know anyone selling a cheap commercial ice maker I'm all ears.
Although this is something you have control of as well. For the right amount of money, I can arrange to be out with my friends when it is hottest, then come home later. :)
A simple way to fix this: price energy more cheaply during off times.
If you've hit 100% capacity there's nothing you can do except start blacking out neighborhoods. The solutions to date are to a)fire up "peaker" plants which are hellishly expensive to operate but keep the lights on or b)buy surplus power from other markets on the open market. And that price will not be the standard price.
If the consumers paid the spot price and realized their air conditioner now cost something like $10/hr to run, I bet you demand would come down. The problem is that this would completely screw over those that can't adjust their demand in the process.
First off, Nest is a business, they're looking for revenue out of this.
Secondly, $85 = $25 + 4 years @$15/yr. So in essence Nest only makes money on this after 4 years. As cool as Nest is, it's not unreasonable to assume that if this catches on other companies might pursue similar programs. Which means that Nest user might be swapping out their thermostat in 4 or 5 years for the then-newest thing.
$85 to the customer doesn't seem like such a bad deal in the grand scheme of things, and as others have said, the customer gets other significant benefits out of the Nest thermostat all along the way.
The article only says the utilities will save 'billions'.. so this may be fair or not.. without additional info, how can you say?