What Makes a Smart Thermostat Smart?

There’s no clear definition of a smart thermostat. In fact, as more offerings have entered the market, the definition of a smart thermostat has become more unclear. Some consider a thermostat “smart” if it has two-way communications (i.e., you can view and change settings via a smartphone). However, according to Guidehouse Insights, this type of thermostat is actually considered a communicating thermostat. A communicating thermostat is a device solely enabled to gather and transmit in-home temperature data in a two-way format that can be accessed and adjusted remotely via a web portal or mobile application. A handful of communicating thermostats on the market today have actually been labeled or marketed as smart thermostats despite their lack of smart features. So what is it that makes a smart thermostat smart?

The answer is algorithms. The algorithms hidden in the backend software of a device are what enable it to perform a variety of different functions that make it advanced, not just communicating. For thermostats specifically, algorithms tend to enable functionalities that can optimize heating, ventilation, and air conditioning (HVAC) settings for consumers.

Algorithms for All Occasions

There are algorithms for a variety of different thermostat functionalities. The Nest Learning Thermostat's learning algorithm is what enables it to adapt to a user’s lifestyle and the changing seasons to optimize the user’s HVAC settings and minimize energy consumption without affecting comfort. EcoFactor uses a series of advanced algorithms alongside real-time data from communicating thermostats, weather conditions, and customer preferences to make automatic micro adjustments in temperature to save customers money and energy. The ecobee3 is advertised as smarter due to its support of algorithms for capabilities ranging from alerts and reminders to optimal humidity control to home/away sensing.

Algorithms are still improving and are increasingly supporting different features. Manufacturers of thermostats have teams dedicated to developing new algorithms and adjusting existing ones to best serve their customers. Similar to updates in apps like Instagram, these algorithms can be added or modified on devices already in use. What developers can do with algorithms and the value they add to thermostats make these devices unique and desirable to consumers. Without its learning algorithms, the Nest thermostat would only be a well-designed on/off switch controllable through a smart phone instead of the learning thermostat that has driven the market and become one of the most popular smart devices available today.

Smart or Communicating?

The value that algorithms add contributes to the importance of differentiating smart thermostats from communicating thermostats. The difference between the two is commonly misunderstood. In fact, the Environmental Protection Agency has not created a definition of “smart” as it applies to smart devices (including smart thermostats), and there is no regulation over the use of the term. This can have negative implications on the market, from frustrated consumers to inaccurate quantification of devices. For simplicity’s sake, Guidehouse Insights categorizes smart thermostats as those with the same functionality as a communicating thermostat (i.e., two-way communication), but which are enhanced by data gathering and analytics that optimize HVAC settings for efficient and automated energy consumption.

Where greater specificity is warranted, Guidehouse, Inc. has defined a smart thermostat as having at least three of the following features (enabled by algorithms): occupancy detection, heat pump lockout temperature control, upstaging and downstaging optimization, optimal humidity control/AC overcooling, fan dissipation, behavioral features, and free cooling/economizer capabilities. To learn more about smart thermostats and how they are different from other thermostats, look for the upcoming update to Guidehouse Insights’ Smart Thermostats report.