The Power of
the Smart Home
For more information contact
the Nest Energy Team at:
Nest-Policy@google
OCTOBER 2022 1
Unprecedented Challenges for an Aging Grid
Our nation’s electric grid is facing unprecedented challenges, with many states across the
U.S. increasingly at risk for more frequent power outages.1 A variety of factors including rising
electricity usage and extreme weather events have increased stress on the grid, often
resulting in outages and higher costs for residents.2 The impact of these challenges can be
staggering, both financially and for the health and wellbeing of residents. The United States
Government Accountability Office recently published findings that the total annual cost of
utility outages are upwards of $55 billion and that this number, if unchecked, could rise to
$480 billion per year by 2080.3
The Growth and Potential of the Smart Home
There is a simple and effective way to help mitigate these costs. Using today’s smart,
connected, technologies, our homes, offices, and buildings have the potential to work in
harmony with the electrical grid to automatically conserve, shift demand, and deploy power
how and where it’s needed—helping us maximize our existing infrastructure capability and
making the grid more reliable and resilient. Connected technologies and appliances (both in
homes and attached to the grid) that enable us to more precisely, cheaply and effectively
adjust and shift the demand, supply, and small-scale electricity generation technologies are
known as distributed energy resources (DERs). Smart thermostats, electric vehicles (EVs) and
EV chargers, rooftop solar, and battery storage are all examples of DERs that can be found in
millions of homes across the United States today.4
OCTOBER 2022SUPPORTING A CLEAN ENERGY FUTURE WITH NEST RENEW 2
However, despite the existence and increasing adoption of these technologies, many
homeowners don’t have access to programs that incentivize and enable their DERs to
respond in real time to the needs of the grid. When the grid experiences high demand for
electricity, there are two options to keep the lights on: 1) increase the production of electricity
or 2) reduce demand. However, the most common approaches for both of these options are
not capable of scaling at the speed and magnitude that we need to ensure grid reliability.
To increase production, utility companies have historically maintained a network of “peaker
plants,” which are typically fossil-fuel based power plants.5 As the name suggests, these
plants often only run during periods of peak energy demand. In fact, on average, they only
run for 3%6 of the year. However, despite their limited usage, they still incur year-round
maintenance and capacity costs, which are paid for by customers.7 Furthermore, peaker
plants are typically gas or oil burning, and are disproportionately located in low-income and
minority communities.8 Due to these factors, it will become increasingly difficult to justify the
construction or continued use of many of these plants.
OCTOBER 2022SUPPORTING A CLEAN ENERGY FUTURE WITH NEST RENEW 3
To reduce demand, we have historically relied on blunt tools like remotely shutting off high-
demand appliances like air conditioners, curtailing commercial or industrial load, marketing
campaigns asking residents to turn off appliances or shift their usage or in extreme cases,
directed power outages. While these tools are useful, residential DERs can enable us to more
precisely, cheaply and effectively adjust and control the demand, supply, and generation of
electricity. Coordinating such a meaningful decrease or shift in electrical demand for a short
amount of time across aggregations of DERs is known as “Demand Response.”
Smart Programs Enable a More Resilient and
Efficient Grid
The deployment of connected devices in homes and buildings, such as smart thermostats,
smart water heaters, EV chargers, etc., coupled with demand response programs can help to
automatically reduce the energy demand placed on the grid. Demand response programs
should create choice, energy efficiency savings, and offer participating customers fair
incentives like hardware credits, payments, or discounted electrical bills for utility programs,
or for market-based programs, direct payments to compensate customers for agreeing to
reduce their energy use, just as a generator would be paid to create that electricity, but
without the additional transmission or distribution costs. By aggregating these shifts across a
region, it is possible to smooth peak load demand and reduce or even eliminate the need for
expensive and rarely used peaker power plants.
For example, during the height of summer, the electrical grid often strains to meet the late
afternoon energy demand when people are getting home from work and school and turning
on their air conditioning.9 As such, we’ve historically had to turn on peaker plants or
implement rolling power outages.10 Today, smart thermostats can coordinate to pre-cool
some homes or automatically adjust temperature settings by a few degrees.11 This helps more
people to stay cool and comfortable while also temporarily reducing the demand and high
stress placed on the grid and reducing our reliance on peaker plants.
OCTOBER 2022SUPPORTING A CLEAN ENERGY FUTURE WITH NEST RENEW 4
FIG. 1
Peak demand response "Event call"
Visual representation of how demand shifts of demand response events can maintain comfort while reducing overall peak demand
More advanced programs provide customer choice by allowing them to enroll into utility or
third-party programs, responding to real-time grid conditions automatically making slight
temporary adjustments to their settings in order to help decrease or shift demand.
Specifically, these demand response programs enable grid operators to 1) automatically shift
or reduce demand via customer-enrolled devices (e.g. smart thermostats) for a given amount
of time and 2) directly incentivize residents to participate. "Nest customers who participate in
these demand response programs can see potential shifts of up to 77% of AC load during
peak events, while still maintaining comfort and control.” 12
While some programs limit customer adjustments during peak events, Google Nest
customers maintain control. We believe this improves customer satisfaction and
engagement, and it’s the right thing to do for customers.
OCTOBER 2022SUPPORTING A CLEAN ENERGY FUTURE WITH NEST RENEW