Google Inc. Will Control Your Thermostat -- And That's a Good Thing


Google  (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) is inseparable from our daily lives. It's not only our search engine and email, Google tells us where to go, what to do, or even who to do it with. Now, Google is gearing up to control the most controversial and contested aspect of our daily domestic levels: the thermostat temperature. Here's what you need to know.

Google's invisible hand
When you crank your thermostat up or down, you pay a price. And you know it. But sooner than you think, that price won't be so predictable. According to a recent survey of 527 utilities professionals, 70% of respondents noted that their employer plans to offer dynamic pricing in the next five years -- and once again, Google is headed to the rescue.

Dynamic pricing is an age-old concept that makes a lot of market sense. At peak hours, electricity consumers can expect to pay more to power their homes. On the other end, when demand drops and supply is relatively high, users can eat up electricity at little cost. Probably the most common example of daily dynamic pricing is pump prices. We pay more at the pump when everyone's guzzling gas and less when there's more gas to go around.

Dynamic pricing already exists for commercial-level electricity consumption, but better data and more intelligent technology is now expected to bring that same "invisible hand" to your very own doorstep.

Automation station
Google's February 2014 acquisition of Nest, the maker of the "Learning Thermostat," took many by surprise. Sure, the tech company has an eye on automated vehicles and WiFi-equipped hot-air balloons, but there's little "big data" advantage to keeping a home heated or cooled.

But as is often the case for mega-tech corporation Google, Nest is only the beginning. As the entire U.S. energy sector becomes more intelligent, seemingly sideline ideas like smart grids, residential power systems, and (you guessed it) dynamic pricing models will only grow in popularity.

In its latest 10-K filing, Google goes into more detail about its recent acquisition:

We expect that the acquisition will enhance Google's suite of products and services and allow Nest to continue to innovate upon devices in the home, making them more useful, intuitive, and thoughtful, and to reach more users in more countries.

Dynamic pricing is a game changer -- and Google wants to be the one to tell you how to play the new game. A Nest thermostat can keep your house comfortable and your wallet fatter on its own, but when coupled with a rooftop solar system, automated tinting windows, an extra-insulated refrigerator, or 24-hour timed laundry machine, your entire house becomes a working cog in a more malleable and manageable energy system.

Don't fight the future
Google is a massive company grasping for growth. And while some of its acquisitions seem more like adolescent adventures, its purchase of Nest proves once again that this company has its eye on an entirely unimagined future. While you may fight with your family over the thermostat temperature, don't fight Google.

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  • Report this Comment On April 28, 2014, at 8:00 AM, shoprecord wrote:

    Want to save the bill? Use less electricity when not necessary! That's the key, and no need for tricky fancy devices. if you need to massively use electricity at certain point, you will have to, regardless of what the device indicates. This so called innovation seems so redundant...

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Justin Loiseau

Energy and Macroeconomic Specialist keeping investors up to date with macro news, utilities, and good companies doing good things.

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