Zen Ecosystems is leveraging its smart thermostat to extend the range of residential batteries for home energy savings.
The nearly four-year-old company sells its signature thermostat individually for homes, as well as in enterprise-wide commercial packages. It saves money by shifting a building's heating and cooling load to optimize for time-based electricity tariffs or demand response events.
Another trendy technology advertizes load-shifting and demand response: energy storage. Customers interested in those functions could pick one or the other, but Zen decided to try pitching both. The company's smart thermostat will be bundled with batteries from Swell Energy, an L.A.-based storage marketplace turned vendor, in what appears to be the first partnership of its kind.
“We're very aware that storage is hot in the market right now, and our ambition is to be a part of that,” said Zen Ecosystems CEO James McPhail, in an interview on the floor of the DistribuTech conference in San Diego. “Having such a fast ROI, we're able to partner with companies that don't have that same luxury to help them expedite their ROI and become an even more attractive solution to their customers.”
The pitch goes something like this: storage and smart temperature controls enable a customer to exert greater control over energy consumption. Storage is more expensive and has a longer payback time; a customer with a limited budget could simply choose a thermostat and start saving in a matter of months. If a battery already pencils out, however, the inclusion of a Zen thermostat will open up deeper savings for a negligible additional cost.
“With the same amount of storage and the same number of customers, a smart thermostat lets us aggregate a larger grid resource,” the folks at Swell tell GTM. “So the synergy is both customer-facing and grid-facing.”
The two technologies don't compete head to head because they achieve similar outcomes through different means. A Zen thermostat can receive a signal from the utility that a demand response event will occur in an hour, and then start pre-cooling the house so it can shut down AC during the event. A smart battery knows to load up before a DR event, so it can discharge to cover a certain amount of the home's load.
These two approaches stack well because they complement each other. Adding more battery capacity won't eliminate cooling load, just like the thermostat can't discharge power once it finishes pre-cooling.
They also share a certain mindset. Both products appeal to a customer who wants to take active control of energy usage, by intentionally scheduling consumption and physically storing electricity for use at desired times.
“This marriage of solutions can optimize the use of energy in the home and stack additional benefits for the consumer as energy efficiency and demand response can be optimized,” said Elta Kolo, a grid edge analyst with GTM Research. “It reduces the payback period on the investment by allowing the stacking of benefits.”
Those harmonies don't guarantee commercial success. Both are new technologies, so pairing one emerging home energy product with another — or one emerging company with another — doesn't necessarily reach a lot of new consumers. Residential storage itself remains a pretty tiny market, cloistered in just a few states.
That said, Swell is already pitching batteries to residents, especially in Southern California Edison territory, where it has a contract with the utility to aggregate 5 megawatts of 4-hour duration storage across 3,000 homes for grid services. The new partnership will put Zen on the radar of those customers, who might not have seen it otherwise. In return, Kolo notes, Swell gets to woo new clients with “an added perk that's approachable and recognizable for the customer.”
Thermostats deployed alongside Swell's batteries play into SCE's effort to build out local capacity in the wake of the Aliso Canyon gas leak, to ensure the grid keeps functioning with the diminished supply of natural gas. Zen Ecosystems also has a contract with the utility to provide capacity as needed.
Zen is working on similar partnerships to cover other distributed energy market segments, like commercial storage or solar.
The commercial storage pairing could prove to be the most lucrative: Zen already sells enterprise packages that let retailers manage thermostats across a fleet of stores. Those clients have a direct profit interest in efficiently managing electricity consumption, and they have demand charges to worry about. Rolling out storage and smart thermostats across many outlets of the same company brings in revenue without additional customer acquisition costs.
In any case, Zen's inventiveness in bridging different energy management markets, and its willingness to open up its product to new uses, could be a positive differentiator.
“It definitely feels like it sets us apart,” said McPhail. “We don't see our competition doing this.”
The move also poses a broader question to the residential energy storage industry: how will it innovate to provide customers with products they really want to buy? The consumer behavior aspect tends to get lost in the race to cut battery costs.
Nevertheless, these are consumer products going into people's homes, and the way they interact with the rest of the home matters. By explicitly connecting the battery with the thermostat, McPhail reframes a potentially alien and obscure object as a natural extension of temperature modulation, a function that everyone knows and understands.
Will this kind of pairing become the norm for home storage?
“If it's not, we have not done our job correctly,” McPhail said.