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Nest Labs
          Innovation for Energy and the Environment
Mario Avila, Jeffrey Quackenbush, Carlos Saborio Villalta, and
                       Christopher Yoder




                                                                 S
Executive Summary


  S Nest Labs
    S Smart Thermostat

  S Revolutionizing the heating and cooling industry

  S 42% of consumer home energy expenditures
     attributed to heating and cooling (EIA) or
     roughly $1,000 a year

  S Large thermostat market and an even larger
     home appliances market

  S Savings of $201 per year
Introduction


S 1st and 2nd generation Nest learning thermostats

S Constant connection via a smart phone, tablet, and Internet

S Sold at Lowe’s, Best Buy, Amazon, and the Apple Store

S 130 employees

S Based in Palo Alto, CA

S Kleiner Perkins, Google Ventures, and 5 other well established
  venture capitals
Current and Future Demand/Market

  Typical Energy Consumption of US Households



 $85     $257

                                     Heating and Cooling
                                     Water Heating
 $269                 $1,056         Appliances
                                     Lighting
                                     Electronics
                                     Other
  $287



          $317
Nest Learning Thermostat


S The results of a October 2012 report found that
  homeowners using Nest’s Auto-Schedule and Auto-Away
  features saved 20.1%.4

S Works with 95 percent of all 24V systems including
  gas, electric, forced air, heat pump, radiant, hot
  water, solar, and geothermal
Rich Patent Portfolio



User Friendly Interface       Thermostat Graphical          Thermostat User
 for Control Unit - US         User Interface - US      Interface - US 8,195,313
   2012/0203379 A1             2012/0131504 A1                      B1




 Thermostat With Self-
                               System Methods for
Configuring Connections                                 Adaptive Power Stealing
                             Updating Climate Control
   to Facilitate Do-It-                                   Thermostat – Under
                               Algorithms – Under
Yourself Installation - US                                      Review
                                     Review
   2012/0248211 A1
Tony




                     Chip




                                   Leadership
              Matt



Yoky                        Erik
       John
Market Demand
                                Customer Preferences
      17%                       For Smart Thermostats
                   23%

                                         Cost
                                         Savings
13%
                                         Interface
                                         Ease of Use
                                         Connectivity
 7%                  20%
                                         Reliability
                                         Features
       15%    5%
                         Tugrul U. Daim, Ibrahim Iskin, (2010),"Smart thermostats: are we
                         ready?", International Journal of Energy
                         Sector Management, Vol. 4 Iss: 2 pp. 146 - 151
Thermostat Competition
                                                   Nest Competitors
       $350



       $300



       $250



       $200
Cost




       $150



       $100



        $50



        $-
              Honeywell Heat Only   Honeywell Programmable      Nest       Ecobee Smart Thermostat   Honeywell Prestige
                  Thermostat             Thermostat
                                                             Thermostats
Other Competitors
                                     S   Pulls information from smart
                                         meters and certain GE
                                         products

                                     S   Doesn’t allow customers the
                                         ability to control units remotely
                                         only provides information




S   Tado is currently only sold in
    Germany

S   Free hardware but $126
    annual subscription fee
Current and Future
           Demand/Market

S 91 million households have thermostats with 25 million
  smart thermostat.3

S $200 X 66 million = $13.2 billion             91 million




                                                  25
                                                 million
Economic Analysis
                               Nest Average GHG Emissions Savings by Region
                  0.9                             (U.S.)
                         0.8
                  0.8              0.8
                  0.7
                                              0.6
   Tons of GHGs




                  0.6
                  0.5
                                            0.4
                  0.4                                 0.40.4   Heating (Natural Gas)
                            0.3       0.3                      Cooling (Electricity)
                  0.3
                  0.2
                  0.1
                  0.0
                        Northeast Midwest   South     West
Data: EIA, 2005.
                                  Geographic Region
Economic Analysis
                 Nest Average Energy Bill Savings by Region (U.S.)
          $250
                           $213
          $200
                                      $169           $172

          $150
Dollars




                                                                 $118
          $100

          $50

            $-
                         Northeast   Midwest        South       West
      Data: EIA, 2005.                 Geographic Region
Economic Analysis




 $181             $20          $201
Energy          1.1 Ton        Total
Savings         GHGs          Savings
Learning and Diffusion
                                                                  Smart Thermostat Market
                              30,000,000




                              25,000,000
Number of Smart Thermostats




                              20,000,000




                              15,000,000
                                                                                                                               Nest
                                                                                                                               Industry

                              10,000,000




                               5,000,000




                                       -
                                           2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
                                                                                     Year
Learning and Diffusion
                                                                    Smart Thermostat Market
                              100,000,000


                               90,000,000


                               80,000,000
Number of Smart Thermostats




                               70,000,000


                               60,000,000


                               50,000,000                                                                                       Nest
                                                                                                                                Industry
                               40,000,000
                                                                                                                                Market Saturation

                               30,000,000


                               20,000,000


                               10,000,000


                                        -
                                            2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
                                                                                      Year
Environmental Management
        Systems




                                           Government
Product Standards   Private Partnerships
                                            Programs
Private Partnerships
S Energy providers



                     S Retail stores


                                       S HVAC professionals
EMS Framework
                      Research


      Assess                       Define Strategy
      Strategy                       & Targets




Relationship
                                            Lobbying
Management




           Recordkeeping    Communication
Life Cycle Assessment


S Manufacturing –
  materials, processes, location, regulations

S Transportation – Pacific Ocean, North America

S Energy Savings – energy bill, emissions, geography

S Disposal – silicon, IC’s, no collection program, e-waste

S Minimal impact on water
Externality Analysis


S In using the Nest, customers are reducing GHG’s and
  other associated emissions with power plants based on
  geographic location

S CO2 currently valued at $21/metric ton

S Nest alone accounts for reduction of 744,624.8 metric
  tons CO2/year

S Net savings of $15.6M / year in CO2 costs
Nest Learning Thermostat
Sensitivity Analysis

                            Nest Smart Thermostat Tornado Plot

 Energy Saved




Electricity Price




      Fuel Cost




 Discount Rate




   Capital Cost



  -$500.00          $0.00           $500.00      $1,000.00       $1,500.00   $2,000.00
Sensitivity Analysis
                                $1,200.00
Net Present Value of Purchase




                                $1,000.00
                                                                                Discount
                                 $800.00                                        Rate

                                                                                Capital
                                 $600.00                                        Cost

                                                                                Fuel Cost
                                 $400.00

                                 $200.00                                        Electricity
                                                                                Cost

                                   $0.00
                                            0%       50%   100%   150%   200%
If you don’t trust us, ask them!
1.   http://gigaom.com/cleantech/nest-makes-its-smart-thermostat-er-smarter/

2.   http://bits.blogs.nytimes.com/2012/10/02/nest-second-generation/

3.   http://www.energystar.gov/ia/partners/prod_development/revisions/downloads
     /thermostats/Summary.pdf

4.   http://downloads.nest.com/summer_2012_savings_white_paper.pdf
Nest lab presentation_2013_03_06

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Nest lab presentation_2013_03_06

  • 1. Nest Labs Innovation for Energy and the Environment Mario Avila, Jeffrey Quackenbush, Carlos Saborio Villalta, and Christopher Yoder S
  • 2. Executive Summary S Nest Labs S Smart Thermostat S Revolutionizing the heating and cooling industry S 42% of consumer home energy expenditures attributed to heating and cooling (EIA) or roughly $1,000 a year S Large thermostat market and an even larger home appliances market S Savings of $201 per year
  • 3. Introduction S 1st and 2nd generation Nest learning thermostats S Constant connection via a smart phone, tablet, and Internet S Sold at Lowe’s, Best Buy, Amazon, and the Apple Store S 130 employees S Based in Palo Alto, CA S Kleiner Perkins, Google Ventures, and 5 other well established venture capitals
  • 4. Current and Future Demand/Market Typical Energy Consumption of US Households $85 $257 Heating and Cooling Water Heating $269 $1,056 Appliances Lighting Electronics Other $287 $317
  • 5. Nest Learning Thermostat S The results of a October 2012 report found that homeowners using Nest’s Auto-Schedule and Auto-Away features saved 20.1%.4 S Works with 95 percent of all 24V systems including gas, electric, forced air, heat pump, radiant, hot water, solar, and geothermal
  • 6. Rich Patent Portfolio User Friendly Interface Thermostat Graphical Thermostat User for Control Unit - US User Interface - US Interface - US 8,195,313 2012/0203379 A1 2012/0131504 A1 B1 Thermostat With Self- System Methods for Configuring Connections Adaptive Power Stealing Updating Climate Control to Facilitate Do-It- Thermostat – Under Algorithms – Under Yourself Installation - US Review Review 2012/0248211 A1
  • 7. Tony Chip Leadership Matt Yoky Erik John
  • 8. Market Demand Customer Preferences 17% For Smart Thermostats 23% Cost Savings 13% Interface Ease of Use Connectivity 7% 20% Reliability Features 15% 5% Tugrul U. Daim, Ibrahim Iskin, (2010),"Smart thermostats: are we ready?", International Journal of Energy Sector Management, Vol. 4 Iss: 2 pp. 146 - 151
  • 9. Thermostat Competition Nest Competitors $350 $300 $250 $200 Cost $150 $100 $50 $- Honeywell Heat Only Honeywell Programmable Nest Ecobee Smart Thermostat Honeywell Prestige Thermostat Thermostat Thermostats
  • 10. Other Competitors S Pulls information from smart meters and certain GE products S Doesn’t allow customers the ability to control units remotely only provides information S Tado is currently only sold in Germany S Free hardware but $126 annual subscription fee
  • 11. Current and Future Demand/Market S 91 million households have thermostats with 25 million smart thermostat.3 S $200 X 66 million = $13.2 billion 91 million 25 million
  • 12. Economic Analysis Nest Average GHG Emissions Savings by Region 0.9 (U.S.) 0.8 0.8 0.8 0.7 0.6 Tons of GHGs 0.6 0.5 0.4 0.4 0.40.4 Heating (Natural Gas) 0.3 0.3 Cooling (Electricity) 0.3 0.2 0.1 0.0 Northeast Midwest South West Data: EIA, 2005. Geographic Region
  • 13. Economic Analysis Nest Average Energy Bill Savings by Region (U.S.) $250 $213 $200 $169 $172 $150 Dollars $118 $100 $50 $- Northeast Midwest South West Data: EIA, 2005. Geographic Region
  • 14. Economic Analysis $181 $20 $201 Energy 1.1 Ton Total Savings GHGs Savings
  • 15. Learning and Diffusion Smart Thermostat Market 30,000,000 25,000,000 Number of Smart Thermostats 20,000,000 15,000,000 Nest Industry 10,000,000 5,000,000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year
  • 16. Learning and Diffusion Smart Thermostat Market 100,000,000 90,000,000 80,000,000 Number of Smart Thermostats 70,000,000 60,000,000 50,000,000 Nest Industry 40,000,000 Market Saturation 30,000,000 20,000,000 10,000,000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year
  • 17. Environmental Management Systems Government Product Standards Private Partnerships Programs
  • 18. Private Partnerships S Energy providers S Retail stores S HVAC professionals
  • 19. EMS Framework Research Assess Define Strategy Strategy & Targets Relationship Lobbying Management Recordkeeping Communication
  • 20. Life Cycle Assessment S Manufacturing – materials, processes, location, regulations S Transportation – Pacific Ocean, North America S Energy Savings – energy bill, emissions, geography S Disposal – silicon, IC’s, no collection program, e-waste S Minimal impact on water
  • 21. Externality Analysis S In using the Nest, customers are reducing GHG’s and other associated emissions with power plants based on geographic location S CO2 currently valued at $21/metric ton S Nest alone accounts for reduction of 744,624.8 metric tons CO2/year S Net savings of $15.6M / year in CO2 costs
  • 23. Sensitivity Analysis Nest Smart Thermostat Tornado Plot Energy Saved Electricity Price Fuel Cost Discount Rate Capital Cost -$500.00 $0.00 $500.00 $1,000.00 $1,500.00 $2,000.00
  • 24. Sensitivity Analysis $1,200.00 Net Present Value of Purchase $1,000.00 Discount $800.00 Rate Capital $600.00 Cost Fuel Cost $400.00 $200.00 Electricity Cost $0.00 0% 50% 100% 150% 200%
  • 25. If you don’t trust us, ask them!
  • 26. 1. http://gigaom.com/cleantech/nest-makes-its-smart-thermostat-er-smarter/ 2. http://bits.blogs.nytimes.com/2012/10/02/nest-second-generation/ 3. http://www.energystar.gov/ia/partners/prod_development/revisions/downloads /thermostats/Summary.pdf 4. http://downloads.nest.com/summer_2012_savings_white_paper.pdf

Editor's Notes

  1. Given the obvious demand for energy savings and specifically smart thermostats, Nest will need to focus on how best to meet that rising customer demand. Studying customer preferences to determine how to invest research and development funds is critical for future success.Tugrul U. Daim, Ibrahim Iskin, (2010),"Smart thermostats: are we ready?", International Journal of EnergySector Management, Vol. 4 Iss: 2 pp. 146 - 151
  2. GE Nucleus Home Manager – Requires a smart meter to measure the energy consumption of the home – IEE (Institute for Electric Efficiency) estimates that 1/3 of residential homes currently have smart meters in a 2012 (http://www.edisonfoundation.net/iee/Documents/IEE_SmartMeterRollouts_0512.pdf)
  3. Given that the majority of a typical household’s energy bill (almost 50%) comes from heating and cooling the house, it makes sense to reduce the cost associated with that function. Although http://www.energystar.gov/ia/partners/prod_development/revisions/downloads/thermostats/Summary.pdf
  4. Calculations base on EIA data from 2005:Table SH9. “Average Expenditures for Space Heating by Main Space Heating Fuel Used, 2005 Dollars per Household.” Used natural gas figures. The average expenditure of natural gas for heating per U.S. household is $544 per year. Table AC7. “Average Expenditures for Air-Conditioning by Equipment Type, 2005 Dollars per Household.” Used electricity figures. The average expenditure of electricityfor cooling per U.S. household is $335 per year. Table SH7. “Average Consumption for Space Heating by Main Space Heating Fuel Used, 2005 Physical Units per Household.” Used natural gas figures. The average U.S. household consumes 49,000 cubic feet of natural gas per year. Table AC5. “Average Consumption for Air-Conditioning by Equipment Type, 2005 kWh per Household.” Used central A.C. systems figures. The average U.S. household consumes 3,475 kWh of electricity per year.
  5. Orange Line – Industry Sales Trend “Sales of programmable thermostats have doubles over the last 10 years.3”Green Line – Nest Sales TrendStarted selling October 2011 but had some supply chain issues and couldn’t meet initial demand “Sold at least 10,000 by April 5th, 20121”Since releasing the first Nest last October, sales have been “in the mid-hundreds of thousands” of units, according to the company by October 2012.2
  6. Blue Line – 91 million which is U.S. Market Saturation
  7. Product Standards: Working with ENERGY STAR® on “Program Requirements for Residential Climate Controls - Partner Commitments” and maintain a system to comply with these standards once industry standards are defined.Work with policy makers to develop standards that would increase demand for the Nest Learning Thermostat.Private Partnerships:Establish a system to maintain partnerships with utility companies (electric and gas) in major U.S. metropolitan markets and government to provide Nest, installation, and servicing to consumers in exchange for service contracts. i.e. Nest partnership with Reliant, a Texas-based retail energy provider to offer a Nest thermostat to customers who sign on for a two-year contract. Reliant serves 1.5 million retail customers across Texas, Connecticut, Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, New Jersey and Pennsylvania. http://www.engadget.com/2012/06/25/nest-partners-with-texas-utility-offers-intelligent-thermostat/ Government Programs: Lobby strategically on the state (state legislatures, state EPAs on greenhouse gas reduction, state energy departments, state commerce departments) and federal level (Congress, DOE, department of commerce).
  8. At 20% energy savings, based on EIA monthly average a home consumes 940kWh/month based on this the nest saves about 188kWh/month or about 2.16MWh/year/household this multiplied by the estimated number of nests sold (500,000) leads to an annual energy reduction of 1.08TWh/year from nest alone. This value times the EPA estimated metric ton CO2/kWh leads to an overall reduction of 744,624.8 metric tons CO2Even with current market value in california selling the CO2 trades at 10$
  9. ----- Meeting Notes (12/3/12 09:47) -----Cost of User Time:-assume user makes 75K/yr; workyear 2080 hrs-roughly $36/hr-assume user spends five min weekly programming a simple programmable thermostat (4 hrs/year)-Nest automatically does this saving user money based on their value of time