Smart Thermostat Market - Growth, Trends, and Forecast (2020 - 2025)
The smart thermostat market was valued at USD 849.14 million, in 2019, and is expected to reach a value of USD 2858.63 million by 2025, at a CAGR of 23.1% during the forecast period (2020 2025). Lighting and other household appliances consume a considerable amount of energy and presently there is a dire need to use these energy resources efficiently. Therefore, governments are emphasizing on the use of smart devices in homes.
The main factors driving the need for smart thermostat are the convenience, energy conservation, energy tracking, and need for an increase in potential savings. For example, Ecobee claims its gear can save an average of 23 percent off bills whereas Google's Nest claims its systems can save between 10 and 12 percent on heating and 15 percent on cooling.
The BYOT (BringyourownTechnology) trend is expected to stimulate the growth of the market over the forecast period. Consumers have independently begun purchasing smart WiFi enabled thermostats capable of receiving demand response control signals. Additionally, with a wifi connection and smart thermostats, virtual assistants, like Amazon Alexa, or Google Assistant, are increasingly being used to control and monitor the home temperature, program schedules, or manage the Air conditioning.
It was estimated that around 60.5 million Americans used virtual personal assistants and voicecontrolled speakers at least once a month, according to an investment firm Cowen & Co. Also, in 2017, 24% of Americans used Amazon Echo and 31% used Google Home for home control settings following music, shopping, and requesting information applications. With the increase in the use of virtual assistants in home control, the forecast period is likely to witness the exponential adoption of smart thermostats.
Covid19 Impact: Smart thermostat market is highly dependant upon China for hardware manufacturing. According to Business Standard, the Chinese exports were badly affected by Covid19 as the exports declined by 15.7% in April. The decline in the exports put Smart thermostats manufactures in a tough position. Furthermore, the rise in tariffs on Chinese manufactured product by U.S. has also added pressure on Smart Thermostat manufacturers like Ecobee who are dependent on China for hardware.
Key Market Trends
Increasing Demand for EnergySaving Devices
According to the US Energy Information Administration (EIA), the global energy demand grows at 2.1 % per year to 2040 with the current stated policies scenario. The demand surge will raise the electricity share in 2040 to 24 %. The use of technologies, changes in government policies, developing economies and market conditions are driving the growth of lowcarbon sources to maintain the environment levels. Electricity consumption has a direct effect on the carbon footprint as electricity generation requires the burning of nonrenewable resources and leads to the carbon footprint.
HVAC systems consumed 38% of the delivered energy in buildings in 2019, this percentage is going to grow in the coming years. The need to save electricity expenses and unnecessary energy consumption made by HVAC systems has to lead increase in the usage of Smart Thermostats. There are various brands in the market with the aim of sustainable future Ecobee, Nest Labs, Siemens AG, Emerson electric to name a few. The usage of smart thermostats is also backed up by governments of the United States, Germany, United Kingdom, etc.
AsiaPacific to Witness a Significant Growth Rate Over the Forecast Period
Consumers are adopting the smart assistant devices, such as Amazon Echo and Google Home for many purposes, with almost onethird of people using it as an information provider responding to questions, and over 40% as an audio speaker for listening to streaming music. The smart thermostats find application among the smart assistants, thereby, fueling its demand across the residential sector across the region.
Moreover, the Chinese government launched the 'NewType Urbanization Plan,' focusing primarily on newtype, smart, and humanities city construction from 2014 2020.
Besides, in India, the IGBC (Indian Green Building Council) Green Homes are the first rating program that has been developed, exclusively for the residential sector, whose objective is to facilitate the effective use of site resources, water conservation, energy efficiency, handling of household waste, optimum material utilization, and design for healthy, smart homes.
This will encourage industry players to invest in smart home space, thus, having a positive impact on the smart thermostat market growth.
The smart thermostat market is not very fragmented, and competitive. Due to the government's support and promotion for the uptake of smart devices in residential buildings, many smart home vendors have entered into the market, making it competitive. Some of the key players in the market include Alphabet Inc. (Nest Labs Google), Honeywell International Inc., ecobee, Schneider Electric SE, and Lennox International Inc., among others. Some recent developments in the market include:
January 2020 Nest labs rolled out a new feature that alerts the customer about any potential HVAC issues. It also assists the customer in booking an HVAC professional to fix it. This new feature is because of Nest labs partnership with Handy.
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