By Jesse Berst

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Given my (admittedly cynical) attitude, I was delighted to see today's announcement from EcoFactor about the success of its automated approach to home energy management.

EcoFactor takes in data about a home's energy consumption, about its thermal characteristics (how well it retains heat, for instance), about the weather forecasts, and more. After crunching the data to come up with a customized plan for each home, it takes control of the home's communicating thermostat and micromanages its settings. A just-released study demonstrates that this approach can simultaneously decrease energy use while maintaining (or even improving) comfort.

How so? EcoFactor changes the settings much more often than a human would – more than 1,000 times per month per home. Each micro-adjustment saves a tiny amount of energy. Aggregated, those small amounts achieve impressive totals.

EcoFactor cofounder Scott Hublou calls this "picking up nickels." Most people won't bother to pick up a nickel. And certainly not 1,000 times per month. But EcoFactor's automated system picks up every one it can. Thanks to these thousands of micro-adjustments, the HVAC system runs less – 17% less on average, the company says. Hence the savings, which average about $30 per month for homes with a single thermostat and about $55 per month for those with multiple thermostats.

The EcoFactor system also has the ability to pre-cool or preheat homes to shift load away from peak periods. In this fashion, EcoFactor improves both energy efficiency (using less energy overall) and demand response (shifting energy use away from the peaks). As a bonus, the EcoFactor system is often able to pinpoint HVAC systems that are in disrepair by comparing actual performance to rated performance.

Although results vary by time of year and region, EcoFactor's automated system has achieved strong results in both energy efficiency and demand response.

I will let you study the results in more detail, as summarized in the nearby illustration and as explained in the press release. As you do, I think you'll notice four important lessons about the home energy management market.

1. Start with HVAC before you mess around with dinky loads from appliances. The HVAC system often represents 50% of a home's energy use. That's where the big opportunity lies. (Next in line: electric water heaters, pool pumps and electric vehicles.)

2. It's about data not about hardware. Scott Hublou pitches his company as "big data people" with expertise in analyzing massive amounts of data. They combine meter data with information about weather and information about the thermal characteristics of each house and more. That's how they gain their edge.

3. Think smart systems not smart people. Most of today's HEM vendors (and most utilities) are putting way too much emphasis on making people smart. With somewhere between $2 and $10 per month at stake from possible energy savings, most homeowners are not going to micromanage their energy usage. What they will do is tweak their preferences several times per year… provided they then have an automated system to enforce those preferences for them.

Hublou puts it this way: "Long-term results won't come from behavior changes. They will come from automation."

4. Think alternative channels to utilities. EcoFactor is cooperating with utilities, but it is going to market primarily through "home service providers" -- HVAC companies, alarm companies, cable companies, telcos, etc. They allow those companies to sell "EcoFactor-enabled" products. It is also working with big box "gadget guys."

When it works with utilities, EcoFactor's attitude is (my words not theirs): "Hey... we're going to be installing these devices anyway. Would you like to get credit for the resulting energy efficiency? Would you like to tie them into your demand response program? If so, help us seed the market with rebates and incentives."

I applaud EcoFactor's early results, but we're just at the beginning of the automated phase of home energy management. There's much, much more we can do to make our systems smart about energy so our consumers don't need to be.

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Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking strategic and M&A advisory. A frequent keynoter at industry events in the US and abroad, he serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment Directorate.