How do you say sugar daddy in Irish?

by Steve Blum • , ,

Finally, an electric utility is taking the plunge on home automation. Electric Ireland announced a deal with Nest, the Google-owned company which makes a networked thermostat that learns your habits and controls your home heating and cooling system accordingly.

New customers who sign up for a 2 year contract with Electric Ireland get a free Nest thermostat, including installation. Existing customers who extend for another 2 years pay €99 (about $123). the device goes for $249 in the U.S. Figuring in the cost of installation and using Irish retail pricing assumptions, though, the value of the device is €374 ($464).

Contrary to fears expressed by some, it’s not the beginning of a long slide into subsidy hell for the home automation sector. The Irish electricity market is competitive and the Nest deal is certainly an excellent marketing tool, but that’s an incentive to go first, not a make or break condition. As I’ve said in the past electric utilities, in competitive markets or not, can use home automation devices to cut costs by managing electricity usage down. It’s an extension of the smart meter concept, not an embrace of the profit killing mobile handset subsidy model.

But it doesn’t need to stop there. The first gizmo might be free, but there are more to buy. Besides its own, branded products, Nest is promoting compatible devices ranging from a security camera to Whirlpool washers and dryers to a Mercedes. And as products are added, the value of the control platform grows. Even if the first freebie can’t be justified on pure subscriber acquisition costs alone, the energy management benefits will eventually make up the difference. After that, it’s a profitable new business for electric companies.