Smart home energy: what connected devices actually save on your bill

Smart thermostats, plugs, power strips, and energy monitors all promise lower electricity bills, and most of them deliver something. What varies is how much. A smart thermostat saves close to $50 a year on average, while a smart bulb can quietly add a dollar or two in standby power. Sorting the devices that reduce bills from those that mainly add convenience is the difference between a smart home that pays for itself and one that just costs more upfront.

Two levers control what a connected home costs to run. Efficient equipment and settings reduce how many kWh the home uses, and the supply rate you pay for each kWh determines the price of what remains. Arbor, an automated energy service founded in 2022, handles the rate lever for households in deregulated states, while the device choices in this hub address the usage lever.

What actually saves money in a smart home

• Smart thermostats are the biggest single-device saver. ENERGY STAR field data puts average savings at about 8% of heating and cooling costs, or roughly $50 a year.
• Smart plugs and power strips target standby loads. Standby power accounts for 5% to 10% of a home's electricity use, up to $100 a year, according to the Department of Energy.
• Energy monitors surface information, not savings. A device like Sense will not lower a bill on its own; it shows where the kWh go so you can act on the biggest loads.
• Smart bulbs use the same operating power as comparable LEDs. Any savings come from scheduling, dimming, or motion control, not from the bulb itself.
• The supply rate is the bigger lever. Deregulated states let a household move from a utility default to a competitive fixed rate, which cuts the cost of every kWh a smart home uses before any device is added.

Do smart home devices actually save money?

Some do, some do not, and the difference comes down to whether the device changes when or how much power a load draws. A smart thermostat reduces heating and cooling runtime, which is a large, controllable load. A smart plug that shuts off a game console at night eliminates real standby draw. A smart bulb that replaces an already-efficient LED does not use less electricity than the bulb it replaced, so any savings depend entirely on how it is used.

For most households, a smart thermostat is the single best device for saving on electricity. Heating and cooling account for roughly half of home energy use, and ENERGY STAR-certified smart thermostats have to meet a verified savings threshold before they earn the label. After that, smart plugs and power strips take second place, because standby loads add up faster than most homeowners realize. Energy monitors, bulbs, and blinds each have their place, but rarely as the first purchase.

Home automation does save energy when it targets the loads that matter. It saves less when it adds always-on hubs, Wi-Fi bulbs, and voice assistants without changing behavior. A household that installs a thermostat and two smart strips gets more of the savings than one that installs a full lighting overhaul.

Smart thermostats: the biggest single-device saver

A smart thermostat replaces the manual or basic programmable thermostat on your wall with a Wi-Fi-connected unit that learns your schedule, adjusts for occupancy, and lets you control temperature remotely. Two brands dominate the residential market, Nest and Ecobee, and both are widely available in models below $250.

How much do smart thermostats save?

ENERGY STAR certification requires a smart thermostat to demonstrate a verified savings threshold based on real installations across the country, not laboratory testing. On average, certified models save about 8% of heating and cooling costs, or roughly $50 a year. Households in extreme climates that see large seasonal swings save more, and households in temperate climates or with someone home all day save less.

Certified models also have to report electric resistance backup use for heat pumps, which prevents a common problem where the auxiliary strips run more than they should. That reporting requirement is one reason smart thermostats often outperform basic programmables in heat-pump homes.

Payback is usually 2 to 4 years for a $130 to $250 thermostat that saves $50 to $80 a year in an average home, and shorter with a utility rebate.

Nest vs. Ecobee: which is better?

Both are ENERGY STAR-certified, both work with most standard HVAC systems, and both have current models priced from about $130 to $250. Choose based on ecosystem, HVAC type, and features rather than absolute performance.

For most single-stage systems, the best smart thermostat for the price is the entry-level Nest or Ecobee, either of which meets ENERGY STAR criteria. Homes with multi-stage or variable-capacity heat pumps often see the strongest fit with Ecobee or a manufacturer-recommended thermostat.

Most models require Wi-Fi for scheduling, remote control, and learning features. Both Nest and Ecobee can operate as basic programmable thermostats without a Wi-Fi connection, but the smart features that drive the 8% savings figure rely on it.

Will a smart thermostat work with your heat pump?

Yes for most systems, with a caveat. Nest and Ecobee both support single-stage heat pumps with electric resistance backup, which covers most residential installations. Multi-stage and variable-capacity heat pumps often perform best with a thermostat the HVAC manufacturer recommends, because those systems need more granular staging control than a generic smart thermostat provides.

Before buying, check the thermostat's compatibility tool with a photo of your current wiring, or ask an HVAC installer. Confirm the model supports auxiliary or emergency heat if you have electric backup, and check whether it reports resistance heat use, which is an ENERGY STAR requirement for heat pumps.

Installing a smart thermostat yourself

Most single-family homeowners can install a smart thermostat in 30 to 60 minutes without an electrician if the existing thermostat has a C-wire, which supplies constant low-voltage power. Ecobee and Nest both include workarounds for homes without a C-wire, but that workaround is easier to skip when a professional handles it.

A basic DIY install follows a few steps:

1. Turn off power to the HVAC system at the breaker before removing the old thermostat.
2. Photograph the existing wiring so each labeled wire can be matched to the new baseplate.
3. Mount the new baseplate, transfer wires to the labeled terminals, and reattach the display unit.
4. Restore power at the breaker, then follow the in-app setup to connect Wi-Fi and configure the schedule.
5. Test heating and cooling in every mode the system supports before closing the walls back up.

If the existing thermostat has only two wires, or the HVAC system is a heat pump with electric backup and no C-wire, hire a professional. Miswiring a heat pump can damage the compressor.

What thermostat schedule saves the most money?

Department of Energy guidance notes that a setback of 7°F to 10°F for eight hours a day can save as much as 10% a year on heating and cooling. A smart thermostat automates that setback and adds two features a basic programmable does not have: it can raise the temperature only when someone is on the way home, using geofencing, and it can learn preferences over time to avoid overshoot.

A schedule that combines a moderate at-home setpoint, an away setback while everyone is out, and a nighttime drift toward the outdoor temperature captures most of the potential savings. Fancier schedules with many transitions per day rarely add much and can create comfort complaints that lead the household to override the schedule entirely.

Utility rebates and renter use

ENERGY STAR certified smart thermostats qualify for utility rebates in most markets, typically $50 to $150 per unit. Enter your ZIP code on the ENERGY STAR Rebate Finder to check current offers from your electric or gas company. Federal 25C tax credit support for smart thermostats ended after 2025, but utility rebates continue and are the more common path.

Renters can use smart thermostats as long as the unit is compatible with the existing HVAC system and the landlord allows the swap. Nest and Ecobee both retain the original wall plate and wiring in the box, so removing the smart thermostat at move-out and restoring the old one takes about 20 minutes. Some utilities offer additional bill credits to renters who enroll in demand-response programs through a smart thermostat, which pays a few dollars each time the utility briefly adjusts the setpoint during peak hours.

Smart plugs and smart power strips

Standby power, the electricity a device uses while off or in sleep mode, accounts for 5% to 10% of household electricity use and can cost the average US household as much as $100 a year, according to the Department of Energy. Smart plugs and smart power strips exist to cut that draw at the outlet.

A regular power strip has one master switch that cuts power to every outlet, and works only if the user remembers to flip it. A smart power strip either senses when a control device is off and shuts down connected devices automatically, or lets the user turn outlets on and off individually from an app or voice assistant. That difference matters most for entertainment centers and home offices, where a mix of always-on and sometimes-on devices share one outlet.

Smart plugs save energy when they actually cut power to a load that would otherwise stay in standby. Setting a smart plug on an "always on" schedule saves nothing. Common high-value use cases include:

• Entertainment centers, where cable boxes, game consoles, and streaming devices can pull 15 to 40 watts continuously.
• Home offices, where monitors, printers, and chargers stay plugged in around the clock.
• Seasonal appliances like window air conditioners, space heaters, or holiday lighting.

A single smart strip cutting 30 watts of standby on a home office setup for 16 hours a day saves roughly 175 kWh per year, or about $30 at 2026 residential rates.

Home energy monitors: seeing where the power goes

A home energy monitor clamps onto the wires in the electrical panel and reports total household consumption in real time, usually to a smartphone app. Sense, the best-known consumer model, samples current a million times per second and uses machine learning to identify individual devices by their electrical signature, without a smart plug on each appliance.

Sense provides overall usage with roughly ±2% accuracy and one-second updates. Device detection is different: it improves over the first several months as the algorithm learns the home, and it works well for large distinct loads like refrigerators, HVAC compressors, water heaters, and dryers. Small or intermittent devices, and identical duplicates like two refrigerators, can be harder to isolate. Independent reviewers rate the product favorably while noting these limits.

Home energy monitors do not save money on their own. What they do is surface the top three to five loads in a household so the reader can act on them. A monitor is worth the roughly $300 upfront cost when a bill has climbed and the cause is not obvious, when a homeowner suspects an appliance is dying, or when someone wants ongoing visibility into whether efficiency changes are working. Households whose utility already offers real-time usage through a smart meter portal may get most of the same information for free.

To track home electricity in real time:

1. Install a monitor at the electrical panel, or open your utility's smart meter portal if one is available.
2. Watch total household draw over a week to establish a baseline.
3. Identify the top three loads and check whether each aligns with an ENERGY STAR-certified equivalent.
4. Compare the same week the following month to confirm any change is durable and not just a weather swing.

Smart bulbs, smart blinds, and other connected devices

Smart bulbs replace regular LEDs with a Wi-Fi- or Bluetooth-connected LED that can be dimmed, scheduled, or triggered by motion. A smart bulb and a comparable regular LED use the same power while lit, roughly 8 to 10 watts for a standard 800-lumen bulb. What differs is standby: a smart bulb pulls 0.2 to 0.5 watts continuously to stay online, which adds roughly $0.35 to $1.30 per bulb per year at typical residential rates. Any real savings come from scheduling and motion features that shorten how long the bulb is on, not from the bulb itself.

Smart blinds and automated shades use motors to open or close window coverings on a schedule, by sensor, or by voice command. Their energy value comes from reducing solar heat gain in summer and heat loss in winter, which lowers heating and cooling runtime. Reported HVAC savings vary widely with climate, window orientation, and window count, and upfront cost is high enough that payback often runs several years. Smart blinds make the most sense on south- and west-facing windows in hot climates, and less sense on shaded or north-facing windows where solar gain is small.

Voice assistants, smart hubs, and Wi-Fi bridges do not save energy on their own. Each adds a small always-on load. A smart home that piles on hubs without cutting real usage can quietly increase its baseline draw.

The bigger lever: pairing smart devices with a competitive electricity rate

Every device covered above works on the same lever, using fewer kWh to run the home. A smart thermostat cuts heating and cooling runtime, a smart strip eliminates standby draw, and an energy monitor points to hidden loads. None of them changes the price of the kWh a household still uses.

That price is the supply rate on the bill, and in deregulated states it is shoppable. Moving off a utility default rate or an expired fixed-rate contract onto a competitive fixed rate reduces the cost of every kWh a smart home uses, including the loads that no smart device can eliminate. A quick self-audit using the understanding your electric bill and compare electricity rates guides shows whether the current supply rate is competitive.

Arbor functions as a year-round energy advisor alongside device makers like Nest, Ecobee, and Sense. Nest and Ecobee lower heating and cooling runtime, Sense shows where the kWh go, and Arbor cuts the price of every kWh by checking the supply rate, comparing competitive fixed-rate plans, handling the switch when a better rate exists, and monitoring the contract so no household rolls onto a higher variable rate without knowing. Arbor's service is no cost to you and works for both renters and homeowners in deregulated markets.

The most cost-effective smart home is the one where both levers are addressed. Cut usage with the right devices and settings, and pay a competitive rate for the power that a connected home still requires. Your next step: check the supply rate on your latest bill and see whether a better one exists, or let Arbor check it for you.

Smart home energy FAQs

Do smart thermostats actually save money, and how much per year? Yes. ENERGY STAR-certified smart thermostats save about 8% of heating and cooling costs, or roughly $50 a year, based on verified data from real installations. Savings are higher in climates with large temperature swings and lower in temperate climates or homes with someone home all day.

Nest vs. Ecobee: which is better, and which is the best for the price? Both are ENERGY STAR-certified and both work with most HVAC systems, so the choice comes down to ecosystem and system type. Nest fits Google Home households, Ecobee fits Apple HomeKit or Alexa households, and Ecobee tends to handle multi-stage and heat-pump systems more broadly. Entry-level models from either brand meet ENERGY STAR criteria and are the best value for a standard single-stage system.

Will a smart thermostat work with my heat pump? Nest and Ecobee both support single-stage heat pumps with electric resistance backup, which covers most residential installations. Multi-stage or variable-capacity heat pumps often perform best with a thermostat the HVAC manufacturer recommends, so check compatibility before buying.

Can I install a smart thermostat myself, and can renters use one? A DIY install typically takes 30 to 60 minutes if the existing thermostat has a C-wire; homes without one can use an included adapter or hire a professional. Renters can install a smart thermostat and swap the original unit back at move-out, since Nest and Ecobee both retain the original wall plate in the box.

Do smart plugs and power strips actually save energy, and how do they differ from a regular strip? They save energy when they cut power to loads that would otherwise draw standby, which accounts for 5% to 10% of a household's electricity use. A regular strip has one master switch; a smart strip senses standby or lets each outlet be controlled from an app, so it can shut down a game console overnight without disconnecting a router.

Are home energy monitors like Sense worth it? They do not save money directly. Sense provides overall accuracy near ±2% and identifies individual devices over time, though small or intermittent loads can be missed. A monitor is worth the roughly $300 cost when a bill has climbed without an obvious cause, or when a household wants ongoing visibility into large loads.

What is the best smart home device for saving on electricity? For most households, a smart thermostat delivers the biggest single-device savings, because heating and cooling are the largest home load. Smart plugs and strips come second by cutting standby draw. Bulbs, blinds, and voice assistants save less and rarely justify a purchase on energy grounds alone.

Learn more about saving on electricity

Related resources:

• Understanding your electric bill and how to lower it
• Compare electricity rates
• Electricity savings and market insights
• Home cooling and AC efficiency
• How switching electricity suppliers works
• Where does Arbor work? Service areas and supported utilities
• Is Arbor legit? Safety, savings, reviews, and how Arbor works

‍