Do Smart Thermostats Save Money? Evidence & Research

Drafted with AI writing tools, then edited and fact-checked by Kritin Curtis. How we research.

Smart thermostats promise lower energy bills through automation and learning, but the evidence on actual savings is mixed. Research shows moderate quality evidence that heating controls can save energy when properly set up, but some studies found smart thermostats do not save more than other control types. What you save depends on your usage habits, system compatibility and climate.

What Smart Thermostats Actually Do

A smart thermostat allows you to remotely control heating and cooling through your Wi-Fi connection. According to the Australian Government Department of Climate Change, Energy, the Environment and Water, these devices can set heating and cooling schedules, learn and adjust for occupancy and preferred temperature settings, and set different temperatures in different parts of the house.

The key difference from a programmable thermostat is the learning capability and remote access. Most connect to your smartphone, letting you adjust temperature from anywhere.

Many also track energy usage and provide reports on consumption patterns. Some respond to local weather forecasts to optimise heating and cooling before temperature changes arrive.

What Does the Research Say About Savings?

The evidence on energy savings is surprisingly mixed. A research review published in Renewable and Sustainable Energy Reviews found moderate quality evidence that heating controls can save energy when appropriately commissioned. However, the same review also found evidence that smart thermostats do not save energy compared to other control types.

Manufacturers claim savings anywhere from $10 a month to 23% on yearly bills. But actual savings depend on many factors including how much energy you usually use, how much your utilities cost, and climate conditions.

The variation in results suggests that smart thermostats work better for some households than others. Homes with irregular occupancy patterns or where heating and cooling run unnecessarily may see genuine savings. Homes already running efficient schedules may see little change.

How Do Smart Thermostats Try to Save Energy?

Smart thermostats use several strategies to reduce energy consumption. Scheduling lets you heat or cool only when someone is home, avoiding energy waste during work hours or overnight.

Geofencing detects when your phone leaves or approaches home, adjusting temperature automatically. Learning algorithms study your preferences and adjust heating and cooling without manual programming.

Some models monitor local weather and adjust settings proactively. Others integrate with home energy management systems to coordinate with solar panels or battery storage.

For air conditioning specifically, products like Sensibo offer intelligent algorithms that optimise operation by reacting to local weather conditions. According to a 2024 report from IEEFA, Sensibo products start at AUD149 and offer full control from anywhere via smartphone, seven day schedules, and geo-fencing.

What smart thermostats actually do — illustration — AI-generated illustration

What Factors Affect Your Actual Savings?

Your starting point matters most. Households that previously left heating or cooling running all day will see larger savings than those already using a schedule.

Climate plays a significant role. Homes in mild climates use less heating and cooling, so percentage savings translate to smaller dollar amounts. Extreme climates offer more opportunity for savings but also more risk if settings are poorly configured.

Energy prices in your area directly affect dollar savings. Higher electricity or gas rates mean each kilowatt-hour saved is worth more.

Your HVAC system's efficiency matters too. An old, inefficient system wastes energy regardless of thermostat intelligence. A modern, efficient system leaves less room for improvement.

Occupancy patterns influence results. Households with unpredictable schedules benefit more from learning and automation than those with fixed routines.

Are Smart Thermostats Compatible With Australian Systems?

Compatibility is a critical consideration. Energy.gov.au advises checking that the thermostat is compatible with your appliances before you buy.

Not all smart thermostats work with every type of heating and cooling system. You need to double-check compatibility with your air conditioner or heat pump, and confirm if it can handle the voltage and wiring configurations of your current setup.

Most smart thermostats use thin, low voltage wires and require consistent power through a C-wire or 'Common Wire' that provides constant power from your HVAC control board, according to ENERGY STAR.

If you see thicker wires for line-voltage control when removing your old thermostat cover, that indicates your HVAC system may not be compatible with most smart thermostats.

Australian homes often use ducted air conditioning or split systems. Many smart thermostats designed for North American forced-air systems do not work with these configurations. Look for products specifically designed for Australian HVAC systems or universal controllers that work with infrared remote controls.

Can You Install a Smart Thermostat Yourself?

Some smart thermostats can be installed by the householder but this varies between products, according to Energy.gov.au. Some are designed for easy DIY installation involving just a few wires and a smartphone app, while others might require professional installation especially for complex systems.

For work involving fixed wiring, Australian electrical safety regulations require a licensed electrician. Check with your state's electrical safety regulator for specific requirements in your area.

Even for low-voltage thermostat work that may be DIY-friendly, professional installation ensures correct wiring, proper configuration and optimal placement. Incorrect installation can lead to poor performance, wasted energy or damage to your HVAC system.

Before attempting DIY installation, confirm your system voltage and wiring configuration. If you are unsure, consult a licensed electrician or HVAC technician.

Australian suburban home exterior at golden hour showing a ducted air conditioning condenser unit on a — illustration — AI-generated illustration

What About Privacy and Data Security?

Smart thermostats collect data about your usage patterns and temperature preferences. It is important to understand the manufacturer's privacy policy and how your data is used.

The devices connect to your home Wi-Fi network, creating a potential entry point for cyber attacks if not properly secured. The Cyber Security (Security Standards for Smart Device) Rules 2025 are the first set of rules to mandate cyber security standards for most types of consumer grade smart devices acquired in Australia, according to Energy.gov.au.

Look for products that comply with these standards and offer regular security updates. Strong passwords and network security help protect your smart thermostat and other connected devices.

Some systems send data to cloud servers for processing and storage. Review what data is collected, where it is stored, how long it is kept, and whether it is shared with third parties.

Smart AC Controllers vs Built-In Smart Thermostats

For Australian split-system air conditioners, smart AC controllers offer an alternative to replacing your existing thermostat. These devices connect to your air conditioner's infrared receiver and provide smart control without modifying your HVAC system.

Sensibo can act as a cloud-based home energy management system for multiple air conditioning units through its energy saver plan, costing AUD2.49 per month, and claims to have more than 250,000 households subscribed globally, according to the IEEFA report.

These controllers work with any infrared-controlled air conditioner, making them compatible with most Australian split systems. They offer scheduling, remote control, geo-fencing and energy monitoring without requiring any installation work.

The subscription model for advanced features is worth considering when calculating long-term costs and potential savings.

What About Matter and Future Compatibility?

A coalition of large tech companies including Apple, Google, Amazon and Samsung have developed Matter, a new global open source interoperability smart home standard that applies to HVAC controllers, according to the IEEFA report.

Matter includes an energy management function to track and report on energy usage in real time. This standard aims to ensure devices from different manufacturers work together seamlessly.

If you are investing in a smart thermostat now, Matter compatibility may provide better long-term integration with other smart home devices and platforms. However, the standard is still rolling out and not all features are available on all platforms yet.

For readers interested in broader smart home integration, our guide on Smart Home for Beginners: How to Start Without Wasting Money covers platform compatibility and building a connected home system.

Should You Buy One for Your Home?

Smart thermostats make the most sense for households with irregular schedules, poor existing temperature control habits, or high heating and cooling costs. They offer convenience and potential savings, but are not guaranteed money-savers.

Before buying, confirm compatibility with your specific HVAC system. Check that there is local customer support available, as Energy.gov.au recommends.

Consider your current heating and cooling patterns. If you already use an efficient schedule and adjust temperature manually when leaving home, a smart thermostat may offer little additional saving.

For those with solar panels or battery storage, integration with home energy management systems can optimise self-consumption. Our article on Amber Electric and Your Smart Home: Automating Wholesale Prices explores how smart devices can respond to time-of-use pricing.

If you are looking to monitor overall energy usage beyond heating and cooling, Best Smart Energy Monitors in Australia (2026): Buying Guide covers devices that track whole-home consumption.

Sources

FAQs

Do smart thermostats work with ducted air conditioning?

Some smart thermostats work with ducted air conditioning systems, but compatibility varies by product and system type. Many models designed for North American forced-air heating do not work with Australian ducted systems. Check the manufacturer's compatibility list before purchasing, and confirm whether your ducted system uses compatible control protocols. Smart AC controllers designed for infrared control work with split systems but not ducted units.

How much can I actually save per year?

Actual savings vary widely based on your current usage, energy prices, climate and system efficiency. Manufacturer claims range from $10 per month to 23% on yearly bills, but research shows mixed results. Households that previously left heating or cooling running unnecessarily see the largest savings. Homes already using efficient schedules may see minimal financial benefit, though convenience and remote control remain valuable.

Are smart thermostats hard to set up?

Setup difficulty depends on the product and your HVAC system. Some models designed for DIY installation connect in minutes with a smartphone app and simple wiring. Others require professional installation, especially for complex systems or when upgrading from non-programmable thermostats. Work involving fixed wiring must be done by a licensed electrician in Australia. Smart AC controllers that use infrared typically require no installation work at all.

Do I need a subscription for a smart thermostat?

Most smart thermostats include basic features without a subscription, including remote control, scheduling and learning. Advanced features like detailed energy reports, extended weather integration or multi-unit management sometimes require paid subscriptions. For example, Sensibo's energy saver plan costs AUD2.49 per month for cloud-based energy management across multiple units. Review the feature list to understand what requires payment.

Will a smart thermostat work during an internet outage?

Most smart thermostats continue basic heating and cooling control during internet outages, following their last programmed schedule. Remote access via smartphone stops working without internet, and features that depend on cloud processing become unavailable. Learning and weather-based adjustments may not function until connection restores. The device typically reverts to a safe default schedule rather than shutting down entirely.

Can smart thermostats help with solar panel systems?

Smart thermostats can help optimise energy use with solar panels by scheduling heating and cooling during peak solar production hours. Some integrate with home energy management systems to coordinate with battery storage, using stored solar energy for climate control rather than drawing from the grid. Matter-compatible devices offer energy tracking that can show how much solar power goes to heating and cooling versus other uses.

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Do Smart Thermostats Save Money? What the Evidence Shows