Smart Thermostats: What They Save and How to Set Them Up

A smart thermostat is one of the cheapest energy upgrades available, and one of the most oversold. It does not make your furnace or heat pump more efficient. What it does is make it easy to avoid heating and cooling an empty or sleeping house, and to adjust settings from your phone. Savings depend entirely on how you set it up and what your habits were before.

What a smart thermostat actually saves

The savings come from setbacks: lowering the heating set point (or raising the cooling set point) when you are asleep or away.

Situation	Typical saving (estimate)	Notes
Gas furnace, 2–3 °C setback overnight and while away	Roughly 5–10% of heating energy	Largest savings in leaky homes and long setbacks
Gas furnace, household already used a programmable thermostat well	Small	Main benefit is convenience
Heat pump, small setbacks (1–2 °C)	Small, sometimes none	Deep setbacks can increase costs
Central AC, raised set point when away	Modest	Pre-cool before on-peak hours

For a home using 2,200 m³ of gas for heating at about 45¢/m³ (roughly $990 a year, estimate), a 5–10% saving is about $50–$100 a year. That is a good return on a thermostat that costs $150–$350 before the rebate, but it is not transformative.

Heat pumps: set it differently

Heat pumps work best holding a steady temperature. A gas furnace can recover from a 3 °C setback in 20–30 minutes. A heat pump running at full speed may take much longer and, if the thermostat is impatient, it calls for electric resistance backup heat, which costs roughly two to three times as much per unit of heat.

Settings for heat pump homes:

Keep setbacks to 1–2 °C, or skip them in very cold weather.
Use "smart recovery" or "adaptive recovery" so the system starts warming early and slowly.
Set an auxiliary heat lockout: electric strips only allowed below a set outdoor temperature, for example −15 °C to −20 °C.
For hybrid systems, set the changeover temperature to switch to the furnace. See our hybrid heating guide.
Use the manufacturer's communicating thermostat if your variable-speed heat pump needs one; a third-party thermostat may only run it in basic stages.

Caution: Many "my heat pump bill is huge" stories trace back to a thermostat letting backup strips run every morning. Check your thermostat's equipment runtime report for auxiliary heat hours.

Matching your schedule to Ontario rates

Ontario's Regulated Price Plan prices, set by the OEB for 1 November 2026 to 31 October 2027, matter more as more of your heating and cooling becomes electric.

Plan	Key periods	Thermostat strategy
Time-of-Use (winter)	On-peak 18.9¢: weekdays 7–11 a.m. and 5–7 p.m.; off-peak 9.1¢: 7 p.m.–7 a.m. and weekends	Heat pumps: keep steady, maybe pre-heat slightly before 7 a.m.
Time-of-Use (summer)	On-peak 18.9¢: weekdays 11 a.m.–5 p.m.	Pre-cool in the morning, let temperature drift up 1–2 °C in the afternoon
Ultra-Low Overnight	3.7¢ 11 p.m.–7 a.m.; on-peak 37.7¢ weekdays 4–9 p.m.	Pre-heat or pre-cool before 4 p.m.; avoid heavy demand 4–9 p.m.
Tiered	Flat 11.2¢ / 13.2¢ above threshold	Timing doesn't matter; focus on total use

Gas prices do not change by time of day, so for gas furnaces, simple setbacks are all you need. Compare plans with our electricity price plan calculator.

Compatibility checklist before you buy

Equipment type: gas furnace, heat pump, hybrid, boiler, or electric baseboard. Standard smart thermostats run on low-voltage (24 V) systems; electric baseboards use line-voltage thermostats, which need a different product.
C-wire: most smart thermostats need a common wire for steady power. If you lack one, check whether the model includes an adapter, or have a technician add one.
Heat pump wiring: check that the thermostat supports heat pump (O/B reversing valve) and auxiliary or emergency heat terminals.
Variable-speed or communicating systems: may need the manufacturer's own control for full performance.
Humidifier, HRV or dehumidifier control: if you want the thermostat to manage these, check accessory terminals.
Wi-Fi coverage at the thermostat location.
Rebate eligibility: check that the model is on the qualifying list before buying.

Tip: Take a clear photo of the existing thermostat wiring and terminal labels before disconnecting anything. Turn off power to the furnace or air handler first.

Features that matter (and those that don't)

Useful:

Occupancy sensing or geofencing (phone location) to set back automatically.
Remote room sensors, which help homes with a cold room or split levels.
Runtime and energy reports, especially auxiliary heat hours.
Outdoor temperature-based controls for heat pumps and hybrids.

Less important:

Voice assistants and large colour screens.
"Learning" features, if you already know your schedule. Some households find manual schedules more predictable.

Rebates and free options

According to Save on Energy, the Home Renovation Savings Program offers a $100 rebate on qualifying smart thermostats through its product route. Income-eligible households may get a smart thermostat free through the Energy Affordability Program or, for Enbridge customers, the Home Winterproofing Program. Programs change, so confirm on https://saveonenergy.ca (opens in a new tab) or https://www.enbridgegas.com (opens in a new tab) and check our rebates directory.

Some utilities and Save on Energy have also offered demand response programs in which you allow brief adjustments to your thermostat during summer peaks in exchange for a credit. Check current offers before enrolling and read the terms.

Setup in five steps

Confirm compatibility (checklist above).
Install or have it installed; turn power off at the furnace switch or breaker first.
Enter the equipment type correctly, especially heat pump, auxiliary heat and fuel type.
Set a simple schedule: for example 20–21 °C when home, 17–18 °C overnight for a gas furnace (smaller setback for heat pumps).
After two weeks, review runtime reports and adjust.

Frequently asked questions

Will turning the heat down at night really save money, since the furnace works harder to catch up?

For a gas furnace, yes. A cooler house loses heat more slowly, so the energy saved during the setback is larger than the energy needed to recover. Heat pumps are the exception when recovery triggers electric backup heat.

What temperature should I set in winter?

Most households are comfortable at 20–21 °C when home and 17–18 °C overnight with a gas furnace. Every degree lower saves a little more. Heat pump homes do best around a steady 20–21 °C.

Can I use a smart thermostat with electric baseboards?

Yes, with line-voltage smart thermostats designed for baseboards, usually one per room or zone. Electrical work should follow ESA requirements; if in doubt, hire a licensed electrician.

Is the $100 rebate worth applying for?

Yes, if your model qualifies. It typically covers a third to a half of the cost. Keep your receipt and model number and apply as directed by Save on Energy.