This is a good question, and asked more and more with regards to home automation equipment.

Traditionally, thermostats are connected in series with the equipment they control. The low current requirements of the older style thermostats, allowed them to ‘steal’ power from the circuit they were controlling with no noticeable effect on the HVAC equipment being turned on and off.

With the advent of home automation, the new ‘smart’ thermostats have more work to do and consequently draw more power than before. No longer can they steal power from the circuit; they need their own power source. Typically, this is done by bringing the common wire from the low voltage transformer to the thermostat location. On a simple 2-wire heat only system where you would have had only a red and white wire, you now would use a third wire for the common. The next step is to determine which of the low voltage wires on the transformer is being used as a common. This is accomplished with a small multimeter.

First, set the meter for AC volts. Next, take the red and white wires from the thermostat and twist them together. This should turn on the heating system. Now, place one meter probe on this connection point (where the wires are twisted together). The second probe will now be used to find the common wire of the transformer.

Making sure you are on the secondary (low voltage) side of the transformer, check both wires. One will give you a reading around 0 volts, while the other will read 24 volts (assuming you have a 24v transformer). The wire that gives you a 24 volt reading is your common wire.