Blog Post

Opinion: Smart Meters Are Not the Answer to the U.S. Power Problem

Subodh Nayar is the Chief Operations Officer of Powerline Telco

Empowering consumers with actionable intelligence about their power will not be the outcome of the deployment of smart meters. Rather, it will be exactly what the utilities intend for it to be: a cost-effective way to implement real-time pricing, demand side management and distribution system monitoring.

Why? The buyer and seller of electricity have opposite power consumption interests. We (buyers) want to have control over the total power we consume and independent confirmation we are getting what we pay for. Electric utilities (sellers) seek to maximize the profits from a business model that requires them to generate, transport and deliver a consistent quality of power — regardless of demand — in exchange for a guaranteed rate of return.

Electricity generated on the power grid isn’t stored, so the grid is engineered and operated to meet peak levels of demand, which might only exist for a few hours per month. Without control over demand, responding to demand spikes will cause the quality of power supplied to fluctuate outside accepted norms, i.e., delivered voltage lags outside the 5 percent acceptable quality band, or frequency fluctuates outside its 2 percent quality band. That can only change if demand can be controlled, so utilities want three things from smart meters:

  1. To protect their return on investment (ROI) by not reducing the total amount of electricity sold.
  2. To free up supply reserved for unpredicted variations in peak demand with direct load control. (If the utility was granted direct control over devices with the highest amperage — the air conditioner (40 amps) and the hot water heater (30 amps) — it could shed 70 percent of the average consumer load, temporarily reducing consumption.)
  3. To reshape the demand curve, shifting demand from the peak busy hours to when demand can be met with baseload power (peak load shaving).

Metering has never been intended to reduce overall consumption.

A smart meter could report on whole house electricity usage, but it could not report on the demand from individual household devices. To make intelligent decisions about energy use, measurement should take place at the outlet, in the device or even on the power cable connecting the device to the outlet. This information can also track the quality of the power being delivered, which can affect the life of the device. Current, temperature and time data could be collected inexpensively, using existing technology, and transmitted over an Internet connection to one of the many service providers with a business intelligence platform. This data can be mined to reveal power quality issues that affect consumption. For example, a low voltage reading will tell you that the device will need to draw more current, increasing the total power cost for that device. Or if your dishwasher were drawing a current for longer than similar appliances, that could alert consumers that a maintenance check is in order.

While price signals, along with consumer education, might have an effect on total demand, they could also have an unintended consequence: If a drop in the price per kilowatt-hour becomes the key indicator of when to run the dishwasher, hot water heater and washing machine, then using it may actually increase total carbon emissions because the cheapest electricity today is mostly from coal. By using more electricity when it’s cheapest, we’ll burn more coal.

There is little doubt that smart metering will meet the utilities’ needs, and perhaps facilitate whole house measurement for the buyer. But direct device monitoring is a simple, inexpensive way to effect a shift from a grid blind to demand and engineered to meet peak demand to smart customers who can manage the way their power is delivered.

19 Responses to “Opinion: Smart Meters Are Not the Answer to the U.S. Power Problem”

  1. Jeremy: A “smart meter” does nothing in itself. You need controls to perform any kind of action. That means relays or “smart breakers”, etc. Who is paying for that? Will you as a home owner? It’s one thing to replace incandescent lights with CFLs – please do it! It’s another to install a new breaker panel, rewire your appliances, etc….. And then for what? If it shouldn’t be on, why is it on. If it should be more efficient, replace it with something more efficient. For AC, smart thermostats have been around for a while – nothing new there – no metering necessary. Google simply wants information about EVERYTHING, including your behavior patterns and your electrical usage tells a story. If they could sift through you garbage with a scanning device, I’m sure they would.

  2. Jeremy

    This information is not exactly correct. Google is working on a smart meter that would measure your usage in zones, thus allowing you to control the usage in your home in zones instead of as a whole, much the way breakers allow you to shut down only parts of your electric at a time instead of the whole home.

  3. Unfortunately, I don’t think there has been much debate. Our fearless leaders were convinced and our money is being spent as we speak! I was in a workshop last Friday. Folks are lining up with their proposals to receive this money. And the money must be allocated by Sept 2010 – not much time to deliberate on the best engineered solutions for something this large.

  4. This POV brings up some excellent issues that are not being discussed. Are rate and tax payers funding a huge bailout for the IT, meter manufacturing and utility industry? We’ve been implementing “smart” metering at large industrial/commercial/institutional customers for years. I was also involved with utility demand side management decades ago – you can do it without millions of meters. It DOES NOT improve the end user IQ. If the end user ignores the information, there is little benefit. How many residential customers will have the time/interest to watch their power consumption in “real time”? Or analyze the vast stores of historical data this will accumulate? Negligible. If you want people to change their energy consumption behavior, change the rate/tariff. There is great potential to improve the efficiency of the grid but millions of meters are not needed. I’m afraid these meters will simply be IT nodes as a platform for the utilities to sell you additional services you don’t need. Maybe we’ll be watching HDTV from a meter connected to a WiMax cloud. Or be able to order our pizza and see how much we saved by not using our own oven…. Look who is sponsoring these efforts – IBM, Cisco, Nortel, etc. (http://www.ibm.com/ibm/ideasfromibm/us/smartplanet/topics/utilities/20081124/index2.shtml) …. How many new data centers will be built to support this change? – I can tell you it is huge!

  5. Petter J. Karal

    Jim M.,

    You are correct that I am not very familiar with the domestic US debate over smart meters. You may be right about them being oversold by their proponents – I would not know.

    In general, though, I believe that smart meters are a good thing for both the climate and for the efficiency of the electricity grid. They can play a vital role in paving the ground for massive wind and solar energy, which are energy sources we must tap if we want a cleaner energy mix.

    An efficient electricity grid is desirable in any society, even one where regulators do such a poor job that most of the benefit accrue to the utilities.

  6. I agree the viewpoint in the editorial is long overdue. But I think Petter may miss some of the justifications that are being used to sell these programs in the US. These metering programs are being sold as a way for utilities to help their customers reduce their energy consumption and spend. As a consumer, the utility is the last entity I trust to lower my energy spend. They sell energy, and while they and I do have a shared interest in helping me consume when it costs them less to produce, the utility’s interest stops there. I have a an additional interest in lowering my overall energy spend. That is the entrepreneurial opportunity here, and it seems more likely to come from outside the electric utilities.

    Regarding the ‘environmental benefits’ of demand response, the UD DoE specifically warned against attributing any environmental benefits to demand response in a report to Congress in 2006. In short, they see the problem as well.

    Lastly, should we spending stimulus money on a technological approach whose primary benefit is allowing utilities to fire meter readers?

  7. Petter J. Karal

    The arguments in this column seem flawed to me.

    1. Consumers and producers have opposite interests: I cannot see how this is substantiated. In any relationship between a buyer and a seller, there is an element of opposite interest (e.g., the price level). However, when consenting adults enter into a transaction, it is because both believe they benefit from it. And in the case of power generation and consumption, I believe that it is clear that it is neither in the interest of consumers nor of producers to use extremely expensive peak power for needs that could just as well be met during off-peak.

    2. Smart meetering has never been intended to reduce overall consumption: Maybe, but it may still be a part of the answer. “Smart” demand based on price signals is one of several steps one could take to improve the electricity system.

    3. Shifting demand off the peak could increase total carbon emissions: This is highly speculative. A smart grid is a key factor in being able to accommodate large quantities of wind and solar power in the grid, which of course reduces carbon emissions. Furthermore, the peak capacity is today typically produced by natural gas plants that mostly idle – the carbon footprint per KWh becomes quite high when the entire plant is only run once in a long while.

  8. I second Marco’s welcome to this posting. Thank you for voicing this POV.

    Given all the attention that “Smart Grid” is getting now it seems very important to start to make distinctions between what the utilities are doing and the public interest of reducing energy use and carbon emissions.

  9. “Empowering consumers with actionable intelligence about their power will not be the outcome of the deployment of smart meters.”

    This statement is correct – that’s also not what smart meters are inherently for. Smart meters will allow power companies to eliminate on-site meter reading which comprises a large operating expense to their business. It’ll lower their costs and improve their profitability – even at the same power prices.

    What your suggesting is compelling, but I don’t know that the industry is really mature enough for that type of meter to be more than a novelty.

  10. I welcome this posting as taking some of the hype about “smart” meters away. If the main motivation is only about load shaving (i.e. cost), there is no saving (i.e. price reduction) nor conservation. Perhaps only more profits for the power company.

    To reduce consumption we as individuals need to take control and know which of our appliances are using electricity, how much and when.

    It is true that in more competitive markets like most European countries have, power companies have more motivations in reducing consumption and in fact are much more active in that.

  11. Two questions
    a) perhaps the post went out early, but why is no author attributed to this guest editorial?
    b) what about decoupled electric utilities? If properly decoupled, is there not an incentive for reduced consumption of electricity?