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Grid Regulator: The Internet & Privacy Concerns Will Shape Grid

The Federal Energy Regulatory Commission is the big daddy of utility regulators in the U.S., which makes it worthwhile to read between the lines of  its biannual reports on the U.S. smart meter and demand response markets. Amidst the predictable broad market trends — yes, yawn, smart meters keep growing — the report also contains a few tidbits that could help guide players in the smart grid sector.

In my weekly report at GigaOm Pro (subscription required), I delve into a few of the items that stood out in my reading of FERC’s latest report released this month (PDF).

First up, FERC notes the dominance of the Internet, versus utilities’ smart meter networks, when it comes to delivering fluctuating energy prices to consumers (where utilities offer different rates at different times of day to encourage energy use during off peak times). FERC surveyed utilities delivering variable pricing data to some 8 million U.S. utility customers, and found that most were using the Internet to deliver them.

Old-fashioned bills and invoices make up almost all of the remainder, while smart meter-to-customer network connectivity was hardly used at all. Many utility smart meter business cases plan on using meter-to-customer communications to help manage energy use and deliver pricing data, often via ZigBee radios — but if broadband takes over as the dominant route into the smart energy home, that could cause a problem for those plans.

Then there’s the matter of consumer data privacy, which earned some rather pointed comments from a report otherwise couched in mild and formal regulator-ese. “The existing business policies and practices of utilities and third-party smart grid providers may not adequately address the privacy risks created by smart meters and smart appliances,” the FERC report authors wrote — about as close as you’d expect a regulator to come to calling out the industry it regulates.

The comments underscored a major area of uncertainty for the industry, with utilities and regulators struggling to catch up to the latest technology deployments, and consumers already starting to fight back against misunderstood intentions. This year could well be the year that smart grid privacy finally becomes a must-do, rather than a oft talked-about, subject.

Much of the rest of the report tracks the growth of smart meters, which accounted for 8.7 percent of the meters in the U.S. last year, up from 4.7 percent in 2008. While that’s still just a sliver of the overall U.S. market, in some regions the penetration of digital, two-way communicating meters is approaching 20 percent or higher. Big utility deployments in Arizona, Oregon and Idaho have driven those states per-capita meter penetration past 25 percent, while California takes the lead in overall deployments with 14.8 million meters installed.

Interestingly enough, however, it’s the smaller world of electricity cooperatives that lead in terms of per-capita penetration, with nearly 25 percent of co-op customers now outfitted with smart meters. Beyond their deeper penetration, co-ops don’t have the same stringent regulations as investor-owned utilities do. That could make them early test beds for new technologies and techniques, and make vendors that specialize in serving them, such as Burnaby, Canada-based Tantalus Systems, up and coming companies to watch.

For more research on smart meters, check out GigaOM Pro (subscription required):

Image courtesy of Tom Rafferty via Creative Commons license.