Weekly Update

The Internet, Privacy Concerns Will Shape the Smart Grid

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

For the past six years, the Federal Energy Regulatory Commission (FERC) has tracked smart meters and demand response around the United States. FERC’s 2010 report just came out (PDF), and the baseline figures — advanced meters reached 8.7 percent of the country last year, up from 4.7 percent in 2008 — come as little surprise, given last year’s stimulus-fueled smart meter boom.

Amidst the expected trends, however, a few facts and figures stood out that might be worth more attention. Those include targeted states and utility segments where smart meter penetration is reaching critical mass, as well as the dominance of the Internet in connecting customers and utilities and what that might mean for the future of ZigBee’s smart meter-to-home aspirations. Finally, there are some harsh words on consumer data privacy, a subject that’s going to get a lot more attention in 2011. Here’s a breakdown:

Electric cooperatives, states of Oregon, Arizona and Idaho, lead on per-capita smart meter deployment. Multi-million smart meter deployments by big investor-owned utilities (IOUs) get all the news, but smaller rural electric co-ops are winning the per-capita smart meter race, with nearly 25 percent penetration. “Political subdivisions” like public utility districts were at 20.3 percent, while investor-owned utilities stood at 6.6 percent. While big utilities have the most meters, many aren’t deploying any yet. It will be interesting to see what co-ops and companies like Tantalus that serve them will do with their highly-metered customers, which add up to 42 million (and 17 million meters) around the country. Co-ops aren’t regulated like investor-owned utilities; they can try new technologies and techniques more freely.

FERC’s report also found that Arizona, Oregon and Idaho led all states in per-capita smart meter penetration, with Arizona Public Service and Salt River Project, Portland General Electric and Idaho Power doing big deployments. California has the most smart meters at 14.8 million, making it an important market to watch, as well as second-place Pennsylvania and third-place Texas.

The Internet is way ahead of home area networks to link utilities to homes. FERC reviewed about 8 million U.S. utility customers receiving load control and pricing data last year, and found utilities used the Internet for about two-thirds of them, or about 5.4 million customers. Old-fashioned bills and invoices — the kind of communications that OPower now does — make up almost all the rest at just over 2.5 million. In-home displays connected via smart meters were hardly used at all for fewer than 100,000 customers.

That’s not surprising; only a handful of pilot projects now connect smart meters to household displays. Still, it underscores a big debate in the industry over whether meter-to-home connections will ever reach mass adoption. Sure, nearly 81 percent of North America will have home-connectible smart meters by 2013, Pike Research predicts, mostly via low-power ZigBee radios. But low-power wireless can’t compete with Internet connections on bandwidth and speed, and some suggest utilities could buy each customer a broadband connection instead of using their smart meters’ radios. How that might affect smart meter business cases that rely on meter-to-home energy connectivity remains to be seen.

Smart meter privacy is a huge worry. Amidst the relatively mild language of FERC’s 2010 report, some harsh words about consumer data privacy stood out — in short, most utilities and vendors aren’t ready to protect it. “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 report authors wrote. While millions of meters are now being deployed, it’s unclear if they’re providing the kinds of privacy protections federal rule-setters like FERC, the Department of Energy and the National Institute of  Standards and Technology are considering.

The problem is, “it is unclear if existing laws and regulation mitigate the associated risks,” the report authors warn. The lack of clear guidelines for smart meter privacy is a major area of uncertainty for the industry, but 2011 is gearing up to be a watershed year for setting guidelines in place. Several state regulators are now pressing forward with new utility data privacy rules, including in California, where a 2010 state law sets privacy guidelines, and other states are following suit. No doubt about it, consumer privacy will be a huge area for discussion in the coming year.

Question of the week

How will smart meter data privacy be regulated in 2011, and how will utilities and vendors meet those regulations?