Smart Metering – Future of Energy Conservation

May 28, 2009
Metering is a fundamental business enabler for the Utility sector companies such as Electricity providers. Electricity is a basic need for virtually every household and business. In the wake of liberalization of energy markets and with growing public awareness and interest in energy conservation, automated meter management or “smart metering” for intelligent metering services is gaining prominence, starting with Europe and now in the US. The vision behind smart metering is that when these meters are collaborating with an in-home display that shows current energy usage, as well as with a communicating thermostat and software that collects and analyzes the information, consumers can see real-time how much consumption drives cost – this awareness will thus will increase the tendency to consume less.
How a “Smart Grid” would let the User and the Utility Company manage power flow

How a “Smart Grid” would let User and Utility Company manage power flow

 Some 50 million old meters in the United States are likely to be replaced by advanced embedded wireless smart meters by 2010 at a cost of about $18 billion, according to a recent analysis by Deutsche Bank. Worldwide, only 6% of electricity, 8% of gas, and 4% of water meters are even automated. In fact, in the electric industry alone, 500 million meters worldwide could be replaced over the next 10 years.

In Europe, Sweden, Finland, Denmark, Netherlands, Norway, and Ireland have mandated (or are in the process of mandating) smart metering. Sweden is the pioneer and is on track to implement smart metering for all electricity meters by 3Q-2009. Governments in Austria, Ireland, Spain and the UK are also encouraging use of automated meter monitoring. Telenor, a Swedish mobile operator, expects the number of wireless M2M connections to exceed regular handset deployment by 2008, driven by the deployment of remote ‘smart’ metering of electricity meters connected to Telenor’s GPRS network.

Close at home in the US, the government is mounting aggressive initiatives for energy conservation including “smart grid” initiatives, where electricity is delivered from suppliers to consumers using digital technology to save energy, reduce cost and increase reliability. About $4.3B in outlays to upgrade the nation’s energy grid has been included in the Obama administration’s $787B economic stimulus package. Such a modernized electricity network is being promoted by many governments as a way of addressing energy independence or global warming issues, and may well represent one of the fastest growing sectors in the GreenTech market. Texas law requires rapid smart-meter deployments.

Utilities are thus spending billions of dollars outfitting homes and businesses with the embedded wireless smart meters, which wirelessly send information about electricity use to utility billing departments and could help consumers control energy use. Recently, companies such as Itron and Digi International have introduced wireless M2M solution bundles optimized for energy services providers. This was instrumental in the launch of TXU Energy’s iThermostat™ energy conservation program, and the platform is designed to support traditional demand response systems in addition to AMI (Advanced Metering Infrastructure) and Smart Grid solutions.

Similarly, Smart power grid company Echelon Corp (ELON.O) and T-Mobile USA DTEG.N announced an alliance to use T-Mobile’s wireless network to link “smart meters” to utilities. Echelon has also entered into a similar alliance with Duke Energy in the development of Duke’s “Utility of the Future” smart metering network.

Likewise, trials are underway in several states by many other utilities such as PG&E Corp (a San Francisco Utility), Connecticut Light & Power Co, Southern California Gas, Delmarva Power (Delaware). GE, in partnership with Florida Power & Light and Cisco began rolling out smart meters in Miami.

On the IT infrastructure side, many players are announcing initiatives to support Smart Grid deployment. IBM has announced plans to speed up Smart Grid deployment with $2 Billion in Financing from its lending and leasing arm, IBM Global Financing. The company also donated its Smart Grid Maturity Model to the Carnegie Mellon Software Engineering Institute to help foster wider adoption of this model. Maturity models are a road map to help users take a technology or practice to its full use. Google has launched a project to provide homeowners with free software that would communicate with such smart meters and allow for the monitoring and analysis of energy consumption trends. Recently Google announced partnerships with eight utilities in smart meter projects to track energy use online.

Despite the promise of smart metering, only a handful of operators are taking the lead. Historically, U.S. utilities have generally focused their business strategies on large capital investments prioritizing mature technologies with well-proven benefits, such as power plants and high-voltage transmission lines. The utility industry is naturally risk averse – it counts on evolution, not revolution. The cutting-edge smart grid technology concept therefore is perceived as revolutionary by the traditionally risk-averse utility industry. Recent policy developments, such as the Energy Policy Act of 2005, are however forcing a cultural shift at many utilities towards focusing on improving reliability, increasing efficiency, and giving customers more control over their energy consumption. 

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