Serving customers’ needs should be a top priority for power companies, irrespective of the regulatory construct and business model. Transformation doesn’t change this basic fact, but how do we...
Smart Grid in America and Europe (Part II)
Past accomplishments and future plans.
that 8 million smart meters had already been deployed. 13
Today, based on the numbers, the United States is lagging behind the E.U. in smart meter installation. Where Italy is close to 100 percent deployment, there are no U.S. states close to this level of penetration. In 2010, Italy alone had at least double, or perhaps even three times, the number of smart meter installations compared to the entire U.S. 14 In five years it is predicted that the U.S. will install 50 million meters in addition to the 6.7 million existing meters, bringing the total to close to 60 million. In the E.U. however, there will be 111 million households with smart meters. 15 Despite the numerical differences, common problems have emerged in the E.U. and the United States.
Smart meter deployment has not been smooth and consumers complain they have not experienced the often heralded electric bill savings, but instead have received higher bills. In Texas, one consumer complained that her bill doubled to $745, which was more than her rent. 16 Installed smart meters might not be used for demand response by consumers if new rate structures are not offered to reflect the differences in electricity prices at different times. 17 Automated energy saving appliances might not be connected to the meter, and information evaluation software might not be installed along with the meter. Changing consumers’ behavior requires more than just the meter. It requires price signals, information, and communication platforms that easily allow consumers to control their energy consumption. In order for consumers to respond to price signals, new price structures are necessary. For example, time-of-use-pricing, also known as dynamic pricing, charges less at non-peak times of the day. There is no evaluation yet of the extent of services offered by the meters already installed. In Europe there has been a disappointing amount of interest in energy saving technology on the consumer end. 18
Another issue is who will pay for the new meters. Meters systems can cost from €95 to €340 in the E.U., or $200 to $400 per meter in the U.S. 19 Only 80 to 85 percent of American consumers are willing to pay up to $100 for a meter, and that is if they are guaranteed to save between 10 and 30 percent in electricity bills every month. 20 The E.U. Directive requiring 80 percent of homes to have smart meters by 2020 does not identify funding mechanisms. Because cost recovery is an important driver to implementation, in Eastern European countries the lack of funding prevents smart meter deployment. Different approaches have been taken. Some costs have been covered entirely by consumers, as in Germany. In the U.S., federal stimulus grants have been used to implement smart meters, but consumers are often expected to cover the costs partially. In Maryland, Baltimore Gas & Electric initially proposed a $835 million smart grid rollout, to be recovered over 15 years, of which only $200 million was covered by federal grants. 21 Similarly in Oklahoma, the Oklahoma Corporation Commission preapproved OG&E’s smart grid system plan,