Support : eNewsletters : Eye on Innovation : Issue 4, September 2011

Smart meters: Yea or nay?

Rolling blackouts nationwide, record heat waves in the Midwest, electricity outages for hundreds of thousands along the east coast—weather and natural disasters are taking their toll on the U.S. electrical grid. Electricity is basic to the functioning of modern society. It also plays an important role in enabling the use of renewable energies to their full potential. Countries worldwide face the enormous challenge of expanding and modernizing power grids to satisfy the foreseeable, growing demand for electrical energy over the coming decades. Energy security, economic efficiency and minimal environmental impact are the three pillars of a sustainable energy system.

The smart grid serviced by smart meters is the latest innovation to modernize electrical systems worldwide. Yet, some consumers are wary of smart meters. This issue of Eye on Innovation explores both sides of this controversy, reviews how nations worldwide are handling smart meters and which countries are taking the lead, and identifies the movers and shakers.

Smart grid vs. smart meters 101

The most fundamental aspect of the smarter electricity system is the smart meter. A smart meter replaces analog mechanical meters with digital meters that record usage in real time. These meters provide a communication path extending from generation plants to electrical outlets. Smart meters usually involve real-time or near real-time sensors, power outage notification and power quality monitoring. Note that smart meters may be part of a smart grid, but alone do not constitute a smart grid.

Here's how it works. The new meters transmit readings via wireless signals to a network that is established when the meters are installed. The data is routed from meter to meter until it reaches a collector, which is a box mounted on existing poles; from there the data is aggregated and sent to the power company using already existing communications infrastructure.

Sources: Inspec®, Ei Compendex®, McGraw-Hill Publications, Business Week

Why a new approach to power?

Although adding new transmission lines will help the utilities get more power from the power plants to homes and businesses, many communities don't want new power lines, and increasing capacity, although needed, will not make all the old electrical equipment reaching the end of its useful life more reliable. Those favoring a smart grid advocate for a new approach that significantly increases the efficiency of the entire electrical delivery system. This approach, they say, will not only increase reliability, but also reduce energy in the delivery process and thus reduce greenhouse emissions. While demand may not be reduced any time soon, it can still be "organized" so that both power companies and consumers can avoid overtaxing the system during periods of peak demand. There are differences of opinion to this notion.

Building for tomorrow

The smart grid initiative brings together leaders and innovators from a number of established and emerging industries, as well as system integrators and consultants who have been involved in some of the early smart grid projects. Utilities, governments, environmental watchdogs and others are touting the smart grid and its smart meters. Here's why.

Designed to lower peak demand for energy and allow consumers to better control their energy use and costs, smart meters can:

• provide enhanced customer service through more flexible billing options
• let customers monitor their electricity use and tailor their consumption to promote conservation
• respond more effectively to power outages
• eliminate traditional electricity meter estimates
• lower electricity theft because they are tamper-proof
• record electricity use of customers in real-time
• make people more aware of how many of the world's resources they're consuming

These enthusiasts say the smart grid and its smart meters are vital to the world's economy, its ability to incorporate alternative energy to fight global warming and keep power greedy users from usurping too much energy.

Consumer backlash

Smart meters, however, have sparked heated controversy among residents who are concerned about their health and the privacy of their energy usage.

_{Credit Creative Commons Attribution-Share Alike 3.0 Unported license}

Picture this— one side of the smart meter story.

Your house has no air conditioning, and you keep the heat down low in the winter (like 50 before you get tired of freezing). The utility company comes out every so often to check your meters to make sure you didn't bypass them because your energy usage is so low.

Voila, utility companies install smart meters. And before long, a call from the electric company tells you to set your thermostat to 65 degrees in the winter (instead of 50), making your heating bills spike. In the summer you get another call to set your thermostat at 75 so your furnace turns on to heat the house to that temperature!

Is Big Brother watching? Is this the Brave New World of Aldous Huxley? Some consumers think so and are worried.

Across the United States utilities are moving forward with smart meter installation, despite that not everyone believes in their benefits. Several major issues—privacy, health, control and cost— have state governments, utility companies and citizens at loggerheads. Some issues include the following:

• RF/EMF emissions from meters that transmit data also emit radiation, and some are concerned about the health risks.
• The meters transmit information about usage, storing much personal data on electricity usage, which could violate privacy if not safeguarded.
• New meters have spawned complaints of inaccuracy. There are fears that the utilities will use this as a way to charge consumers more for electricity if they use it during peak times.
• There are concerns that the utility could unilaterally control some portion of your usage (heat, lights, etc.).

In states including California, Texas and Connecticut, resistance to smart meters has grown so high and widespread that temporary or permanent bans on these devices have been imposed or debated. Californians fear radiation from wireless communications devices in meters, and Texans unexpected increases in electricity bills. In fact, Itron, one of the largest companies, designing, manufacturing, servicing and installing smart meters across the United States, says they and utilities have not done a good job educating people about the safety issues. This needs to change. A recent California Public Utilities Commission (PUC) ruling aimed at protecting the privacy and security of utility customers' electrical usage data generated by smart meters is a start.

Consumer backlash has spread. In the United Kingdom citizens are skeptical about smart metering costs and benefits. The Dutch worry about home security as utilities gather more detailed information on domestic energy use. If citizens are to be persuaded the smart grid is a good thing and are to be talked into helping make it work to best advantage, they will have to be convinced of its public benefits and assured its downside can be managed.

Sources: Dialog NewsRoom, Global Reporter, Marketwire, IEEE Spectrum Gale Group PROMT®, Business & Industry™, Gale Group Trade & Industry Database™, PR Newswire, Business Wire, McGraw Hill Publications.

On the horizon—a global smart grid?

Despite the controversy over smart meters, According to energy market research specialists, Pike Research, the smart meter market worldwide is on a roll. Manufacturers shipped nearly five million meters in early 2011 — a 22.7% increase over the same time period in 2010. Looking ahead, forecasts suggest the global smart meter market will exceed 71 million units by 2015 — a 5-year compound annual growth rate of 25.3%. The report anticipates significant adoption in Asia/Pacific and Latin American countries. It also notes that smart meters are quickly becoming a standard in North America, with small and mid-market utilities joining the trend toward smart meter solutions.

Forecasted growth is 26% in Europe with the United Kingdom holding the highest growth potential among all European countries. The British government has announced plans to install 53 million electricity and gas smart meters in homes and businesses by 2019, while the French energy regulator Commission de régulation de l'énergie (CRE) has created guidelines for mandatory implementation requiring all electricity consumers to have smart meters by 2016. Sweden attained 100 percent smart meter penetration in 2010 while Italy's deployment is almost complete with 33.5 million smart meters installed through 2010. The three hotspots in Europe will certainly be France, the United Kingdom and Spain that are expected to witness high growth levels in smart meter installations in the next two to three years.

An upgraded forecast shows strong adoption of smart meters in the Asia Pacific region. China, in particular with a global installation base approaching one billion by 2020, announced in the 12th Economic 5-year plan that smart meters play a key role in its economic vision. South Korea has also embarked on a Smart Grid Demonstration Project, encompassing various initiatives in the smart energy space. Singapore has also joined the bandwagon with its "Intelligent Energy System.

Sources: Gale Group PROMT (Business Wire); Frost & Sullivan; World News Connection

Movers and shakers

_{Credit Creative Commons Attribution-Share Alike 3.0 Unported license}

Which vendors will be best able to profit from these trends? According to Frost & Sullivan, Echelon is a clear leader in the European smart meter market. Echelon's open standard smart grid communications and control technology was one of the first in Europe, and 81% of installed meters there are based on that technology. Echelon also holds enviable market shares in Italy, Denmark, Sweden, Norway, Austria, Finland and Russia. And the company recently announced a major partnership with China-based global metering company Holley Metering Ltd. to provide metering technology to the huge smart grid China market.

Landis+Gyr shared the market in Europe with Echelon in 2010. However, the playing field changed in May when Japanese Electronics giant Toshiba announced it was acquiring Swiss meter maker Landis+Gyr, one of the old-timers of electric metering in Europe and a serious smart meter competitor in the U.S. With the Toshiba deal, the Japanese are now turning their attention to the smart grid, and other Asian countries like Korea may do the same.

Slowly, but surely, cellular is catching on as a viable option for smart meter communications. Itron puts cellular modules right into the meters themselves. Popular applications can include multifamily locations and college towns, distant or expensive to reach field locations, seasonal homes and prepaid electric customers. Itron and Elster, leaders in smart metering and distribution systems, may cut into the leaders' share.

Sources: Frost & Sullivan, Business Wire

What's next?

Close to two-thirds of all utilities plan to increase their smart meter expenditures between 2012 and 2015. The number is expected to be lower in North America (54%) and higher internationally (85%) with regulations largely driving European and Chinese smart meter adoption. It appears the growth of the industry will be characterized by regional waves of adoption, beginning with the North American market, which will peak in 2012, followed by a peak in Asia Pacific in 2015, in Europe in 2017, and more gradual long-term growth in Latin America, the Middle East, and Africa. It is anticipated that smart meters will represent the majority of all installed electrical meters by 2018, and the smart meter penetration rate will reach 59% by 2020.

Smart meters are only one piece of the smart grid—abeit an important part. Will consumers accept them? Will better information result in reduced use of energy to justify the investment? Countries worldwide are trying to make the smart grid a reality. With global economic instability and oil prices in flux, will they succeed?

Source: Datamonitor Market Research

top of page