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Let's Get Going: Smart Meters Go Global

For 25 years, I've written and lectured about the need for smart metering, often concluding by saying, "Someday, utilities will use all that data."

Now, suddenly, the idea of smart metering and a smart grid have captured the interest of utilities and governments. Many other countries are replicating the North American experience. Utilities that once used metering data for little more than billing are now planning to deploy smart meters and use the meter data to improve their business operations.

It now seems inevitable that every First World country will be starting smart metering projects within the next decade, and every major city in developing countries will also start such projects.

The smart metering industry is so young that it also seems likely that worldwide standards will remain minimal and will have little effect on industry growth. Where standards are employed, they will probably be regional -- not international. So growth will include multiple generations of products, as well as an evolution of interfaces, equipment and services that will gradually converge over the next decade.

In the United States, the change came with the election of Barack Obama, whose interest in climate change led to advocating wider use of renewable energy and the eventual use of battery-powered electric vehicles.

The emphasis in the utility metering industry has shifted from advanced metering infrastructure (AMI) to smart metering. This is especially true among electric utilities. Gas and water utilities are also supporting smart metering, but with less fervor.

The drive toward smart metering is a worldwide phenomenon. Early successful work on AMI was concentrated in Canada, so there is a strong North American emphasis on smart metering beyond just the United States.

In November, China announced a smart metering project encompassing 170 million meters and an estimated budget equivalent to approximately $10 billion. In February, the project was expanded to 200 million smart meters, to be completed in three to five years.

The European Commission mandated smart metering in April for all electric, gas, water and heat meters, and put mandatory dates on electric metering -- 80 percent by 2020 and 100 percent by 2022. Many European countries have already passed laws with tighter deadlines than those mandated by the EC.

Worldwide there are approximately 2 billion electric meters, of which 150 million are in the United States, 300 million in Europe and 350 million in China as well as smaller numbers of meters in Canada, Australia and New Zealand. Although other countries with a combined total of about 1.2 billion electric meters have not made a smart metering commitment, it's unlikely that they can avoid the trend.

Key drivers

With the United States now participating in the Kyoto Protocol Replacement effort, it's inevitable that this new protocol will enjoy broad support in the United Nations. Because electricity generation is a key contributor to carbon emissions, most countries will need to better manage what they generate, and the only way to measure usage is through metering.

Equally important is the fact that smart metering will be a huge new industry worldwide. Deployment rates for smart metering will probably rival the deployment rates for cell phones and the Internet.

Countries that take an early, strong lead will have the best opportunities to produce the equipment that will be used by the rest of the world.

The key challenge is the word "smart." No collection of meters or sensors or communication systems makes a system smart. The smarts come from software systems that collect and process the metering data in conjunction with other utility information. Some of the smarts are expected to come from systems that do not yet exist, but a greater challenge is the need to interface with most other software systems currently being operated by the utility. For almost all electric utilities, these systems are not commonly managed and networked.

Even the most basic smart systems need information from a variety of other systems. A good example is an outage. In a smart environment, such a problem is broader than most robust, outage systems can handle. First, the outage must be automatically identified. This is usually accomplished by noticing the absence of information, for example, sensors not reporting, meter readings not increasing and communications not working. Locating the outage requires collecting information from many other systems such as CIS, GIS, metering, communications and engineering.

A smart system does more than identify the problem. It may notify affected customers, assuming that the customers' communications are not also out. And it will also start resolving the problem. It will evaluate the whole area affected by the outage, and try to reroute the energy to minimize the affected area. It will also try to identify whether specific equipment is nonworking, and route repair crews to the correct location. The new smart systems will also try to ensure that these crews either have the right replacement equipment on the truck, or identify where it is in inventory, or automatically initiate communication with suppliers or other utilities if replacements are not in inventory.

Simply stated, smart systems do more than collect information. They take action.

Some large utilities in the United States have already started the process of integrating existing systems to facilitate their move to becoming smart. One clear challenge has emerged from this effort - few utilities have the same systems, and many existing systems were homegrown or are out-of-date. In the United States there are over 3,000 electric utilities, and worldwide there are many times that number. The challenge to integrate existing systems will require many thousands of separate efforts.

Equally challenging, the software and hardware interfaces that connect network equipment to existing software systems are often different from one utility to another and from one equipment supplier to another. Also, the software systems are often different and store the data in different formats. Becoming smart will require a massive software effort worldwide, with at least minimal commonality among finished solutions when they are completed a few years from now.

A major challenge for the U.S. Department of Energy and similar government entities around the world will be to define standards. Though this effort will likely bear fruit eventually, the only way that the resulting standards will encourage trade worldwide is if they are open and flexible and can serve the needs of many countries. The likeliest outcome is a repeat of the CDMA fiasco in the cell phone industry many years ago -- standards that limit trade with other countries.

Why take action now?

We must take action now because there is a worldwide consensus that smart utility systems are needed and will probably lead to a better quality of life.

This type of consensus is rare, the result of political change, economic near-collapse, pending environmental disaster and technology that can solve the problem. Never before in this industry have so many governments worldwide simultaneously agreed to solve problems in a consistent way.

However, these times of consensus are fleeting. Other disasters will occur, there will be other crises to be resolved, and they will take attention away from smart grid. The time for action is limited.

The utility industry must take action now, or something else will take away the support of our leaders and the funding from our governments and ratepayers.

The choice facing every utility is simple. Do you want to address these challenges now while you enjoy a broad base of support or do you want to wait? Waiting will probably squander this opportunity, allow this brief time of consensus to pass, and force utilities to address these same challenges in a more oppressive environment.

Now is the time to move to a smart grid.

Howard Scott - PH. D.'s picture

Thank Howard for the Post!

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Bob Amorosi's picture
Bob Amorosi on Oct 1, 2009

Very inspiring article in making the case for realizing smart grids everywhere. It is however quite sobering because of the vast myriad of incompatible systems out there already employed by utility companies.

I agree standards adoption for smart meters and smart grid is badly needed, but this is only to lower costs and provide utility companies multiple vendors to buy equipment from in the future. Standards will obsolete many of the legacy systems already in use. Why? Because systems already in use were never designed with the communications interfaces or with highly flexible software upgrade capabilities that we have all become so familiar with in personal computers and the internet. The cost to modify legacy systems already in use can easily become much higher than simply replacing them with all new ones, simply because it will all be customized work for any particular utility.

There is a false perception that standards adoption will solve everything alone. Technology standards are indeed crucial when systems must communicate globally with other systems. This is what has enabled the computer, cellular telephone, and internet industries to become so successful and pervasive on a global scale where every manufacturer's hardware is capable to communicate and exchange data or software with each other, or use the internet to reach each other anywhere in the world. Alternatively a utility company’s systems and smart grid interfaces will not always need this global compatibility. For example asset management and outage management functions will only need devices to communicate within the utility company itself, and not necessarily with a neighboring utility or one halfway around the world.

Unlike consumers who routinely replace their cell phones, digital cameras, or computers quite often, utility companies have minimal financial incentives to replace legacy systems or even adopt customized smart grid interfaces to them in a timely manner. Standards adoption must therefore also be accompanied by regulatory reforms to enable utilities to make money in other ways besides rate base income, otherwise it will take decades for smart grid technologies to be deployed throughout an entire utility grid.

Standards adoption for consumer devices that must communicate with smart grids are even more critical because these have the greatest potential for communications commonality on a global scale. For example consumers are only going to accept a new plug-in electric car that must communicate with smart grids, say for charging management, as long as the car works with any smart grid they might travel to.

Joseph Somsel's picture
Joseph Somsel on Oct 1, 2009
Didn't you forget someone? Like the customers?

"[T]he idea of smart metering and a smart grid have captured the interest of utilities and governments..."

However, when the residential customer is exposed to some of the realities of smart grids, rejection occurs. They smack of soft depotism and become intrusive to the personal liberties we Americans consider our birthright.

Plus, savings to the average family are unlike to be realized.

Watch for political pushback when the reality hits. Just like bans on incandescent light bulbs, remote control thermostats, and food content controls (trans-fats) It might well be an issue in the 2010 elections.

Bob Amorosi's picture
Bob Amorosi on Oct 1, 2009

You may indeed be very correct about a looming political backlash from consumers about smart grids. We relish our freedom to consume as much affordable energy as we like, whenever we like. Smart grids will effectively promote energy rationing using Time-Of-Use rates on consumers, or otherwise higher utility bills unless we strive to reduce total consumption through efficiency or conservation measures. This will not sit very well with the public because it will force behavioral change on consumers.

You're overlooking something else though. Say the political backlash against smart grids erupts and many of these smart grid plans are pulled back substantially. When the electricity grid system starts crashing more often from the inevitable growing energy consumption demand down the road, and from the grid’s inability to handle more renewable source generators, and the charging of massive numbers of electric cars, what level of public backlash do you think could happen when the lights don't stay on reliably anymore?

Joseph Somsel's picture
Joseph Somsel on Oct 1, 2009
Ultimately, it is the government that is creating the shortages and requiring the alternate energy requirements. They create the problem then steal some power over us to fix it. This scenario plays out over and over.

The answer is build more transmission and develop more energy sources and electrical generators. It worked before!

Bob Amorosi's picture
Bob Amorosi on Oct 2, 2009

It is believed by many in positions of power and authority over the regulated electric utility industry that simply building many more conventional large central generation plants alone to meet future energy needs is painfully more expensive, and more harmful to the environment, than implementing efficiency upgrades, promoting more energy conservation, fostering widespread renewable source generation, and fostering smart grid technology to support them and support energy rationing on a grand scale. The resulting total reduced consumption is meant to slow future growth in demand, and that my friend among other things means changing the behavior of consumers using smart grids and smart meters.

Another goal of smart meters with Time-Of-Use billing is to promote some flattening of daily load curves to reduce somewhat the daily peak-to-off-peak demand ratio. This will utilize more of the unused off-peak capacity of existing central generators so as to reduce the need for new peaking plants.

One only has to look around at what legislators are spouting out around the globe. North America, Australia, and now Europe are banning the commercial sale of incandescent lighting in favor of much more efficient fluorescent or LED lighting. Wide screen televisions are now being mandated in California and by the Energy Star agency people with huge gains in power efficiency standards. Many countries including Canada are offering and expanding substantial tax breaks and other consumer subsidies to upgrade heating and air conditioning systems, or ditch their old inefficient appliances by replacing them with new high-efficiency ones. There are also large subsidies rolling out for businesses to upgrade their building and machinery efficiencies with retrofits. The Obama administration has already imposed dramatic improvements in future automobile fuel efficiency standards, and is currently in an accelerated process to get electric vehicles and utility smart grid standards defined and implemented.

In essence governments are fervently attempting to minimize the need to build conventional large central generators. Sorry Joseph but building lots more of them in North America is not the biggest item on policy makers' radar screens anymore, and probably wont be for a very long time to come. You will see however much more long distance transmission lines built in the near future into remote rural areas to enable new wind and solar farms, because renewable source generation is currently getting massive financial support from government policies.

Joseph Somsel's picture
Joseph Somsel on Oct 6, 2009

I did a piece here on EnergyPulse of the fallacy of "negawatts." Politicians have embraced negawatts since it offers them a politically safe, if imaginary, haven from making hard decisions about energy generation. "Efficiency" has no NIMBYist opponents nor anti-efficiency advocates.

Even Republicans have proposed "all of the above" as an energy policy but that is clearly avoiding hard decisions and lacks the leadership our country requires.

I think we have made a mistake in putting efficiency and alternative generation as our lead technologies and have long argued with articles and comments here and elsewhere. The chickens are coming home to roost - the cost to our liberties and to our economy from this ill-conceived policy are becoming increasingly apparent to the general public. Hopefuly, before it is too late.

Bob Amorosi's picture
Bob Amorosi on Oct 6, 2009

I fear you may be correct. I for one am supportive of building at least some conventional large central generators to meet future needs, even if it's in combination with the huge efficiency and alternative generation pushes going on.

Down the road our electricity rates will skyrocket as I predict, but this alone will not change the course our policymakers are one. But if rates climb in combination with a severe decline in the reliability of the grid in many places, and the majority of consumers also reject the consumption behavioral changes being imposed on us with the current policies, then there will indeed be a public backlash that ultimately forces the other path of building substantially more infrastructure. Time will tell.

In the meantime Joseph, I would prepare yourself for substantial changes coming to our lifestyles, and in particular for being coerced into spending much more personal effort to manage your electricity consumption behaviors.

Bob Amorosi's picture
Bob Amorosi on Oct 6, 2009

Check out Kate Rowland's post today on the EnergyCentral Blogs page titled "California's Efficient Appliance Rebates". She says "The California Energy Commission is preparing for the State Energy Efficient Appliance Rebate Program (SEEARP), enabled by the American Recovery and Reinvestment Act. In preparation for submitting its Comprehensive Program Plan to the DOE by Oct. 15, it put all manufacturers of major home appliances on alert."

New consumer appliances will be barred from sale in California soon unless they are certified both by the EnergyStar people, and certified to the California Energy Commission to meet its new efficiency regulations coming out. Ah yes, Joseph, you can probably read my mind in typing next... one of the new regulations coming will stipulate all new appliances have grid communications built in to make them into "smart appliances" so they can be controlled by a utility demand response program. And what happens in California often spreads to the rest of the US and Canada over time.

Joseph Somsel's picture
Joseph Somsel on Oct 7, 2009
My response is a proposal to save the California taxpayers half a billion a year in direct costs by abolishing the California Energy Commission.
Bob Amorosi's picture
Bob Amorosi on Oct 7, 2009
Good luck Joseph, it is rare indeed to see a government-controlled agency abolished because it directly consumes lots of tax revenues.
Len Gould's picture
Len Gould on Oct 13, 2009
Joseph: Your proposal, admit it or not, is simply one more contender in the list of contending market designs. One which is not likely to be tried anywhere, which I bet even you would agree is fortunate.

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