What makes a utility go ‘smart’?
Published Tuesday, 25th January 2011
Why would any utility provider undertake the massive expense to upgrade its customer base to smart meters and spend further millions — if not more — on infrastructure improvements that are designed to reduce, not increase, energy consumption? Wouldn’t that seem counter-intuitive for an industry dependent on selling energy?
On the surface, yes. But scratch a bit deeper and a variety of reasons emerge for why costly, smart-grid investments ultimately make sense:
- Regulations: EU requirements to reduce carbon emissions are a key driver for smart metering, smart grid and renewables development across Europe. And while the US hasn’t adopted any nationwide climate legislation, many states — California, in particular — have. That means utilities in those states have to respond.
- Cost savings: How can a budget-straining infrastructure investment save money for an energy company? One way is by enabling utilities to get a better understanding of who’s using how much and when … without having to pay real people to go out and physically inspect electricity meters. All those real-world trips to check household meters every month, or every three months, or every six months, carry costs in time and petrol and salaries and benefits. In a way, it’s the same thinking that underlies WalMart’s self-checkout lanes: the end result — a sale — remains the same, but there are fewer humans to pay along the way.
- Risk aversion. In many ways, the writing’s on the wall that utilities have to change the way they do business. A growing number of wind farms and solar power installations need to be integrated into the grid, requiring more advanced ways of managing load balances and demand peaks. Feed-in tariffs and incentives for low-emissions vehicles are spurring on adoption of home-based energy generation and electric cars. And electricity grids in so many places are ageing and decrepit, prone to ever more failures and outages, which are themselves costly. Business as usual is no longer an option.
So why are utilities going smart? Because it’s becoming increasingly dumb not to do so.
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