Is Smart Grid coming soon to your neighborhood? Don't count on it. With respect to consumer Smart Meters, only about 25% of the installed base has been replaced or approved for replacement.
Smart Grid's fundamental concept is that the addition of digital technologies to the electric utility distribution system will permit the monitoring, analysis, control and communications required to maximize throughput while reducing consumption. This will enable utilities to distribute electricity as efficiently as possible and allow end users to consume electricity as economically as possible.
While the benefits of Smart Grid are well understood and the technologies to implement the Smart Grid vision have been developed and are rapidly maturing, deployments to date are limited. Let's be clear, however: Smart Grid is a global market where some countries are moving much faster than the USA and where global manufacturers and software companies with sophisticated offerings are staking claims to a share of the market. The worldwide Smart Grid product and services market has been estimated at $69 Billion in 2009 growing to $186 Billion by 2015.
If Smart Grid is such a good thing, why is it not being deployed more rapidly in the USA?
- The Return on Investment is in years or decades, not months - However, in August Black & Veatch showed that Commonwealth Edison (ComEd) customers could save $2.8 Billion on their electric bills over the 20 year life of smart meters, based on the results of a one year pilot.
- Utilities are not early adopters of technology - Try and sell to a utility a product that has not been deployed somewhere else without failing for ten years. The culture of the electric utility industry has been to emphasize reliability over operations optimization.
- The electric utility industry in the USA is highly fragmented - Privately-owned, local-government owned, and co-op utilities operate independently and with a monopoly in their markets.
- Rate increases are controlled by regulatory bodies - Utilities make investment decisions independently but must justify cost recovery to state regulatory agencies before raising rates to cover Smart Grid costs. State regulatory agencies are subject to political forces, primarily the enthusiasm of the consumer for an investment.
- Smart Grid is not entertainment - There is no Steve Jobs selling Smart Grid 'pods' to the masses. The average electricity consumer is woefully undereducated about Smart Grid benefits and consequently lukewarm in his or her enthusiasm for rate increases to cover Smart Grid investments.