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My New Smart Meter

By Ted Nelson
May 3, 2009
File under: Electric Sources, Green Economy, Waste Reduction


This week I was able to see the green revolution at work, when my electricity provider–San Diego Gas & Electric–installed a smart meter on my home (some info on their smart meter program from SDG&E).

The smart meter will be the ground soldier of the smart grid, allowing both utilities and consumers to track demand from individual homes and businesses in real time. Critics remain skeptical about the cost of installing smart meters across the US, but the benefits we are going to see will prove well worth the cost.

Eventually, my smart meter will allow me to monitor my electricity usage online, but this feature will not be available to SDG&E customers until later in the year. Until then the meter’s main benefit is that SDG&E can monitor my demand and identify problems (basically, not much).

Once I can track my usage and the current price of electricity in real time, however, the system will allow me to level off my demand–moving away from peak demand hours when prices are highest–and encourage me to reduce my overall demand.

Additional software installations will allow customers to program “smart appliances” such as thermostats to draw more energy off-peak and less during peak times. The benefits of this leveling off of demand are two-fold. First, I’ll save money by buying more of my electricity at times when prices are lower.

This benefit might dissipate over time: if enough people switch their demand away from peak time then prices are likely to fall in peak times and rise off-peak. In the short-term, though, the consumers who utilize their smart meter will save over those who don’t. The second benefit is that fewer power plants will need to be built, as level demand allows existing plants to be used more efficiently.

Just knowing the amount of energy I am consuming at any given moment, and more so how much I am paying for that privilege, is likely to lower my consumption. I may know that leaving appliances plugged in, taking long showers, watching TV instead of doing more productive things, etc., etc. use electricity and cost me money.

Watching the money drop out of my pocket and into SDG&E’s every hour on the internet, though, is probably going to influence my behavior in a more profound way.

Perhaps the biggest benefit of smart meters will be their role in the larger smart grid, which will allow renewable sources to be more effectively integrated into our electricity supply. While there is no direct economic benefit from using renewable sources at this point (they actually tend to cost more), the quality of life and indirect benefits of containing global warming and creating a sustainable society are enormous.

The costs of installing these meters is significant. SDG&E estimates that they will spend $500 million by 2011, and that over a 32 year period this will only result in $565 million in savings for customers. Each customer with a smart meter will be footing $2.5o per month of the $500 million bill.

Electricity utilities, too, stand to gain from these meters though. The labor costs they will save by not sending a meter reader to every customer alone are significant. Fewer power plants also means savings on construction and operating costs.

The fact is that the costs of smart meters can only outweigh the benefits if you ignore the science of climate change.

The direct economic benefits are not substantial (spending $5 today to get back $5.65 over the next 30 years…), but these smart meters are part of a solution that will save an amount that truly cannot be known.

Smart meters will help to reduce the need to build more power plants, reduce overall electricity consumption, and pave the way for higher usage of renewable sources.

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