The past year has seen an up-tick in United States utilities' smart meter initiatives. In fact, about 50% of the states have utilities with some smart metering pilots or installations. Much of this activity still remains in the pilot stage, but if each of those utilities fully implemented smart meters for all their customers, it would include more than 42 million electric and 9 million gas meters. This is equivalent to almost 30% of the electric meters and 13% of the gas meters in the U.S. Although the utility industry is quite far from reaching the tipping point of substantial investments, new initiatives are coming faster than expected.

Understanding smart metering terms
Various definitions of smart metering are in use throughout the energy industry, but Energy Insights defines smart metering, also know as advanced metering infrastructure (AMI), as a subset of automated meter reading (AMR) with three key characteristics:

  • Uses solid-state or computerized meters that collect time-series (interval) energy use data and are programmable to support features like time-of-use (TOU) rates
  • Capable of two-way communications between meters and the utility, other distribution and transmission operators, or consumer devices and systems
  • Able to support applications beyond meter reading, such as demand response programs.

Smart metering, however, entails much more than just the meter. Smart metering is an entire system that supports many customer and utility uses (see figure). In the case of the customer experience, smart metering not only assists with load management programs (e.g. demand response and time-of-use pricing) but can also enable additional customer services, such as options for net metering, plug-in electric vehicles, smart appliances, and energy monitoring and control of both building environmental systems and overall usage. On the other side of the meter, smart metering supports a broad range of utility applications including outage management, load forecasting and balancing, theft and tamper detection, and asset management. Usage determinants, pricing and curtailment signals are among the data elements moved through the communications network.  

Smart Metering System

Smart Metering System

 

Source: Energy Insights, 2007

Smart metering drivers
Today, many utilities find that smart metering not only provides basic AMR benefits (e.g. reducing meter reading and fleet vehicle costs, providing more accurate meter reads, and reaching "hard-to-read" meters) but also addresses the needs of an intelligent utility. Smart metering enables more advanced grid control capabilities, including demand response, load balancing and forecasting, and time-based pricing. Furthermore, even some utilities that have already implemented AMR can still quantify sufficient benefits to move forward with smart metering. Another important advantage for some utilities is reduction or offset of additional generation capacity.  

Customer satisfaction is a part of the smart metering equation too, with smart metering potentially enabling a wealth of improved services such as faster connection/reconnection of service, better information for customers to manage their energy use and take advantage of rate options, enhanced outage management and reporting, and prepayment options.

Even with the bright future of smart metering and successful business cases already out there, utilities still face challenges justifying and implementing smart metering projects.
When building a business case, utilities should concentrate on the future: Due to the substantial asset and business process changes, utilities need a long-term vision for implementation of their smart metering transformation. In particular, widespread smart metering deployments can take years. A utility serving 2 million customers with a 5-year deployment schedule would need to replace 33,000 meters per month. And the meter deployment is just one of the many pieces to achieve payback, with additional software and associated process work in service delivery, customer service and generation planning some of the areas to consider.

Critical in realizing the benefits is working with as many internal departments as possible while developing the smart metering plan and then rolling it out. Utilities must also fully understand and be prepared to mitigate risks associated with working with smart metering vendors in a landscape that's changing due to mergers/acquisitions and developing technology. Utilities need to carefully manage each phase of the project, building on the previous phase and keeping the next in mind. Lastly, utilities need to actively involve their customers in understanding the benefits and impacts of smart metering.