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Smart Meter Gains

We are living in the age of big data, where almost everyone is connected to the web and regularly uses all sorts of popular apps. Our utilities cannot avoid this trend.

In the mid-1980’s, Dr. Donald Schlenger of Hackensack Water in New Jersey bought 225,000 telephone-based AMR units.  Other than a few very small pilot projects, that was the world’s first AMR system.

By the late 1980’s Itron was selling RF-based AMR systems to gas utilities, but it wasn’t until the mid-1990’s that electric utilities started deploying AMR in a big way. 

The first smart meters began to appear in 2005. The smart metering industry began to significantly grow in 2008 after the Bush administration ordered utilities to report their plans to move to smart metering.  The utilities were not mandated to move to smart metering, just report their plans, but the result was an inevitable motivation to move to this new technology.

Howard Scott

In the weeks before President Barack Obama took office, his administration signaled their intent to further encourage the use of smart meters.  On December 2, 2008 the Obama transition team asked this author to suggest a budget for smart meters that would be included in the federal stimulus package.  My response led to $4.5 billion in funding that was focused on smart grid.  Most of these funds were eventually spent on smart metering projects.

The stimulus money had an impact on the smart metering market, but the vast majority of utilities did not get a share of it.  For a few years some lucky utilities had an easy job of cost-justifying it, but we are past that point and the remaining utilities still have to build a winning business case. 

During the second quarter of this year the percentage of all meter points that are smart metering passed the 50 percent mark.  That percentage has grown at the rate of 5 percent to 6 percent per year for the past three years and will likely continue at that rate for the next few years.  Clearly, many utilities are still able to make the case for smart metering.

Though the forward movement is not a stampede to smart metering, it is inevitable that the vast majority of electric utilities in the United States and Canada will deploy it.   If the current trends continue for three more years, we will be at the two-thirds point.  By the end of this decade, over 70 percent of all meters will be served by smart metering.  At that level of penetration, it is very difficult for a utility to remain “non-smart.”  Yes, poor or very rural utilities will move slowly, but a large IOU or muni will have difficulty when they look like they are backwards.  In the foreseeable future almost all major cities and almost all suburbs will have smart metering. 

The remaining debate centers on what utilities will do with all that data.  Most utilities are using it to make smart operational decisions.  Others use it to enhance customer service and/or increase service offerings. 

We are living in the age of big data, where almost everyone is connected to the web and regularly uses all sorts of popular apps.  Our utilities cannot avoid this trend, and in our industry that technology is called “smart metering.”

Howard A. Scott is managing director of Cognyst Advisors.

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