Smart meters have been in use since 2006 in the United States and have gained wide penetration in some areas and caused backlashes in others.  In the near future  many utilities will be switching their customers over to this technology.  So what exactly are smart meters, why are they sometimes controversial, how do they help consumers and utilities save money, and who is the industry leader in the field?

A smart meter is a device that collects electric consumption data from a home or business and communicates that data back to the utility.  This communication is accomplished by the use of Radio-Frequency (RF) technology.  Smart meters provide several advantages to the customer as they allow the customer to monitor their energy use in real time and allow for the customer to receive real versus estimated electric bills.  For the utilities there are several major benefits as well.  Primary among these is that smart meters allow the utility to adjust its billing policies to entice customers to use electricity during non-peak hours.  This is vital as during peak electric usage periods the utilities must bring on-line less efficient energy methods or purchase power from other entities.  Both of these methods increase costs to the utility.  Incentivizing customers to adjust their energy use to off-peak hours helps the utilities keep costs down and potentially produce electricity using more environmentally-friendly methods.  A good example of this approach can be seen with TXU Energy’s Free Nights program which is designed to encourage customers to change their electricity usage habits and as a reward not be billed for electricity usage between 10 PM and 6 AM, non-peak hours for the utility.   Another use of smart meters is that they allow utilities to more quickly respond to power outages or problems as they are now receiving almost real time information from customers.

The level of penetration of smart meters in the United States varies dramatically by region of the country.  PG&E just recently announced that it had installed its 9 millionth unit in Northern California while other areas of the country have almost no units in place.  Current levels of penetration in the United States are estimated at 35%.  In some areas there has been a backlash against smart meters due to health concerns regarding the RF technology used to communicate between the readers and utilities as well as concerns about customer privacy.  Although the use of RF technology has been approved and deemed safe by the Federal Government, fears still remain.

The global leader in the smart meter industry is Itron (Nasdaq: ITRI) with 8,000 customers in 130 countries.   With energy consumption continuing to grow and regulatory initiatives aimed at increasing energy efficiency being put in place around the world, the market for smart meter technology seems destined to continue to expand.  Per Itron estimates, there are 2.8 billion meters in use around the world with only approximately 10% being smart meters.   One significant risk facing Itron is that they are almost totally dependent on utility industry capital spending.  The recent slowdown in the global economy has had a direct effect on Itron’s fortunes as such slowdown reduces the industry’s capital spending.  However, with its strong financial results and healthy cash flow, Itron seems well positioned to take advantage of the growth in smart grids and smart meters in the future.

Disclaimer: This article is intended to be informative and should not be construed as personalized investment advice. You are responsible for your own investment decisions.

Disclosure: The author has no position in Itron and no plans to initiate a position in the next 72 hours.

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To accomplish these goals, the SunShot Initiative announced last month it would focus on making solar installation “as easy as plugging in an appliance.” The program says it hopes that plug-and-play technology—similar to that used in many printers, webcams, and smart phones—will be applied to PV systems. The idea is that these systems can be plugged into a “PV-ready circuit to initiate an automatic detection system that would connect your system with your local utility.” Ultimately, the goal is that plug-and-play technology will allow PV systems to be purchased, installed and begin to generate electricity all in one day, rather than today’s ideal time frame of two to four days. This streamlined process will effectively simplify and reduce the cost of installing a PV system, which currently represents more than half the price of a residential solar unit.

Through the SunShot Initiative, the DOE will fund up to $25 million over five years to aid the development of PV plug-and-play technology. An initial $5 million will be invested this year for up to two projects that will develop plug-and-play prototypes through partnerships with universities, utilities, and other entities. The DOE will request an additional $20 from congress to spend over the remaining four years. If you are interested, application instructions and deadlines can be found here.

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• If the cloud were its own country, it would rank fifth in the world for how much electricity it uses, and that electricity demand will triple by 2020!
• Server farms can consume as much electricity as a small city. Some of the largest consume as much electricity as 180,000 homes.
• Yahoo! was the only major Internet company in the study to get most of its electricity from renewable or clean energy sources, according to the report. 56% of the electricity demand for its data centers comes from such cleaner sources.
• Facebook is building a server farm in Sweden that can be powered by renewable sources.
• Amazon, Apple and Microsoft continue to rapidly add server capacity, but all three rely heavily on coal. On Greenpeace’s report card, Amazon gets three F’s and a D. Apple gets three D’s and an F.

Source: Greenpeace

This report represents the fifth such study in the MIT Energy Initiative’s Future series. It “aims to provide a comprehensive, objective portrait of the U.S. electric grid and the identification and analysis of areas in which intelligent policy changes, focused research, and data development and sharing can contribute to meeting the challenges the grid is facing.” Because the grid must provide the necessary amount of power required by users at all times, the fluctuation in production that is inherent in solar and wind can cause an imbalance. Too little electricity leads to a blackout (rolling or otherwise).

If wind and solar are to replace coal and nuclear as viable sources of electricity, the study points out that they may well rely on centralized locations (think giant wind farms in the Dakotas, once hailed as the Saudi Arabia of wind). Delivering the electricity from these locations to urban populations centers will require extending transmission wires well beyond the current reach of the grid. The same issue comes about in the southwest where large concentrated solar power installations are underway.

Among the major points in the research are the need for implementation of technology to better detect ebbs and flows of demand, as well as smart grid options to help monitor usage. One X-factor will be the adoption of electric vehicles. These cars may help by storing electricity in their batteries and acting like decentralized power plants by feeding the electricity back onto the grid (if the cars are plugged in) or they may pull more power from it, which could “increase the ratio of peak to average demand and thus further reduce capacity utilization and raise rates.”

The following bullet points represent the summary recommendations from the study:

• To facilitate the integration of remote renewables, the Federal Energy Regulatory Commission should be granted enhanced authority to site major transmission facilities that cross state lines.
• To cope more effectively with increasing cybersecurity threats, a single federal agency should be given responsibility for cybersecuity preparedness, response, and recovery across the entire electric power sector, including both bulk power and distribution systems.
• To improve the grid’s efficiency and lower rates, utilities with advanced metering technology should begin a transition to pricing regimes in which customers pay rates that reflect the time-varying costs of supplying power.
• To improve utilities’ and their customers’ incentives related to distributed generation and energy conservation, utilities should recover fixed network costs through customer charges that do not vary with the volume of electricity consumption.
• To make effective use of new technologies, the electric power industry should fund increased research and development in several key areas, including computational tools for bulk power system operation, methods for wide-area transmission planning, procedures for response to and recovery from cyberattacks, and models of consumer response to real-time pricing.
• To improve decision making in an increasingly complex and dynamic environment, more detailed data should be compiled and shared, including information on the bulk power system, comprehensive results from “smart grid” demonstration projects, and standardized metrics of utility cost and performance.

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Though there is currently not date set for completion, the solar array is to be placed next to the data center and will cover 100 acres, producing 20 megawatts or 42 million kWh per year. That will only comprise 20 percent of the 100 megawatts needed to power the facility, so the remainder will likely consist of coal fired generation, the main source of electricity in the state.  Still, an investment in green energy is an investment in green energy and should be applauded.

The data center itself will be highly efficient. Here are some of the characteristics Apple is touting:

• A chilled water storage system to improve chiller efficiency by transferring 10,400 kWh
of electricity consumption from peak to off-peak hours each day.
• Use of “free” outside air cooling through a waterside economizer operation during
night and cool-weather hours, which, along with water storage, allows the chillers
to be turned off more than 75 percent of the time.
• Extreme precision in managing cooling distribution for cold-air containment pods,
with variable-speed fans controlled to exactly match air flow to server requirements
from moment to moment.
• Power distributed at higher voltages, which increases efficiency by reducing power loss.
• White cool-roof design to provide maximum solar reflectivity.
• High-efficiency LED lighting combined with motion sensors.
• Real-time power monitoring and analytics during operations.
• Construction processes that utilized 14 percent recycled materials, diverted 93 percent
of construction waste from landfills, and sourced 41 percent of purchased materials
within 500 miles of the site.

Here is the full report (PDF).

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