Austin, Texas, March 1, 2012 – According to a new report by IMS Research, a supplier of market research and consultancy to the global electronics industry, more than 25 million smart grid-enabled devices, such as smart thermostats, smart energy displays and smart appliances with the ability to communicate with smart meters, will be shipped in the U.S. in the next five years.
“The U.S. is often considered to be at the forefront of smart grid development, and energy reform is high on the U.S. government’s agenda,” says Lisa Arrowsmith, Senior Analyst, IMS Research. “The American Recovery and Reinvestment Act of 2009 stimulated large investment in smart meters which provide two-way communication between people’s electricity meters and utility companies, enabling the utility company to remotely measure how much electricity consumers are using and send signals to the meter, enabling functions such as variable pricing tariffs. Increasingly, smart meters will be able to ‘talk’ to in-home devices, such as smart thermostats or appliances.”
As smart meter deployments in the U.S. continue, so too does the debate regarding the merits of variable tariffs such as dynamic pricing or demand-response. Dynamic pricing involves market-led tariffs whereby the highest unit prices are charged when demand is highest.
This can help to smooth out demand, and avoid using the most costly (and often least environmentally-friendly) power plants that are kept in reserve to satisfy demand peaks. Longer-term, there is the potential for widespread load-shedding or demand-response programs. Here, the utility company sends a signal to the smart meter (via the AMI network) to request that electricity consumption (often of a particular device) is reduced or temporarily halted. This can be automated through the deployment of devices such as smart thermostats to adjust HVAC settings and through smart load control switches, which may be used with air conditioner compressors and electric storage water heaters.
“At times of peak electricity demand, a utility company may send a request that air conditioners reduce power consumption, and – with advanced customer agreement – a thermostat then automatically adjusts itself slightly,” Arrowsmith adds, “By enrolling many customers in such a program, even minor adjustments become significant. Load shedding programs – including those that do not require a smart meter – have been employed in several countries, with consumers offered a variety of incentives to participate. These include rebates, electricity price discounts, or even, as seen in the case of a specific Canadian utility company, an iPod Touch as a reward”.
In the U.S., while there are a number of utility companies already using the smart meter as a gateway to enable variable pricing tariffs and demand-response programs, there have been a number of barriers that have inhibited widespread deployment. Importantly, there have been some major consumer concerns ranging from privacy and data security, through to potential negative health effects from RF emissions.
Additionally, utility companies need to ensure that any variable pricing tariffs are carefully designed such that low-income customers are not harshly impacted and that, to avoid public backlash, even heavy users do not face massive bill increases —as was the case with the infamous Bakersfield case, where consumers blamed PG&E’s smart meters for a massive bill hike.
Currently, many consumers in the U.S. are limited in the extent that in-home devices can interact with smart meters, even where they have already been installed. In the U.S., most smart meters shipped now have the hardware to enable communication with in-home devices. Yet, in many cases, this ability to ‘talk’ to the smart meter is disabled by the utility company.
“The management of residential electricity consumption is a rapidly growing business in the U.S., not only as a result of utility companies programs, but also of others – such as major telecommunications companies and security companies – entering the market,” Arrowsmith concludes. “As more in-home devices, such as thermostats and appliances, have communications functionality, it paves the way for other companies to offer additional services, as a means of increasing subscriber revenues or reducing customer churn. These include services such as online electricity consumption monitoring, and web-portals enabling consumers to control devices in their home from anywhere, using devices such as smart phones.”