US Utility Consumer Managing Their Electricity

The utility companies run one of the oldest infrastructures in the USA. A friend working in mesh networks for Smart Grids highlighted the fact that an industry where change may occur once in 20 years is being driven to incorporate and integrate technology whose pace of change is substantially faster. Challenges abound!

The Economist in their recent Technology Quarterly have an excellent article on the subject, "Building the smart grid" here. The article highlights my point above further:

"Even though the demands being placed on national electricity grids are changing rapidly, the grids themselves have changed very little since they were first developed more than a century ago. The first grids were built as one-way streets, consisting of power stations at one end supplying power when needed to customers at the other end. That approach worked well for many years, and helped drive the growth of industrial nations by making electricity ubiquitous, but it is now showing its age."

From speed of growth, lack of transparency on the transmission and distribution side of the grid to the consumer's habits of obliquity to their electricity usage, the opportunities abound. Having lived and traveled overseas extensively, the USA lags in one key aspect that the article touches on some what - the US consumer has never been given an incentive to save electricity. The utility companies must grow their revenue and bringing smartness to the electric grid will cut into their top-lines. The article discusses this aspect:

"One problem is that power companies are understandably reluctant to invest in technologies that will reduce consumption of the product they sell, even if there are other benefits. One way to realign the public interest with that of the utilities is through a process called “decoupling” which breaks the direct relationship between electricity sales and profits, a measure that has been successfully employed in California. Energy use per person has remained largely flat over the past 30 years in California, but it has increased by roughly 50% for the rest of America. But in some instances the business case is straightforward. Enel (utility in Italy)spent around €2.1 billion ($3 billion) installing its 30m smart meters in Italy, but now saves around €500m a year as a result, so its investment paid for itself within five years."

I am reminded of Bill Bryson's article "The Waste Generation" on the US consumers' habits in his book "I am a stranger here myself". The author writes that when he used to live in England, the utility offered an off-peak energy plan resulting in value back to the customers. He used to run his washing machine on a timers at night to receive the benefits using timers.

Is the pain or perhaps the desire to manage utilities strong enough for the consumer to adopt the new changes or are the stimulus funds would be used enforce a new regime for the unwilling customer?

"The American government is spending some $4 billion from its economic-stimulus package on smart-grid initiatives, but providing a smart meter for every American home would cost far more: California’s investor-owned utilities alone are spending about $4.5 billion on deploying smart meters over the next few years. That implies that a nationwide implementation could cost around $50 billion. But PNNL estimates that $450 billion would have to be poured into conventional grid infrastructure to meet America’s expected growth over the next decade anyway. Mr Carlson, who now works for GridPoint, argues that a bit of thought is called for if the aim is to move to a new energy-management model, “as opposed to building more of what we’ve already got.”"

One thing is for certain, once the grid gets tapped, the invention driven entrepreneurial opportunities for revenue generation through fulfillment of user needs will be endless!