Negawatts, not Kilowatts

AP article on smart metering in Pennsylvania gives a balanced account of smart metering on the domestic side.

Note how the cost is $200 as opposed to the UK’s estimate of £300+.  Two Way Metering, where a householder can export  power as well as respond directly to price signals from wholesale markets, is  more problematic in markets where supply and distribution and metering have  been separated (as in the UK).   

Where distribution and supply are from the same provider,  SM gives an incentive for the electric utility to truly innovate, as opposed to mere financial engineering in the UK model.   Enabling and incentivising customers to use peak shaving models themselves makes more sense to the supplier than building more power stations.  In effect, installing SM is installing negawatt capacity as opposed to megawatts.  A rather zen concept, where doing nothing is as valuable as buying or selling something, but it’s the conceptual root of carbon trading as well as the future of energy supply.

Why is the UK so Dumb on Smart Metering?

After months of hemming and hawing, BERR said this week that smart metering would cost too much.  BERR did a classic framing trick.  They came up with a figure of over £16 billion as the cost of SM introduction.  But that is about £340 per meter based on 45 million meters, whereas any meter provider will give you a rate of £100 today.  Assume they are right and amortise that cost over the 20 year average meter life and it’s a far less scary £17 per year.  Almost any study says that a minimum of 5% reduction can be anticipated producing a net saving on a £1000 average domestic bill is £33 per year.  All of a sudden BERR have some holes in their figures.  A giant hole is why the high cost:  The California Public Utility Commission is mandating the roll out of 10.1 million meters at a cost of $165 per meter.  Italy rolled out 30 million two way electric  smart meters in five years at €70 each.  On the subject of time frames,  BERR thinks it will take at least 10 years, despite 40,000 obsolete meters being replaced every week in the UK with…obsolete meters.   

If BERR ran Weight Watchers, they would throw out those tiresome scales.  They think the best way to reduce costs is through competition.  Out in the real world, there is a natural human response to feedback, and that is where SM will, one of these decades, work best.

UK based but with a global scope, No Hot Air provides information on various energy issues but especially in the global implications of shale gas.