According to the EIA, installations of smart meters have more than doubled since 2010, and almost half of all U.S. electricity customers now have them. Residential smart meter adoption rates vary by state, but it is clear that energy consumers are embracing this technology. For example, Washington D.C. and Nevada are at 97% and 96% penetration, respectively. Some states, including California, Georgia, Maine, and Michigan have 80% or higher penetration rates.
But what is a smart meter? Can it help consumers save money, and if so, how?
What is a smart meter?
According to Bryan Jungers, lead analyst of technology assessment at E Source, a smart meter is simply a more advanced electricity meter. “Old meters simply measured electricity consumption, usually on a monthly basis,” Jungers says. “Smart meters also measure power, but because they are computing devices on a network, they are capable of interactive two-way communication.”
Smart meters measure, collect, and report data back to utilities in short intervals. Jungers also says they can perform such advanced functions as sending signals to your home appliances – assuming your appliances are compatible.
In fact, Jay Stein, board member and senior fellow at E Source, says the difference between smart meters and the electromechanical meters they’re replacing is as stark as the difference between smartphones and rotary dial phones.
“In the past, electric utility meters had to be read manually, meaning that an employee from the utility had to roll a truck out to your home each month to read the meter and determine how much energy you used in the past 30 days,” Stein says. “This is costly and inefficient.”
Therefore, the ability to monitor remotely and in real time with a smart meter is a boon for the utility industry. Kevin Pennachio, EVP at SQUAN, says a smart meter allows not only remote monitoring, but also the ability to detect possible issues. “When paired with a data collection platform with adjustable modeling of key performance indicators (KPIs), smart meters provide great benefit by reducing costs to monitor (meter reading) and providing real-time data to monitor problems and minimize loss,” Pennachio says.
Can smart meters help consumers save money?
Clearly, smart meters help utility companies, but do they also help consumers? Experts say yes. The main benefit of smart meters is the ability for utilities to troubleshoot remotely; these features speed up the time it takes to resolve customer issues.
Smart meters also offer customers insights on their consumption habits. “Smart meters enable utility customers to monitor their energy use more precisely and make informed energy choices,” explains Jordan Tobey, a demand-side management analyst at E Source. She says the devices can measure and record energy consumption on an hourly basis – with some models measuring usage every 15 minutes.
“When this information is made directly available to the customer, it can help them understand which appliances or behaviors lead to higher energy consumption,” she says. Tobey also provides several other smart meter benefits:
- Enable customers to set spending goals and compare their energy usage to that goal.
- Trigger high-usage alerts to customers to signal that an energy bill is going to be higher than usual.
- Notify customers of a power outage and provide an estimated time of restoration.
- Enable customers to start and stop service quickly and easily through remote, two-way connection.
- Provide the option of time-of-use pricing (TOU) and load management services to customers. TOU pricing gives customers a financial incentive to shift energy usage to off-peak hours of the day.
By reviewing real-time data, customers can make decisions that help them save money. “For instance, consumers can monitor times where it is more cost efficient to run appliances like dishwashers and clothes dryers, and set timers for these appliances to operate when electricity is cheapest to use,” Pennachio says. “Similarly, connected thermostats can be programmed to function most optimally with electricity consumption, and determine whether the HVAC unit or simply the fan is needed to cool the home or circulate air.”
The benefits of smart meters may be limited
While smart meters can help consumers save money, Mario Berges, a professor of civil and environmental engineering and the co-director of the Smarter Infrastructure Analytics Lab at Carnegie Mellon’s College of Engineering, says the devil is in the details. “One argument is that with higher frequency measurements of electricity consumption, customers (or trained analysts, or even computer algorithms for that matter) can learn a lot more about their electricity consumption patterns and learn about energy efficiency opportunities, detect faulty appliances, etc.”
However, Professor Berges cautions that more frequent measurement doesn’t necessarily lead to dramatic monetary results. “It is not straightforward to translate hourly (or faster) power measurements of your whole house into recommendations for energy savings,” he says. “Luckily there are many solutions coming out from both industry and academia to provide these value-added services on top of the data that smart meters are now recording.”
A Consumer’s View on smart meters
U.S. residents appear to approve of smart meters, and fellow consumers across the pond are also experiencing their benefits. Dublin, Ireland-based Martin Meany, the editor of goosed.ie, says he has several smart plugs and smart meters in his home, which he uses to keep track of his electricity consumption. He explains that his smart meters help him monitor his usage, so he doesn’t end up going over-budget.
Meany has only had his smart meter set up for about 12 months; he says the short-term savings have cancelled out with the cost of installation; there real savings can be found a few years down the line. “Long term, you could expect to save about 3% per annum.” For Meany, that amounts to about 80 American dollars per year. Over several years, those savings add up.
Meany also touts the environmental benefits that his smart meters provide. “I wouldn’t say you get smart meters and smart plugs and your job is done,” he says.” Instead it’s part of making your whole ecosystem smarter and greener with the smart meter playing just one part in that system.”
Terri Williams is a freelance journalist with bylines at The Economist, USA Today, Yahoo, the Houston Chronicle, and U.S. News & World Report. Connect with her on Twitter or LinkedIn.