JAMAICA — If you have read the newspaper or listened to the radio recently, chances are that you have heard the Central Vermont Public Service (CVPS) commercials for something called “Smart Power,” which is how CVPS has branded their implementation of what is known as smart grid technology.
Over the next year, we can expect to hear a lot about the smart grid, including smart metering.
Several of Vermont's utilities, including CVPS and Green Mountain Power, are working on a multi-year effort to deploy this new technology - technology that was funded, in part, by a $69 million grant from the U.S. Department of Energy.
So what is this all about and what does it mean for consumers?
Smart metering will be the most significant (and visible) feature of the smart grid, so it makes sense to start with a discussion about how electricity is metered currently and then explore some of the opportunities that smart meters will offer.
The electric meters most of us have today can measure the consumption of electricity over a period of time, but this measure is limited by the frequency of meter readings by employees of the utility company.
For example, if your meter is read on June 1, and again on July 1, and the two readings show that you consumed 600 killowatt hours (KwH) of electricity in June, there is no way to tell whether you averaged 20KwH of use per day during morning and afternoons, or whether you consumed most of the 20KwH a day during the evenings. More to the point, there is no way to differentiate between peak and off-peak consumption.
This situation presents a challenge for the electric company, because when it purchases power on the wholesale spot market, it pays different rates that represent market conditions in real time - for example, higher rates during peak hours and lower rates during off-peak times.
In effect, since there is no direct connection between the wholesale market and the meter on your house, price fluctuations in the wholesale market are averaged out and passed onto all consumers over time.
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Smart meters allow for the measurement of electrical consumption at specific points in time. With a smart meter, you (and your electric company) will know how much electricity you are using during a particular hour on a particular day.
This level of precision enables the electric company to offer new pricing structures that would charge differential rates (known as time-of-use pricing) for energy consumption: more during times of peak demand and less during off-peak times.
This new technology empowers consumers to plan for, and make informed decisions about, their energy use.
For example, my wife and I have a dishwasher and a washing machine with delayed-start features. This allows us to tell the machines to start at 5 p.m., 10 p.m., or 3 a.m.
Today, we don't pay much attention to when we run the machines, but if we had a smart meter and the option to pay a lower rate for the electricity we use in the dead of night, we could load the dishwasher and washing machine during the day and program them to start at 3 a.m. to take advantage of a low off-peak rate.
The principles behind smart metering and time-of-use pricing are already well established. If you think about it, the same concept has been an integral part of our telephone network since the early 20th century.
If you have a cell phone, you probably pay more to use your phone during the day than to use it in the evenings or weekends. Wireless telephone networks have capacity constraints that are managed with differential pricing. If you make a call during peak daytime hours, you generally pay more; the wireless phone company offers plans that encourage people to place calls after hours, when the network is less congested.
This helps level out demand and makes the most efficient use of limited network capacity.
Using these same principles, smart meters will allow our electric utilities to more efficiently manage resources on the electric grid (hence the term “smart grid”). Over time, this will help level out some of the peaks in electrical demand that strain the grid, which will minimize the need for peak generating capacity.
By providing economic incentives that encourage more efficient usage during times of peak demand, our electric companies can minimize the purchase of energy when it is most expensive - which benefits all ratepayers.
But this is just the beginning. The smart grid is a platform that will make possible innovative technologies, resulting in greater efficiency and conservation of energy resources over time.
Down the road, we will start to see things like water heaters and appliances that can communicate with the smart grid and automatically make decisions about when to turn on or off based on how you want to them to respond to pricing incentives - powerful tools that will help us all save on our energy bills.