Study: Even for the skeptical, smart meters pay off

Rolling out smart energy meters makes financial sense for utilities and customers even in regions where electricity costs are low, fossil fuel generation is high and the public is skeptical about climate change, according to a new report.

The paper from the Institute for Electric Efficiency (IEE) shows that, for a wide variety of utilities under a range of realistic assumptions, the benefits of investing in advanced metering infrastructure (AMI) and related energy management technologies will outweigh the costs.

“Although specific results will vary by utility, our study found that even with conservative assumptions regarding consumer engagement in technology, programs, and rate plans, utilities and their customers can expect positive net benefits from their AMI investment over the next 20 years,” said Lisa Wood, executive director of the IEE.

“The Costs and Benefits of Smart Meters for Residential Customers” also indicates that, the more people adopt electric vehicles (EVs) in any utility service area, the greater the benefits of smart metering become.

“This analysis shows that the strategy with the potential to achieve the greatest financial impact is to focus on accelerating EV adoption,” the report states.” The benefits of EVs … are disproportionately high, indicating that even modest increases in EV adoption will have a large impact on benefits.”

Assuming a service area of one million households, a utility looking to invest in smart meters and associated home energy management technologies could expect to spend anywhere from$198 million to $272 million, the IEE analysis found. However, after adding in the impact of operational savings on the part of utilities, as well as customer-related energy savings, the net benefits of an AMI deployment ranged from $21 million to $64 million.

“In estimating the net benefits of smart meters, we took a very conservative approach and assumed fairly low participation rates by customers in different program offerings even after 20 years,” Wood said. “We believe that if customers can choose their preferred rate plans, programs, and enabling technologies, and if significant investment is made in consumer engagement, the benefits to customers, utilities, and society would be even greater.”