Study: Utility Smart Meter Benefits Outweigh Costs

Electric utilities across the United States are rapidly deploying millions of smart meters as part of an industry-wide, federally supported effort to build an advanced metering infrastructure (AMI), a critical component of a smarter national grid. Few question the need to upgrade to avoid failures, conserve energy, and incorporate the new wind and solar generated power that is rapidly coming online.

A smarter grid promises savings on consumer electric bills, but it appears that utility companies will also reap large benefits. According to a study The Brattle Group prepared for the Edison Foundation’s Institute for Electric Efficiency, the net benefits of smart meters could be more than $96 million over a 20-year period for a U.S. utility serving a million residential customers.

The study estimated the costs and benefits of smart meters between 2011 and 2030 using four prototypical utilities located in the Southern, Central, Eastern, and Western United States.

Each utility had a million customers with different generation resources, load forecasts, capacity costs and smart meter costs. The study estimated the operational benefits that each utility would accrue as it replaces its existing metering infrastructure with smart meters, which allow for two-way communication between the consumer and the utility.

In one case, the operational benefits virtually covered the installation investment. In all cases, however, additional benefits would accrue as customers participate in specific smart meter-enabled program offerings. These include household energy-use information delivered to customers in real time through in-home devices and web portals, dynamic pricing with and without technology options (such as programmable thermostats with display information), direct load control with measurement and verification, and electric vehicle charging with time-varying rates.

The study concluded that, in each of the four utilities, the benefits of smart meters exceed the costs. The net benefits range from $96 million for a utility in the East to $287 million for a utility in the South. The range is due to the variation in smart meter costs, operational benefits of meter replacement, and the mix of customer-side programs across utilities.

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