Utilities Promote Demand-Response and Smart-Meter Options

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Researched by Industrial Info Resources (Sugar Land, Texas)--Electrical utilities across the country are promoting demand response and smart-meter options to customers in an attempt to reduce peak consumption of electrical power, as well as to postpone large capital expenditures that come with building power plants. Investments in advanced metering devices would allow consumers to monitor their electrical usage on an incremental basis and curtail usage to avoid peak-load prices. This could lower electric bills and assist utilities during peak-load days.

Demand response refers to the reduction of a customer's energy consumption at times of peak usage to help address system reliability. Demand-response programs may include dynamic pricing, price response demand bidding, contractually obligated and voluntary curtailment, and direct load control.

Smart electrical meters are tools that utility customers can use to monitor the price of the electricity that they are purchasing at any given time and on high-demand days such as morning or evening peak when electrical load increases to lower their thermostat or to turn off large high-amp equipment in order to save on electricity bills and, in turn, lower peak energy use on the grid.

According to McKinsey Consulting, Princeton University and the California Energy Commission, Americans can save from $10 billion to $19 billion every year by balancing investments in new power plants with demand-response programs. Most of the savings comes from reduced costs in not having to build power plants and transmission lines, resulting in lower wholesale power purchases.

The typical electrical meter uses technology that is 100 years old, and utility meter readers record this reading once per month. Smart meters record usage throughout the day, every 15 minutes or every hour, and send this data in once per day. By installing smart meters with advanced computerized technology, the U.S. could reduce consumption enough to need 15% fewer power plants. Smart meters have cost about $3,000 each, but prices have dropped and are now going for about $50 for the meter and $50 for installation and connection to the electrical utility.

Customers could control usage by raising the temperature on their thermostats, using programmable thermostats to automatically raise the temperature when they are away during peak load times. Users could simply allow the utility to turn off large or high-amp appliances or turn up air conditioners to an agreed temperature range during peak times, and all users could receive incentives to do so. This would benefit the electrical utility by keeping loads lower so they would not have to ramp up inefficient generating units. This would lead to higher costs, the need for additional units or the purchase of wholesale power at peak prices, which can be in the thousands of dollars per megawatt-hour.

Smart meters and demand-response programs are vital to the transition to the smart grid of the future, and the implementation of renewable energy projects, such as those using wind, solar and hydropower, are vital to our electrical infrastructure as we move toward a more energy-efficient future.

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