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White House Promotes a Smarter Grid

But some consumers, concerned about rising prices and privacy, would rather their electricity meters stayed dumb.

This week Secretary of Energy Steven Chu announced new initiatives to support the development of the smart grid. But he also warned that the United States isn’t doing enough to get the grid ready for cheap renewable energy. And he acknowledged privacy concerns are making some utility customers wary of new smart meters, which are a key component of the smart grid.

The initiatives include a nonprofit organization called Grid 21 that will promote new smart-grid technologies to consumers, a student competition aimed at improving energy efficiency at home, a series of meetings about Recovery Act smart-grid projects, and a “rapid response team” to speed up the review of potential energy-transmission projects. The U.S. Department of Agriculture also announced $250 million in loans for rural grid development. Full details can be found here.

Chu predicted that in 10 to 20 years, solar power will cost six to seven cents per kilowatt hour, making it competitive with fossil fuels. Once that happens, he said, there will be a boom in solar panel installations that will strain the grid.

Solar energy presents a challenge for utilities, because output fluctuates as the sun’s position changes and clouds pass overhead. Utilities must actively manage the fluctuations, especially in neighborhoods with large numbers of solar panels or electric vehicles that need charging, to ensure that the right voltage levels are maintained and the power doesn’t go out.

Renewable sources of energy will also require lots of new transmission lines, especially since some of the windiest or sunniest places are far from large cities, where power is needed most.

Much of this can be managed with technology that will be invisible to consumers. But one vital part of an advanced grid—the smart meter—affects consumers directly. And where efforts have already been made to deploy smart meters, such as California, these have sometimes met with resistance. Smart meters allow utilities to keep track of each household’s power consumption throughout the day, rather than just checking the meter periodically. They also make it possible to charge consumers higher rates during parts of the day when demand is high. (A conventional meter can’t tell utilities when homeowners are using electricity—it just records total usage between meter readings.)

Data from smart meters can also help manage power consumption in new home appliances, allowing customers to program them to respond to price signals from the utility or adjust their operation according to variable-time-of-day pricing. During times of peak demand, for instance, a refrigerator could avoid an energy-intensive defrost cycle, or an air conditioner could switch to a less power-hungry mode.

Some consumers are resisting smart meters. For one thing, electricity bills can increase significantly after the meters are installed. This may happen because consumers don’t understand the new pricing structures and lack smart appliances or other technology that would help them avoid high rates. For another, some consumers have serious privacy concerns, as Chu acknowledged. Detailed information about power consumption, he said, can tell utilities—and anyone else who gains access—that a family is on vacation, for example.

Chu said that utilities are responding to these concerns by making sure the new data can’t be hacked, but he didn’t specify how, nor did he say whether the government plans to put controls on how utilities or the government could use the information. This is too bad, since, as a White House document released this morning noted, “Consumer trust is essential to the success of the smart grid.”

That document (in PDF form here)—a policy framework written by Cabinet officials—provides more detail about privacy issues. It says that consumers should have access to their own smart-meter data and control over which third parties have access to it. The reason to give third parties access at all is mostly so that consumers can use third-party technology to manage their power consumption; companies could analyze smart-meter data to pinpoint ways to decrease energy use and electricity bills.

Significantly, the document notes that energy usage data is probably not covered under existing privacy laws. It suggests that new legislation be written to explicitly address how the information is handled, similar to the legislation that covers health-care privacy issues.

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