Installations of smart meters have surged dramatically since 2010, with almost half of all U.S. electricity customer accounts now equipped with these advanced devices. By the end of 2016, U.S. electric utilities had installed around 71 million advanced metering infrastructure (AMI) smart meters, covering 47% of the 150 million electricity customers nationwide.
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Smart meters boast two-way communication capabilities between electric utilities and customers, a significant upgrade from the one-way meter-to-utility communication system, also known as automated meter reading (AMR), that was more prevalent before 2013. The shift to two-way AMI smart meter installations has been the dominant trend since then, based on data collected in annual electric utility surveys.
These two-way AMI meters empower utilities and customers to interact using real-time or near real-time electricity data, which supports smart consumption applications. Such features enable demand response, distributed generation, improved reliability, and provide crucial information allowing consumers to save money by managing their electricity use more effectively.
In the event of storms or other system disruptions, AMI data provides utilities with detailed outage information, helping them restore service more quickly and reduce the length of power outages.
Residential smart meter penetration rates vary widely by state. Washington, DC, boasts the highest penetration rate at 97%, followed by Nevada at 96%. Six other states—Maine, Georgia, Michigan, Oklahoma, California, and Vermont—had residential AMI penetration rates higher than 80% in 2016. In Texas alone, over 200,000 new residential AMI meters were installed in that year.
State legislation and regulation often drive these differences in smart meter penetration rates, as some states require regulators to approve utilities' cost recovery mechanisms for metering projects. The Smart Electric Power Alliance publishes reports on state-level actions related to advanced metering among other topics.
Many residential customers might not be aware they have a smart meter. According to the 2015 Residential Energy Consumption Survey (RECS), when residential smart meter adoption was about 44% nationwide, only 22% of households reported having one, 49% reported not having one, and 29% were unsure. Additionally, just 8% of households knew they had access to hourly or daily data, and a mere 4% had accessed or viewed that data.
Principal contributors: Alexander Mey, Sara Hoff
Smart meters and dynamic pricing can significantly help consumers use electricity more efficiently. Many Americans strive for cheap, clean, and reliable electricity, but achieving this trifecta is increasingly challenging due to climate change. A 2021 report by Climate Central attributed over 80% of major outages from 2000 through 2021 to weather extremes like heatwaves, wildfires, and tropical storms.
We are an economist and an electrical engineer examining how increased usage of two-way smart meter technology can reduce greenhouse gas emissions from the electricity sector and bolster the economy against climate-driven weather extremes. It's clear to us that adapting to increasingly volatile weather will require a mix of user-friendly technologies and economic incentives.
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Smart meters, also known as advanced metering infrastructure or AMI, measure a household's electricity consumption and wirelessly communicate the data to the utility every few minutes. These devices allow utilities to remotely connect or disconnect power to homes. The U.S. Department of Energy estimates that over 90 million residential AMI systems had been installed nationwide by 2020, with about two-thirds of electricity meters in the U.S. now being smart meters.
For utilities, smart meters reduce the cost of meter reading and enable faster detection and response to power outages. The detailed usage data provided can help anticipate and manage customer demand through data analytics and artificial intelligence tools, potentially preventing blackouts due to generating capacity shortfalls.
Utilities frequently partner with companies like Opower to offer mobile apps and reports, aiding customers in monitoring and comprehending their electricity usage. Typical reports might allow consumers to compare their own usage with their closest and most energy-efficient neighbors. These insights have been shown to reduce electricity consumption by about 2%, ensuring utilities can handle peak demand without blackouts.
During extreme weather events, utilities commonly issue conservation appeals to customers. The data analytics capabilities of smart meters can pinpoint which customers respond to these requests effectively.
Smart devices and dynamic pricing further contribute to electricity conservation. For example, smart thermostats from companies like Google, Ecobee, Emerson, and Honeywell can autonomously adjust home temperatures, potentially reducing energy consumption by 10% to 15%.
Managing energy use can be further optimized through dynamic pricing—real-time price shifts reflected in consumers' electricity bills. Under dynamic pricing, electricity rates would spike during adverse weather reducing power supply, signaling customers to reduce usage.
Excel Energy in Colorado is testing time-of-use rates paired with smart meters. Experiments in Washington, D.C., and other cities have demonstrated that consumers reduce their electricity consumption during price spikes, helping to lower the overall risk of blackouts. This strategy also has environmental benefits by reducing the need for high-polluting, fossil fuel-based power plants during peak demand periods.
Critical peak pricing for electricity can lessen the dependency on dirty power and decrease reliance on home generators that emit harmful pollutants. However, it is essential to balance this with fair pricing practices to avoid public backlash, as seen during the 2021 Texas freeze.
Economists suggest pricing strategies that promote energy conservation without exploiting vulnerable consumers. For instance, utilities can incentivize significant electricity consumers who are responsive to price increases to enroll in critical peak pricing programs, offering them an annual financial incentive in exchange for facing price spikes on select days.
If this approach is adopted, a small percentage of high-demand consumers reducing their usage can significantly alleviate the overall power demand. Financial incentives for energy conservation, supported by federal funding from the Inflation Reduction Act, could advance this initiative.
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