A report just released by the Washington, DC-based National Institute for Science, Law & Public Policy (NISLAPP)—a group that encourages collaboration among scientists and lawyers to develop intelligent public policy—claims that billions of dollars in U.S. federal subsidies for smart meters have been misspent because the technology will not lead to energy sustainability or contribute to the possibility of a more efficient and responsive electricity grid.
The report adds that the smart meters are confused with the much broader concept of the smart grid—and that the undue emphasis on meters diverts resources badly needed for key elements of a true smart grid technology. The desire of many ratepayers to “opt-out” of the new wireless meters on privacy, security, reliability, cost and potential public health grounds may herald, the report says, “an epochal transformation of the political economy of energy.”
“Getting Smarter About the Smart Grid” is authored by smart grid technology expert Timothy Schoechle, PhD, a former faculty member of the University of Colorado, College of Engineering and Applied Science. Schoechle, who has been engaged in development of electric utility meters, home automation systems, gateways, and energy management systems for over 25 years, and who sits on several international standards setting committees related to the smart grid, calls the smart meter being rolled out across the U.S. “a canard—a story or hoax based on specious claims about energy benefits….”
What’s more, Schoechle says he believes that the present policy approach to electricity infrastructure in the U.S. evidences a “fundamental lack of understanding of the problems associated with the future of electricity and energy”.
"Getting Smarter About the Smart Grid” recognizes the growing grass roots rebellion against smart meters now happening a dozen U.S. states and municipalities—including California, Vermont, Arizona, Texas, Florida, Pennsylvania, Maine, Illinois, Oregon, the District of Columbia—as only the “tip of the iceberg,” one that conceals a deeply dysfunctional energy economy needing urgent federal, state and local attention (see video).
Monopoly Players with No Rules
The report exposes inherent conflicts in the monopoly utility business model preventing the nation from moving to a renewable energy economy. It defines the technology investments, and standardization, as well as regulatory action, needed for an electricity grid that is wealth-creating, interconnected, secure, and empowering of people. The report says the nation’s energy and economic future can no longer be left in the hands of a monopoly power industry that has been disincentivized to take the necessary steps toward renewable energy and sustainability.
Jim Turner, Esq., chairman of the National Institute for Science, Law and Public Policy and partner in the D.C. law firm, Swankin-Turner, says “A key element in a successful transition to a renewable energy economy will be establishing a clear ‘demarcation’ line between monopoly utility space and customer premises space, where the home gateway belongs to the consumer, not the utility.”
Such a demarcation, a concept already embodied in electricity policy in Germany and in the Netherlands, was a critical element in the breakup of the landline telephone monopoly in the United States and led to significant growth in the consumer electronics industry, as market forces moved to better meet customer needs.
Above – smart meter protesters in California, courtesy of Tim Porter Photography
The findings note that, in Germany and the Netherlands—combined with feed-in tariffs (FiTs), which compensate homeowners for the distributed energy they produce—this demarcation has opened the way for home-based energy management technologies to flourish and facilitate the growth of renewable technologies, while eliminating the potential for significant privacy invasions, with the homeowner in control of his or her meter data.
Nine Key Problems in the Present Approach
Specifically, Schoechle outlines nine key areas in which the current smart meter approach will not fulfill current energy efficiency goals:
- Data to be collected by the smart meters, including personal information, is not necessary to fulfill the basic purposes of the smart grid, such as supply/demand balancing, demand response (DR), dynamic pricing, renewable integration, or local generation and storage, as promoters of the meters, and uninformed parties, routinely claim.
- Federal, state and local governments have been sold a bill of goods, promising that the installation of smart meters will somehow lead to reduction in use of fossil fuels, greater electricity efficiency and long-term energy economy benefits for the United States. In fact, efforts to further develop and standardize those technologies that could achieve those goals have languished, while investments with stimulus funding have instead been made in technologies that merely serve the short-term economic interests of the utility industry and its suppliers.
- Much of the multibillion-dollar federal subsidy for smart meters does not benefit ratepayers, nor support economic growth, but primarily benefits meter and meter networking manufacturers, while financially propping up unsustainable investor-owned utilities (IOUs). Regulated utilities can charge back their capital investments to ratepayers, with a guaranteed 10 percent to 13 percent rate of return (ROR) on assets, by law. Thus, investors in utilities gain from the smart meter deployment, as they would from any other capital expenditure, while there is ratepayers see no clear gain and significant new risks.
- Utilities (IOU) are paid on a per-kilowatt-of-energy-sold basis, and also receive a guaranteed ROR on assets, they do not have a financial incentive to encourage less energy usage, or to invest in technologies that would help citizens reduce energy consumption.
- Because coal plants must run at near capacity to achieve necessary economies of scale, adding renewable energy to the power mix may be in fact cost-additive for utilities and, ultimately, cost-additive for ratepayers. The report recommends the United States “move away from dependency on base load generation, particularly coal, as quickly as possible” to facilitate renewable integration and reach our potential for energy independence.
- Despite paying lip service to the public’s interest in incorporating renewable energy, as evidence in their marketing materials, utilities actually waste much of the renewable energy now generated in order to protect the economics of investor-owned coal plants. “Getting Smarter About the Smart Grid” explains why state initiatives wanting to fulfill the promise of a 30 percent or higher renewable portfolio standard (RPS) is practically impossible in a coal base load system. The paper suggests that decommissioning coal plants, possibly through a public bailout, may be required to move the United States to a renewable energy future.
- U.S. policy statements “reflect the mistaken belief that the basic solutions involve fixing or modernizing the existing electricity grid, rather than complete structural transformation of electrical service, which goes beyond particular ‘smart’ technologies.” In reality, shaving peak energy usage by shifting loads may actually increase energy bills as well as CO2 emissions by increasing dependency on coal base load generation – the most expensive generation there is when considering the totality of subsidies and externalized costs.
- Expected growth in electric vehicles within a coal-based system will only worsen the nation’s base load dependency, thus making the needed shift away from coal to a renewable energy future that much more pressing.
- Leadership in the energy sector is unlikely to come from the top, due to ‘regulatory capture,’ unless caused by a catastrophic event or consequence. At present, there appears to be little evidence utilities and their regulators want to or know how to make the needed changes to the utility business model, leaving it to the American public, through community-based initiatives and municipalization efforts, to drive the needed change toward renewable technologies and distributed, non-centralized power generation - as is now happening in such places as Boulder, Colorado.
Seven Opportunities to Intelligently Move Forward
The author also outlines seven opportunities to correct the course of the energy industry - among them:
- The United States must move away from dependency on coal base load power generation and toward renewable sources. Renewables (e.g., wind and solar), augmented by flexible “peaking” generation (e.g., natural gas turbines, hydro, etc.) and advanced smart grid supply/demand balancing can completely replace base load generation.
- Free, renewable energy resources must be prioritized and local opportunities for power generation and storage pursued. We must stop subsidizing a centralized, wasteful infrastructure approach that will not lead to sustainability or empower citizens to contribute to the grid.
- A clear legal and policy demarcation between customer premises space and utility space must be established. Utilities should not be the sole “gatekeeper” for access to energy applications—controlling consumer use, storage, and generation of electricity. As occurred in the telecommunications industry, establishing a clear market demarcation could unleash the creativity and competitive market strength of consumer electronics, appliance manufacturers, homebuilders, solar installers, and apps developers.
- Distributed renewable integration technologies must be developed and standardized for in-home devices and smart appliances. The heavy lifting on smart grid deployment is yet to be done. It will require research, engineering, and standardization of new consumer premises equipment and communication protocols to support distributed, variable, and transactive control of electricity generation, use, and storage at the household level.
- Electric power must be more local, using distributed renewable sources, instead of large solar and wind farms for which the economies of scale are not significantly greater than at small scale.
- State legislatures should enable public utility commissions to move to a service model that is not based on the present economics of commodity sale of electricity and rate of return regulation (ROR), which encourage unwise capital investments. Generation must be deregulated and separated from distribution, and the customer premises opened up to market competition in products and services for the premises-based generation, storage, management, and use of electricity. For example, some states are already moving to deregulate renewable generation for the charging of electric vehicles.
- Local communities must take it upon themselves to understand and obtain the safest and most secure technological options available for utility meters and other smart grid technologies. This education should be gained from independent experts with no vested interests in the present centralized utility paradigm. Wireless technologies should be avoided where safer more secure options exist.
In summary, Schoechle stated, “Utility meter networks intrude into homes and distract and divert attention and resources from the real task at hand while bringing unnecessary risks. Granular meter data expose intimate details of individual lives but do not facilitate the advantages claimed by meter proponents, such as demand response, dynamic pricing, or local generation and storage. Data should flow into the home – rather than out of the home – to distribute the generation and control of electricity. It is time for government, industry, and communities to move away from smart meters and base load dependency to get on with the work of developing technology and standards for distributed renewable integration, in-home devices, smart appliances, and other innovative products and services that can unburden an electricity grid that has become overly complex, vulnerable and uneconomical.”
For a full copy of the report, click here.
Edited by Braden Becker