Smart Grids, Cheap Utility Companies
James is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Here’s the thing: In the immediate term it’s expensive to be smart, and cheap to be stupid. In the long term, smart saves, though the math is a bit complicated.
There are a handful of energy experts out there who believe that America’s utility giants could have recovered from Hurricane Sandy much better had they invested in smart grid upgrades.
A number of smart grid paraphernalia would have come in handy:
Smart-Metering: Smart meters pinpoint utility customers who are without power, enabling the utility company to respond in a timely fashion. These smart meters monitor electricity flow and send data back to the control room in seconds.
Outage Management Systems: The OMS reduces the impact of outages by reducing the time and resources used to deal with them, through automated call-taking, prediction and the integration of Advanced Metering Infrastructure (AMI) integration and Integrated Voice Response (IVR). In simpler terms, it predicts the location of a failed fuse or breaker, prioritizes restoration efforts, provides information on the extent of outages, calculates restoration times and manages repair crews.
Distribution Management Systems: This is a collection of applications that work to monitor and control the entire distribution network, and it is a key decision-making tool that improves reliability and deliverables.
Are these systems available? Yes. Are they expensive? Yes. Are they worth it? Yes.
Related Article: The Smart Way to Play the Natural Gas Boom
According to Siemens (NYSE: SI), which is one of the key developers of this technology, the greatest cost is not in the technology itself, but in the training of personnel required to effectively use it. Apparently, you have to have smart people operating a smart grid.
Siemens knows. It acquired California-based eMeter in January 2012. Still, no one’s willing to put a price on implementing this technology, with too many variables to consider.
John McDonald, director of GE Digital Energy’s Technical Strategy and Policy Development, told AOL Energy that if US utilities in the east had installed this smart technology earlier, they would have known about outages more quickly and been able to respond more rapidly.
Ralph LaRossa, the president of PSE&G, told reporters that his company had no immediate way to tell if a customer was without power. Installing smart meters, though, would cost as much as $700 million. Until the company is ready to foot the bill, it will remain “antiquated.”
Related Article: Pakistan's Shambolic Electrical Sector Stymies Exports
Let’s take New York: Governor Andrew Cuomo is asking for $30 billion in disaster money: $3.5 billion to repair infrastructure; $1.65 billion to help rebuild homes; $1 billion for overtime costs. Separately, Cuomo wants a smart grid, which he estimates will cost $30 billion over the next decade.
There are a few in the east who have jumped on the smart bandwagon. Con Edison in New York is working on smart grid installations, but they’re still about four years away from completion—certainly, to the dismay of those who suffered lengthy blackouts in the wake of Hurricane Sandy.
Pennsylvania-based PPL (NYSE: PPL) is also more up to date, already operating four smart grid systems, putting them ahead of the pack and offering their consumers a great deal more security. PPL reportedly has smart meters for 1.4 million customers.
Overall, American utilities have installed around 36 million smart meters—so there’s progress, albeit slow.
In terms of cost, McDonald told AOL Energy that they will be quickly outweighed by the benefits, and will eventually lead to lower electricity prices.
The mathematics is complicated, and it’s hard to determine the amount of damage to electricity infrastructure Hurricane Sandy caused, and how much less damage might have been caused if we had smart grids. Immediate damage is more a question for burying power lines, than for installing smart grid technology. But smart grid technology would certainly help predict potential problems and respond to them before they get out of control. More than anything, it’s about fast recovery and about serving the customer, who is, after all, paying for electricity.
There are also plenty of naysayers, who like to point out that smart grid technology is not a magic cure. Certainly, it’s not, but no one’s talking about magic, they’re talking about progress and modern technology.
Smart grid technology would also reduce the vulnerability to physical and cyber attacks on the system, and as we’ve pointed out before, the US electricity network is vulnerable to just about everything.
oilprice has no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!