Two weeks ago, Lynne mentioned an ad by IBM that had appeared in the Wall Street Journal. They reprinted the ad on the back page of the first section in today’s edition (Tuesday, May 30). Still can’t find the ad online, but here is a picture:
The text says:
* this outlet talks to people
It tells headquarters exactly how much power it’s using. It even keeps accounting up-to-date, making for automated real-time billing. In short, a once dumb line is now smart. Enel, Italy’s top utility, uses this Automated Meter Management system to support 30 million homes. They can see their entire grid at all times, and billing efficiency is up. Now IBM is rolling out this groundbreaking program to utilities around the world. Want innovation for efficiency? Talk to the innovator’s innovator. Call on IBM. To learn more, visit ibm.com/innovation
I quote the ad not to endorse IBM’s products or services, but to endorse the idea of smart metering.
Lewis L. Strauss famously imagined a future in which “our children will enjoy in their homes electrical energy too cheap to meter.” Typically this remark is interpreted in terms of a projected falling cost of producing electricity. But implicit in the “too cheap to meter” phrase is a comparison of benefits of metering electricity and the costs of doing so. The benefits of metering are improving dramatically as advanced meters capture increasingly detailed data on energy consumption. At the same time, the costs of metering are falling dramatically because of advances in electronic technologies and the expansion of communications networks. Advances in computers and software further magnify the value of the meter data now available.
Currently the price of energy is relatively high, compared to recent history. If the peak oil people or other resource pessimists are right, then maybe the cost of energy is going up for a long time to come. In that case, smart metering is a no-brainer. Personally, I’m an optimist and believe that useful energy will get cheaper and cheaper in the long run. So I think that advanced metering should be subject to a careful cost-benefit test. I also think it is obvious that smart metering passes the cost-benefit test in more and more cases.
It makes no sense to ration — through markets or other economic systems — any good that is not scarce in economic terms. Perhaps electrical power or some substitute source of useful energy will become so abundant some day that it is for all practical purposes simply no longer a scarce good. Power would actually be too cheap to meter. We aren’t there yet, and if the quality of metering continues to advance while the cost of metering continues to drop, we are not going to get there for a while.
Falling cost of power vs. falling cost of metering — now that’s a race to the bottom I’d like to see. At the moment, the smart money is on smart meters.