New Economist Smart Grid Article

Lynne Kiesling

This week’s Economist has an outstanding and thorough article on the current status of smart grid investments in the electricity industry. It surveys recent developments from a international perspective as well as focusing on some of the specific developments in the U.S. It highlights the peak demand reduction and renewables integration benefits that would come with such an intelligent network:

With peak demand lower, utilities would no longer have to hold as much expensive backup capacity. Mainly because so many of its customers have air conditioners, Pacific Gas and Electric (PG&E), a Californian utility, needs to be able to deliver more than 20,000 megawatts (MW) in the summer months—almost twice the average demand. Eliminating only the top 10% of electricity usage through demand-response and efficiency programmes would save customers more than $100m annually, says Andrew Tang, who oversees the utility’s smart-grid project, one of America’s biggest. PG&E is installing 10,000 smart meters a day and wants to equip 5m homes by the end of 2011.

The article then goes on to describe some of the political difficulties, with regulators “still stuck in the era of the dumb grid” and wanting to “protect” consumers who have no experience with intelligent end-use devices.

The only area missing in this excellent article is a discussion of the political difficulties of retail competition, and how removing entry barriers in retail markets could affect the consumer experience and consumer value propositions. It would be great to have the Economist analyze retail competition, and not just leave it to the local papers; I think we’d see a more balanced perspective.