Why American utilities will overpay $2 billion for smart meters - 25 Jan 2011


An article written by Jesse Berst from SmartGridNews.com asks the following questions:

  • Why are American utilities spending twice what the Europeans do for smart meters?
  • Why aren't they using joint standards and joint procurement to achieve economies of scale and drive down prices?
  • Who will foot the bill?

In Europe, the typical cost for installation is $40 per meter (plus $15 for the communications). In America, typical prices are $110 to $120 per meter (and approx $50 for the communications).If American utilities install 50 million smart meters over five years and spend $40 more than the Europeans, that would equal $2 billion.

Many European utilities have more bargaining power because they're larger than their American counterparts. That is one of the disadvantages faced by America's electric power utilities. But Europeans have more marketplace muscle by creating joint standards, as with the Prime Alliance for smart metering. This ability to collaborate is one of the reasons Europe has a higher smart grid IQ than America.

Other industries can do it

Joint standards and joint procurement have certainly worked in other industries. The telecommunications industry had a Joint Procurement Consortium in the mid-90s and the cable industry’s CableLabs consortium has been going strong since 1988. Some people say joint procurement slows things down or even stifles innovation. The innovation will come in the software, not the hardware. Why can't American utilities use the same tactics that have been so successful for European utilities and for other American industries? Are there any justifications for this (what appears to be) selfish insistence by utilities to go it alone, even if it saddles ratepayers with huge extra costs?

For more information see:

http://www.smartgridnews.com/artman/publish/Technologies_Metering_News/Why-American-utilities-will-overpay-2-billion-for-smart-meters-3448.html

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