U.S. looks to Italy for electrifying advice
Italians currently lead the world in smart grid technology.
Thu, Nov 19, 2009 at 01:12 PM
Photo: Getty Images
Politicians and utilities in the U.S. are preparing to roll out smart meters nationwide, and they’re looking to Italy for figure out how to do it, according to a recent article in BusinessWeek.
The sudden interest in smart meters, which allow energy companies and consumers to more closely monitor their electricity consumption, is due to the whopping $4.5 billion that President Obama’s stimulus package set aside in subsidies for the technology, with the hope that smart meters will ease consumers' financial woes by helping them save money on energy.
To get a handle on how best to roll out these meters, U.S. policy makers are eyeing Italy, which due to a massive push back in 2001 by Enel, the country’s main utility, currently has smart meters in an impressive 85 percent of homes — the highest percentage in the world.
"We wanted to improve efficiency, create higher margins, and help customers reduce their energy bills," says Livio Gallo, Enel's director of infrastructure and networks, who oversaw the smart meter rollout.
Of course, Enel’s reasons for pushing smart meters are not entirely altruistic. Some say that Enel was tired of people stealing its power and committing other forms of fraud.
Still, the end result is positive. After all, Enel customers now have control over their energy bills. What a concept!
It works like this. When electricity prices are high during peak hours, like in the evening or when it’s freezing outside, members of the household can instantly know about the higher rates and adjust accordingly by doing things like putting on an extra sweater or postponing washing the dirty dishes until morning.
Though these actions sound kind of quaint — think Jimmy Carter in a sweater — they've been cutting Enel customers' energy bills in half, according to some estimates.
But it's not just consumers who benefit from the technology upgrade.
Enel is also cleaning up nicely on the venture by quickly making back its $3 billion initial investment in annual savings of about $750 million. Of course, once Enel makes the entire amount back in about four years, the energy savings will turn into pure profit, a notion that has U.S. utility companies like San Francisco’s PG&E taking notice.
Since Enel was the first company to do anything like this on a massive scale, it has a few tips that, fortunately, it's more than willing to pass on to others. One recommendation Enel makes is that companies should roll out the technology as quickly as possible so that the return of the investment is faster. This means consumers will start benefiting from the technology sooner too, a major plus.
Enel also advises that companies make sure consumers understand what they’re getting into by holding public forums like town meetings so the utility’s customers have a chance to ask questions. This also gives the utility company a chance to show its customers that they will actually save money using this technology, making it more likely that consumers will not only accept the changes, but actually embrace them wholeheartedly.
This last part is key because, as the U.S. EPA has learned the hard way with programmable thermostats, there's no use in having smart technology if people aren't smart enough to use it.