Meters, Pricing and Politics

Published: August 18, 2010    Category: Smart Grids

In carrying out our research for our soon-to-be published report on Smart Grid market opportunities in Europe  we came across one Smart Grid project in which the home energy monitoring software is sophisticated enough to identify which members of a family are the “energy hogs.”

Somehow this called to mind the character in Orwell’s “1984” who is turned in to the authorities by his family for exceeding his chocolate ration, though we are not anticipating that arrests are imminent for those unfortunate enough to consume an extra watt hour or two of electricity. 

Another Smart Grid project in Europe promises that consumers will be able to monitor the amount of CO2 they emit, although again there doesn’t seem to be any punishment for those who the Smart Grid software reveals as hideous greenhouse gas polluters.  Presumably, they will read their smart meters and just stop being bad, bad, bad. 

In practice, it doesn’t seem likely to us that most consumers will be quite as bright eyed and bushy tailed as the thinking behind these project imply when it comes to doing their “duty” as energy consumers.  But what they will respond to are real pricing mechanisms.  The long-term success of Smart Grids ultimately depends on such mechanisms, but they are (clearly and noticeably) not in place to today.

The only way to ensure that pricing can be effective is to allow electricity firms to experiment with pricing schemes and then allow them also to take the profits or losses that result.  Nothing could be further from what actually happens in the politicized regulatory framework from which the Smart Grid must ultimately break out.

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