Dissecting the Cost of the Smart Grid

Distribution automation will be the big kahuna in smart grid. Component costs, though, still bedevil meter makers.

How much does it cost to install a smart meter on your home?

Approximately $250, including the cost of the equipment, installation and integration into a utility’s back-end systems, according to a recent webinar conducted by GTM Research.

By contrast, it costs about $330 to erect a home area network (HAN) for home automation and energy savings. A full report on the subject is available here.

Keeping down costs has consistently been a primary concern for utilities in their smart grid rollouts, but recent complaints from consumer groups and regulators in Maryland, California, Texas and other states have put utilities on warning that they must do better to justify rate increases.

“Proving the business case has become more critical,” said David Leeds, senior manager of smart grid research at the firm. (GTM Research is part of Greentech Media.)

Overall, distribution automation will likely be the strongest smart grid segment over the next five years, Leeds reiterated. Approximately $2.3 billion of distribution automation equipment -- voltage regulators, feeder switches, capacitor banks -- will get shipped in 2010, but the figure will rise to $5.6 billion by 2015. Between 2010 and 2015 inclusive, approximately $26.4 billion worth of equipment will get shipped. A fully intelligent smart grid would require three million capacitor banks. Approximately 175,000 of them -- selling for an average estimated price of $35,000 -- will likely get installed over the next five years.

“We’ve had under-investment in distribution for the last several years,” Leeds added.

So how do some of these expenses break down? Approximately $80 in of the total cost of a residential smart meter goes to replace a 'dumb' meter with an intelligent one. The metrology components for basic functionality cost around $17 to $30, the networking card for connecting the meter to a utility run about $20 (multiply that by ten if the utility wants to use WiMax for the neighborhood area networking protocol), and $5 to $15 for the networking components to connect the meter to everything inside the home, i.e., the HAN card.

The ability for a utility to remotely disconnect power service to a home costs $30 to $50. “We were surprised by this,” Leeds said, adding that the cost -- like many of the components based around IT equipment -- will go down over time while the performance rises. The processors in meters, for instance, will graduate from the 8-bit and 16-bit level to the 32-bit level. Computers made that leap in the '90s.

Remote disconnect technology from Germany runs around $50, while Chinese remote disconnect runs around $30.

Even at those prices, remote disconnect is still a bargain for utilities, which now have to schedule trucks to make onsite visits.  CenterPoint in Texas has eliminated over 220,000 truck rolls with its smart meter network. Trying to get a rate increase for something that will save utilities money and anger customers, however, could become the sort of thing consumer groups and regulators object to more often in the future.

In all, 17 million smart meters will have been installed by the end of 2010. By 2012 the figure will creep up to 39 million. By 2015, 48 percent, or 68 million, U.S. homes will sport smart meters.

Home area networks will be less robust. By 2012, only around 12 percent of U.S. homes will be classified as smart homes. Home area networking thus will stay small: growing from $50 million this year to $250 million by 2015. 

via greentechmedia.com

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