Smart meter deployments slow as questions emerge over cost effectiveness, saturation

There could be 90 million smart meters installed by 2020, but U.S. utilities may also be approaching market penetration limits.

There are tens of millions of smart meters deployed across the United States. While a precise number is difficult to pin down, roughly half of electricity customers have advanced metering infrastructure (AMI) installed. And their prevalence has grown steadily in the last decade, despite debate over the technology's effectiveness.

The devices are foundational to grid modernization efforts, allowing two-way flows of information between the utility and customer. New meters mean utilities can offer dynamic rates and a range of demand management programs, as well as integrate more distributed renewable resources.

A recent report from the Federal Energy Regulatory Commission concluded advanced meters are the most common type of meter deployed in the United States, "accounting for nearly half of all meters installed and operational" in the country.

According to FERC, there were 70.8 million advanced meters operating in 2016, out of 151.3 million meters in the U.S., giving them a penetration rate of 46.8%.

But a look at data from the last decade shows the rate of AMI deployments may be slowing. And two utility AMI proposals were rejected by state regulators this year, bolstering arguments that they are not cost effective.

Shifting controversies

Smart meters have always been controversial, though not always for the same reasons. It's only been a decade since the Wall Street Journal ran the story, "Smart Meter, Dumb Idea?"

While debate over health impacts has quieted, in 2011, protestors took over a California Public Utilities Commission meeting and forced regulators to allow customers to opt out of Pacific Gas & Electric's rollout.

More recently, privacy concerns have grown as the amount and type of data the devices can collect has broadened. Smart meter issues wound up in front of the United States Court of Appeals for the Seventh Circuit this year, with a panel of judges concluding readings from smart meters constitute a "warrantless search."

There have long been arguments that the savings smart meters generate do not justify the cost. Regulators in Kentucky and Massachusetts were not so blunt, but they did reject proposals this year over concerns that utilities did not sufficiently make the business case. AMI deployments are expensive: Kentucky Utilities and Louisville Gas & Electric had proposed to install AMI for 1.3 million customers over the next five years, but the plan carried a $350 million price tag.

Despite the costs and controversy, the number of smart meters has grown ten-fold in a decade: from about 6.7 million in 2007, to north of 70 million today.