The movies had “Dumb and Dumber.” Perhaps the grid will have “Smart and Smarter.” If so, Europe looks poised to take the Smarter role. I just returned from a speaking engagement in Europe. While there, I had the chance to spend time with Novabase (Portugal's leading integrator), EDP (Portugal's distribution system operator) and the Current Group (an American company that is finding success in Europe). I came away with the impression that Europe's approach to the smart grid is often superior in at least three ways :
1. Linked with a larger social vision. Many European utilities are wisely tapping into the larger social agenda. For instance, Denmark and Sweden have pledged to become completely free of fossil fuels. Portugal is not far behind with extremely aggressive renewable portfolio targets. Utilities in these countries correctly paint their smart grid programs as an important step along that path.
At their very worst, American utilities justify smart grid with "because our regulator said we could." Even at their best, they talk only about efficiency and "information to help you control your energy usage.” That's fine as far as it goes, but they are missing the chance to tap into America's great yearning to end the tyranny of foreign oil and to create a better world for the next generation.
2. Launched with system efficiency as first priority. I recently speculated that America was building the grid @$$ backwards. We are starting with smart meters and demand response, which require consumer marketing and consumer behavior change. By contrast, many European utilities are beginning first by trying to make their distribution systems more efficient (with distribution automation, voltage optimization, and so on). Only then will they start implementing programs that require consumer involvement and behavior change. Denmark's DONG Energy, Portugal's EDP and France’s EDF are three examples.
3. More bang for the euro. According to the latest estimates by eMeter, U.S. utilities are spending about $220 per smart meter, including installation. By many accounts, European utilities spend roughly half that much. To be fair, some of the savings result because of lower installation costs. But a big chunk comes because they are shopping smarter, especially when it comes to the meter and the communications module. First, European utilities are typically larger, providing more economies of scale and more bargaining power. (Just one of the reasons I have been so worried that U.S. utilities will always be rinky-dink.) Second, they seem to be more adept at joining forces to create joint procurements and interoperable, plug-and-play standards, both of which drive prices down.
So let’s see. Europe is:
- Hitching its smart grid to a larger vision of a better world
- Starting with the low-hanging fruit of system efficiency instead of hard-to-achieve consumer efficiency
- Paying about half the cost (for smart meters at least)
The U.S. may be doing some pretty smart things with the grid. But from where I sit, the European approach seems even smarter. Use the comment form below to post your own opinion.