Customer density factors into smart meter projects

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By Stephan Williams, smart grid engineer

As of September 20, 2012, the Energy Information Administration puts the total number of smart meters installed in the United States at 20,334,525 -- or nearly 25 percent of customers in all sectors. According to a report  by the Edison Foundation, smart meter installations have reached one-third of all U.S. households -- up from one-fourth in late 2011-- and are projected to reach one-half of all households by 2015.

Stephan Williams

While many factors determine where smart meter projects are being implemented, including state regulatory requirements, the availability of federal grant money and an organization's internal objectives, there are also tangible geographical factors that influence advanced metering projects.

In addition to terrain topology, weather considerations, and coastal issues, one of the biggest geographical factors affecting any system-wide project a utility considers is its customer density. Current analysis of the customer density and smart meter installations of 22 of the largest utilities in the U.S. shows a tendency toward mid- to lower-density applications:

  • Customer densities ranged from 3992 customers per square mile at the high end to 18 customers per square mile at the low end.
  • All of the utilities analyzed have more than 1 million customers in their service area.
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One of the biggest geographical factors affecting any system-wide project a utility considers is its customer density
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The graph shows that the four utilities with the highest customer density and the two with the lowest density have low smart meter penetration. While not a comprehensive overview of utilities in the U.S., this snapshot gives a general idea of where the bulk of smart meters are being deployed at large utilities. An analysis of smaller investor-owned utilities, co-ops and municipalities is likely to show a different pattern, due to the inherent differences between them and larger IOUs.

Operational and Upgrade Costs

Labor, fleet operations and maintenance make up the majority of traditional metering costs, but with an advanced metering infrastructure these costs can be drastically lowered. This is due to customer usage data being sent directly back to a meter data management system along communication paths, allowing foot- and fleet-bound meter readers to be reassigned or their positions phased out. Other factors, such as smart meter opt-outs, can have a slightly negative effect on the benefits of an advanced metering system, but the numbers of customers choosing to opt-out is remaining low.

View the full-size chart.

So why the dearth of smart meter installations at extreme ends of the density spectrum?

When considering operations and maintenance costs in high-density areas such as New York and Los Angeles, meter trucks don't have as far to drive as they would in less densely populated locations. Utilities in high-density areas also benefit from aggregated metering on skyscrapers and other densely populated buildings. This may explain why some of the higher density utilities are holding out on smart meter implementations -- they just don't have the high foot-hours and fleet costs of utilities in less dense areas.

One issue at lower density utilities may be the prohibitively high cost of building out advanced metering infrastructures. Communications lines are required for AMI, and these costs are directly related to circuit miles and inversely related to customer density. Line-of-sight availability and repeater tower builds or leases can become a big monetary drag on an AMI business case. There is a cut-off point at which the cost to build the required communication infrastructure outweighs the monetary benefits of the AMI system. These costs are coming down as cellular systems expand and other technologies improve, but for now the price is prohibitive for some large rural utilities.