A realistic growth of AMI requires that system’s imprisoned utilities and regulators let go, by changing our most basic ways of thinking. “If these do not change, any new ‘input’ will end up producing the same fundamentally unproductive types of actions.” The result will be much needed industry consolidation and opportunity for innovative AMI competitive providers to emerge to fuel AMI growth without today’s limitations.
Enabling AMI’s Growth
By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity
First posted in the GMH Blog, on March 1st, 2008.
Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to email@example.com to contact the author for any kind of engagement.
Mark Hall, Research Analyst, Chartwell Inc., has written the very timely article Advanced Metering Growth to Expand Significantly, but Industry Penetration Still Low. In the article, I'd found very instructive that “the number of installed ‘smart’ meters – those that are both advanced and serve as a gateway to customers’ homes – are almost nonexistent.”
Mark adds that “Based on the 18.5 million residential AMR endpoints represented by the 111 utilities Chartwell surveyed, it is estimated that two out of every 15 residential AMR meter is two-way and capable of delivering customer data on an hourly basis.” Such “gauge [of] a realistic industry ratio of true advanced metering installations” as he names it, signals that utilities and regulators are imprisoned in a system that doesn’t enable them to do the job required.
The potential for Advanced Metering Infrastructure (AMI) growth is indeed very large. There is, however, a typical systemic problem that gets in the way. In the “Dance of Change,” Peter Senge et al write: “Our core premise … is that the sources of these problems cannot be remedied by more expert advice, better consultants, or more competent managers. The sources lie in our most basic ways of thinking. If these do not change, any new ‘input’ will end up producing the same fundamentally unproductive types of actions.”
To enable growth, it is essential to place attention on the limiting processes to make them visible and on the fundamental shift in thinking to develop the necessary leverage. The limiting processes inherent in today’s systems are found in the interaction of the regulator and the utility, which come from the great power of the larger culture, structures, and norms that exert great resistance against the best efforts of effective growth. EWPC is a market architecture and paradigm shift that changes the roles of the regulator and the utilities with a high leverage intervention to enable larger AMI and smart grid growth.
The intervention separates the utility grid from the utility enterprise. First, the utility grid retains the utility characteristics as a new transportation utility compact with a responsibility to transport under tolls price controls. The EWPC article The Smart Grid Transportation Utility (hit link here and further down to get more details) shows how to remove the limitations, imposed by the utility enterprise, which has priority over the utility grid; and that the regulators remain with a well known job. See also the EWPC article Shrinking the Regulator’s Jobs.
Second, the state utility enterprise, however, is shifted to the open market, where they become competitive retailers (see Second Generation Retailer - 2GR) in the federal market. So the state limitations on the federal retail markets are removed, while regulation shifts from price controls to prudential regulations. This way, regulators are not longer involved in risky AMI bets for which they are unprepared, passing such market innovation risks to the market with 2GRs. See the EWPC article The Sixth Disruptive Technology.
The result will be much needed industry consolidation (Chartwell reports 111 utilities surveyed) and much needed opportunity for innovative AMI competitive providers (other than Sensus and Itron, which seem to have the larger market share) to emerge under EWPC to fuel AMI growth without the above limitations. In addition, free of such limitations, a mutually reinforcing activity is expected to develop between the smart grid and AMI.