We need to think small to save big

Mention the same two words to many Dutch homeowners and they think about easy, sacrifice-free savings. They also believe — justifiably — that they are doing their bit to save the planet.

Those Dutch homeowners are clients of Oxxio, an energy retailer owned by Britain's Centrica, which also owns Ontario's Direct Energy. Oxxio has deployed what are probably the world's snazziest smart meters — 150,000 of them so far. Roughly the size of a thick paperback, the boxes are two-way communications devices that measure hourly electricity consumption and zap the data wirelessly to the company's computer system.

Customers can log on to the Oxxio website and see how much juice they consumed in the previous day and what percentage was used during peak hours, when power prices are 40% higher than during off-peak hours. Oxxio turns the information into pretty charts so households can track energy use over days, months and years. Another Oxxio meter can measure both electricity and natural gas consumption.

Oxxio began installing the meters two years ago, and they are already a business and environmental success. The company's records show that 30% of households are saving at least 5% on their electricity bills, and 17% are saving 10% and up — more than justifying the $4 a month they pay to rent the meters. It expects those savings to increase as people get even more adept at simple manoeuvres like waiting until off-peak hours to turn on dishwashers and washing machines.

The meters, adapted from an Italian design and integrated into Oxxio's data network by IBM, will get even smarter as power prices respond faster to increases and decreases in demand. Right now, in Holland and elsewhere, prices can switch to off-peak rates just twice a day. But it's easy to see the future — even more variable pricing options that respond to increases or decreases in demand.

When this happens, beyond shaving a few bucks off your electricity bill, smart meters will also help utilities build more efficient and less environmentally damaging power grids. Electricity generation and transmission systems in North America and Europe are designed to meet peaks in demand, typically the hottest and coldest days of the year. So-called baseload generating plants cover daily energy needs: They run all the time, and new ones tend to be nuclear.

Peaking plants, on the other hand, are powered up to meet surges in demand; they sit idle much of the time, and usually are fuelled with coal, oil or gas, so carbon dioxide emissions soar during those surges. In the U.S., coal-fired power plants generate half the nation's electricity and 40% of its carbon dioxide emissions, the pollutant largely responsible for global warming.

More uniform demand during the day would reduce the need for peaking plants. This is where smart meters can work wonders. In Ontario, the Ontario Energy Board and IBM recently tested meters in 375 homes in Ottawa. Total electricity consumption declined by 6%, and peak demand declined by as much as 25%. A recent study done in the U.S. Northwest concluded that the use of smart meters could reduce peak demand by up to 15%.

Florida Light & Power has developed some of the most advanced practices to manage demand. The utility has 750,000 households enrolled in its "On-Call" program, which allows the company to turn off water heaters and other appliances remotely during surges. It says the program has "saved enough energy to avoid building two additional power plants." Research done by the Pacific Northwest National Laboratory of the U.S. Department of Energy suggests that if smart meters were deployed throughout North America, it would save $70 billion (US) in infrastructure spending over the next 20 years and eliminate the need to build 30 large coal-fired plants.

Governments, businesses and environmental groups love to promote elaborate and costly energy-savings schemes. Many of them throw money at things like rooftop gardens, wind farms, ethanol production and systems that would push carbon dioxide underground. Most of those big ideas don't work, have marginal benefits or are stupidly expensive.

A few years ago, smart meters were expensive. Now they cost $100 apiece or less, and the price will continue to fall. Programs in Ontario, Holland and elsewhere prove they work. There is no better bang for just a few green bucks. Bring them on. Fast.