How Smart Grid Technology Can Affect Energy Pricing: Smart Grid Technology Articles: Eco20/20

How Smart Grid Technology Can Affect Energy Pricing

Smart grid technology can affect energy pricing in two ways: raising the rates for high-demand peak periods and lowering it during off-peak times. The benefits of the smart grid can go both ways: for those who are tapped into the smart grid and are creating all of their own energy, selling excess energy back to the grid becomes a viable option. The excess energy could then be credited to the consumer's account for the month.

As more and more people become familiar with the concept of alternate forms of energy and are willing to install and use these systems in their homes, the utility companies will need to make less energy. Instead of losing money however, they can simply start changing the way that they charge. This could be accomplished by moving from a flat rate system to charging for actual usage. A smart system that actually charges more for high demand periods would create smarter consumers as they work to keep their energy costs low. The utility companies will still make a profit and the consumers will be in better control of their own consumption.

When more people are connected to photovoltaic systems for instance, the cost of the energy created by the utility companies will go down; less production equals less cost, except for those customers not using solar power at all. Those customers would then have to make conscious and clear decisions regarding when and how they use energy in their homes or pay the higher bills. The PV user would then see reduced charges and possibly credits at the end of each month. In fact, it is entirely possible for the right system to start paying for itself in as little as eight years, depending on a wide number of factors.

The more people who are selling their excess energy back to the grid, the less energy the utility companies will have to generate their own. If enough people sell excess energy back, the utility companies become giant holding facilities for offset solar power making it possible for prices to be dropped even further. Any amount charged would be almost pure profit if most of the energy that is sent out is being made and returned to the grid by others.

Any reduction in the utility bills would be welcome to most Americans who have struggled under the weight of crushing heating costs for the last few winters with no real relief in sight.