Why Aren't Smart Meters Available to More Utility Customers?

Smart meters have been promising to disrupt and revolutionize the utility industry for many years, unlocking new realms of customer-utility interaction, empowering utilities with massive troves of new types of data upon which they can make decisions, and influencing the concurrent trends of cleaner, more affordable, and more resilient energy systems. While technically the smart meter was invented in the 1970s, it wasn’t until the turn of the 21st century that utilities started to deploy them. But even with decades of development, pilot programs, and lofty promises, the use of smart meters for utility customers has still stalled and fallen well short of complete market penetration.

Promising digital technologies are often some of the most vulnerable innovations to the Gartner Hype Cycle, with inflated expectations and overpromises too often leading to under-delivery and the waning of interest before real success is achieved on the market, and smart meters have been no exception to this rule. But what exactly has been holding back more smart meters from making their way to the grid, given their status as being beneficial to all stakeholders involved?


To start, what even are smart meters and why has there been such a level of excitement behind them? Smart meters are also often referred to as advanced metering infrastructure (AMI) smart meters, and they replace the traditional more analog meters that utilities would traditionally use to track energy usage by customers that informed monthly bills. Whereas the traditional method of billing would see a utility employee sent out to each meter to read it each month, smart meters utilize modern technology to remotely collect and send data about power usage at much more regular intervals, whether that’s daily, hourly, or even every 15 minutes.

Utilities like the idea of smart meters because this added availability of data permits them to study energy usage patterns, to better predict the assets they need to be deployed on the grid, to ensure supply keeps up with demand at any given moment, and so much more. From the customer side, smart meters are also beneficial because they can communicate important information. For example, if a customer is using more energy than they usually do, a smart meter can be used to alert the customer to investigate equipment in the building to see if anything is broken, needs replacement, or is just incredibly inefficient and should be upgraded. Smart meters can also be used as a tool to influence customers to adjust their energy-consuming behaviors with real-time information about consumption and corresponding costs, or even in some more advanced demand response systems utilities can use smart meters to alert customers when electricity prices are rising to incentivize customers to reduce their energy use, such as by delaying when a household runs the laundry or when a factor turns on a particularly energy-intensive manufacturing machine.

Another benefit of smart meters is that rather than just tracking power coming to a customer from the grid, they can also tabulate the energy being sent from the customer back to the grid, such as if the customer has on-site energy storage or is generating power via solar panels. This process allows customers to be billed via net metering, which incentivizes and promotes more renewable generation on the grid, more distributed assets on the grid, and other innovative trends.

Taking a step back, when industry stakeholders discuss the smart grid, that development is just based on is the pervasive use of smart meters, along with some other grid-tied sensors and automation, which can create a two-way flow of both information and energy between customer and grid. The National Renewable Energy Laboratory notes “Smart grids attempt to predict demand and react to rapid changes in demand and supply to deliver efficient, reliable, and sustainable electric power.”

So, for a technology that benefits everything from customers (e.g., fewer power interruptions, rate flexibility) to utilities (e.g., demand control and reduced operating costs) to the economy as a whole (e.g., job creation and less energy burden on customers) and even entire environment (e.g., more renewables leading to reduced emissions contributing to climate change and localized pollution), one would think that there’d be nothing standing in the way of mass deployment and integration. So, is that the case?


The U.S. Energy Information Administration tracks the deployment of smart meters by utilities and found that, as of 2019, nearly 95 million smart meters had been deployed, with 88% of those meters being installed at residential buildings compared with 11% in commercial buildings and 1% in industrial buildings. As a percentage of all utility customers, EIA data demonstrate that smart meters have been installed for 61% of residential customers, 58% of commercial customers, and 54% of industrial customers. All told, that’s 53% of all meters in the United States are smart meters.

This level of smart meter installation is, indeed, great progress to see, with more than half of each sector utilizing smart meters. The penetration can be particularly impressive especially considering that as recently as 2013 (the first year for which EIA data are available) the total percentage of meters that were smart was under 40%. Additionally, the absolute count of smart meters installed has seen immense growth, doubling multiple times over the past decade.

All that said, smart meters do appear to be universally beneficial for all stakeholders in the supply chain, including utility, customer, common citizen who wants to see benefits to the environment and the economy, and more. So the fact that the remaining 47% of customers that do not have smart meters remains troubling. What’s causing that holdback?


Early in the smart meter deployment process, public policy was responsible for bringing the technology to commercialization. In 2011, when smart meter deployment was still nascent, a review by the U.S. Department of Energy found only a 14% market penetration of smart meters nationally, but seven states in particular were each above 25%. Those high-adopting states were the ones where regulations, policies, and government-sponsored pilots drove action.

In the time since, the rest of the country has seemingly started to catch up with the rise of smart meters in terms of prioritization and deployment. But there remain hurdles in the way that account for the nearly half of all U.S. customers to still be stuck without smart meters.


Unsurprisingly, an early and ever-present hurdle towards smart meter installation is one of limited resources. Because of the more advanced technology required, smart meters are more expensive than the equipment they are replacing at every stage, from manufacture to installation to maintenance. While utilities can save money on labor by no longer having to send meter readers to individual buildings, smart meter installation remains a capital-intensive endeavor.

These costs are critical considerations where regulators have an obligation and commitment to keep costs to ratepayers as low as possible and will thus push back on unnecessary price hikes to the customers in a service area. For example, Virginia regulators recently rejected a proposed smart meter rollout from Dominion Energy, joining New Mexico, Massachusetts, and Kentucky, all with costs cited as the main reason to pause deployment. And while the amount that utilities are willing to invest in smart meters is growing, reaching an aggregate of $39 billion in 2019, that’s a relatively small portion of the $135.6 billion in total investments across the industry as a whole.


That competition for new investment resources extends to other competing priorities in the innovation and modernization wing of the power sector. Utilities are notoriously slow to move, very deliberate, and can get stuck in inertia. As such, focusing on smart meter rollout will take a lot of time, study, and consideration, and during that lag executives at utilities are seeing smart meters fall down the list of priorities.

For example, dealing with the COVID-19 pandemic has seen an interruption in existing plans to install smart meters. Not only were resources diverted, but cashflow to the utility as a whole was down as customers couldn’t pay bills, so capital was harder to come by. And practically speaking, the COVID-19 pandemic made it more difficult to send workers out into the fields to install meters. Of course, utilities couldn’t have anticipated COVID-19 upending preexisting 2020 plans, but the fact remains that emergencies will come up in the utility industry frequently, such as hurricanes, wildfires, or other unexpected events. These emergencies and the necessary responses will divert attention and resources towards the utility sector’s clear cut top objective: keeping lights on reliably and affordably, and smart meter deployment will always remain a step below.

Of course, COVID-19 isn’t the only competing priority, otherwise the industry would likely have seen a much wider deployment of smart meters before 2020. For example, New Jersey has notoriously been among the slower states to implement smart meters, with one of the main hurdles coming at the behest of environmental advocates. While smart meters can, long-term, aid in the deployment of more clean and renewable energy, New Jersey clean energy advocates thought the immediate priority should be adding more renewable energy to the grid. With the resources and attention available for innovation investment being naturally limited, having renewable energy be the focus in recent years won out and New Jersey had put up a two-year moratorium on smart meter deployment (though that pause recently expired and allowed PSE&G to deploy their $700 million smart meter rollout plan).


Another critical holdup for smart meter deployment has come from the behavioral aspects that the inventors and investors perhaps didn’t anticipate. In particular, customer pushback has been intense in certain communities.

A main source of pushback has been from fears of customers who worry that the radio frequencies emitted from smart meters are dangerous to health, even calling them a poison. Fights have been waged on this issue from Iowa to Pennsylvania and even in Europe. Despite smart meters not functionally being different technologically than an average cell phone and industry advocates noting that they have the technology is thoroughly tested and verified as completely safe, unfounded fears have been enough to tank the market of other products and technologies in the past.

Combine those fears of smart meters with other groups of customers who worry about the security of their data and their privacy amid the rollout of smart meters, which officials also note are completely controlled for, and smart meter opponents can create groups of resistance among many community customer bases, whether they refuse to install them in their home, issue lawsuits to prevent the program rollouts, or other tactics. While education and awareness initiatives are commonly in place to quell these fears, they remain a consistent hurdle for smart meter proponents.


Lastly, installing the smart meter technology is just the first step, and ensuring the technology is fully and appropriately utilized is a completely different one. Reports from the American Council for an Energy Efficiency Economy find that despite utilities installing smart meters widely, many are failing to capture the data that could be of great use. After all the costs to install and all the resources spent in program rollout, not capturing the available data amounts to wasting all of those funds. In these specific cases, real change is needed in many utilities to understand the true value and possibilities with smart meter data. From efficiency to grid reliability to customer engagement and more, this data can be invaluable. Unfortunately, too many utilities are treating smart meter deployment as something to simply check off a list rather than a philosophy to ingratiate in their core practices.

Further, the customer side of smart meter utilization can be a particular challenge as well. Just because the technology is available to try and influence certain behavioral changes does not mean that people will necessarily respond in the way that the makers had hoped. When deploying a multi-billion-dollar smart grid investment in 2009, President Obama noted that “Smart meters will allow you to actually monitor how much energy your family is using by the month, by the week, by the day, or even by the hour. So coupled with other technologies, this is going to help you manage your electricity use and your budget at the same time.” But what he and other government officials found is that people weren’t immediately using smart meters in the way they had envisioned.

Initial deployments of smart meters lacked user-friendly interfaces to relay information in real time and trigger customer responses. Even when they did have such interfaces, smart meter programs experienced difficulties in communicating to customers the real impact—in energy, in dollars and cents, and in environmental benefit—of those people making such recommended changes. Especially when people aren’t fully aware of how much energy they’re using or what systems or machines are using it, smart meters alone aren’t enough. They need to be paired with education and understanding.

Hopefully, future smart technologies can be paired with smart meters, whether that’s smartphone notifications, smart voices assistant integration, and more. Beyond that, utilities may find that relying on people to take action is challenging and another approach may be more automated in nature. But asking customers to allow for those automated changes is also a tough sell. So, technology developers must continue to work with psychologists, behavioral scientists, and marketing gurus to figure out the best way to marry smart meter technology with desired actions.


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