Smart Metering: A Smart Investment in Energy Efficiency

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Information Empowers

Browsing AltEnergyStocks new CleanTech News page (I find it a good way to discover quality stories I wouldn’t have come across otherwise) I came across one of the best articles I’ve seen yet on Smart Metering.  Smart metering is one of the biggest win-wins available when it comes to reducing our carbon footprint by providing real time feedback on our electricity use. It allows us to see how we are wasting electricity and choose to take action.  When Woodstock Hydo’s customers were given this information (without any other encouragement to save electricity), their average usage fell by 15%.

In addition, Woodstock Hydro discovered that participants complained much less frequently than other customers. By giving people real time information about their electricity usage it empowers them to make their own decisions, and the better information they have (if accompanied by the  tools to manage the new information), the better decisions they will make.  

My own utility, Xcel Energy (NYSE: XEL), is just completing a year long trial of time-of day pricing, and the preliminary results indicate that when customers have the controls necessary to program or cut their usage of high consumption appliances such as air conditioners, either ahead of time or remotely, their usage decreases most.

Investment Opportunities

Smart metering is just the sort of less-than-sexy energy efficiency sector I think cleantech investors should focus on.  Because it’s not as sexy as, say, solar, there are fewer investors bidding up the price of the companies (although, like everything in this sector, they are far from value plays,) yet the strong economic case for smart meters means that smart meters could easily be one of the first energy efficiency measures rolled out by many utilities.

The leading pure-play company in smart metering is Itron, Inc (NYSE: ITRI.)  Itron does not have the field to itself, since energy management companies such as EnerNOC (NasdaqGM:ENOC) (previously covered here), and Comverge (NasdaqGM: COMV) offer similar products and services to utilities. Also, conglomerates such as GE and networking services companies such as Echelon ,(NasdaqGM:ELON) also compete in the area..

The competitive forces in this rapidly growing sector are intense, and it is difficult to pick winners in a market whose customers are dominated by regulated utilities.  Because of these factors, I prefer acquiring small stakes in as many smart metering players as possible, rather than trying to pick an eventual winner.  


Woodstock Hydro Pay as you Go program

New York Times article on time of day pricing (subscription only)

The Psychology of Energy Efficiency

Clean Tech News

DISCLOSURE: Tom Konrad and/or his clients have positions in all the stocks mentioned here: XEL, ITRI, ENOC, GE.
DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.


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