Smart Metering: Helping Customers Reduce Consumption

Global energy demand is on the rise – forecasted to increase almost 50% over the next three decades, according to the U.S. Energy Information Administration. At the same time, extreme weather events are expected to continue, taxing the capabilities of an aging utilities infrastructure and unreliable energy grids. Consumer awareness about how and when to use energy is critical in order to optimize energy resources. Smart meters are at the heart of giving customers the information they need to reduce consumption, lower their bills, and support the environment.

What is a smart meter?

Smart meters are Internet of Things (IoT) devices that attach to homes and businesses to track energy, water, and natural gas consumption. Whereas traditional meters only measure overall consumption, smart meters track exactly when and how much electricity – or water or gas – is used and transmit that information to utilities in near real time. 

Using artificial intelligence (AI) and machine learning, the data generated by smart meters can be parsed to determine how to lower operating costs, increase efficiency, and forecast demand. That ability to track usage, analyze it, and plan ahead could result in smart meters saving utility companies up to US$157 billion by 2035. Smart meters are also a gateway for consumers to become prosumers, allowing them to produce, store, and consume energy.

Knowledge is power, and smart meter data benefits consumers by helping them:

“With the ability to adapt and react to usage patterns and energy prices, [smart meters] could represent massive energy savings if applied to the broader population. Widespread implementation could contribute to a greener, more stable electric grid for everyone.”


What is a prosumer?

“Prosumer” is a portmanteau word combining “producer” and “consumer.” Energy prosumers typically remain connected to the central grid. However, they are also capable of producing and even storing energy – typically with photovoltaic solar panels and EV batteries. Depending on the amount of power generated, this energy can either be used to offset monthly bills or be sold back as surplus to utilities companies or other energy distribution services. This model may be applied to both residential and commercial prosumers, with a growing number of businesses plugging their solar panels and EV fleets into the grid.

Smart utilities billing supports smart, engaged customers

With smart meters, power companies gain significant opportunities to improve the customer experience. Rather than relying on transactional communications around billing and payment, companies can use the data gathered from smart meters to drive communications that increase customer satisfaction, trust, and engagement. 

Companies can analyze this data and use it to send personalized recommendations to customers via text, e-mail, or as part of the billing process. For example, they can offer pool owners more efficient pool pumps, or encourage those with EVs to charge their vehicles when energy demands – and costs – are lower. This ability to personalize communications while helping customers save money and energy moves utilities from being seen as mere service providers to being valued energy partners. And at a time when there is rising competition in the energy sector, this opportunity to strengthen relationships with customers is paramount.

Despite these benefits, smart meters haven’t quite come into their own yet. In the U.S., 75% of homes have smart meters, whereas about 40% of UK and fewer than 25% of Australian households use them. As smart meter technology evolves, consumers will soon be able to set budgets and receive alerts via an app on their phone to let them know that they’ve left their stove on or have a water leak. They’ll also be able to integrate IoT devices such as smart thermostats or smart lighting into their home networks to better understand and manage their energy consumption. And with renewable energy use growing, consumers will be able to connect solar panels and batteries to the smart grid, becoming prosumers. This will allow them to both store energy and sell excess power back to the grid – making them more active and engaged in the overall conversation around energy and the environment. 

The benefits of advanced metering infrastructure (AMI)

AMI integrates smart meters, communication networks, and data management systems to provide two-way communications between utility providers and customers. 

The benefits of AMI include:

Smart meters and AMI support smart grids

Increasingly severe weather events have highlighted the weaknesses of existing power grids. And the global impact from flooding, forest fires, hurricanes, and heat is expected to continue to rise. As just one example, a recent McKinsey report on climate risk and response noted that in “Ho Chi Minh City, direct infrastructure asset damage from a 100-year flood could rise from about $200 to $300 million today, to $500 million to $1 billion in 2050.” That, coupled with rising energy prices, calls for better overall energy management, which is where smart grids come into the picture. 

Smart grids, which integrate smart meters, renewable technologies, sensors, communications networks, and monitoring systems, allow utilities and their customers to exchange information and energy. This improves the grid’s reliability, quality, and efficiency, optimizing energy usage and catching and adjusting for small problems before they balloon into big issues. 

Smart grids also have self-healing, predictive capabilities. They can identify faults, isolate them, and react to them, reconfiguring energy flow around affected areas to protect the broader grid. They also can access weather and energy usage forecasts to adjust for upcoming situations. Using predictive analytics, they can also anticipate future maintenance and system management needs.  

Can smart metering and smart grids help eliminate overloads?

The short answer is “yes.” The connected, communicative nature of smart meters and smart grids allows for a much more nuanced response to everyday energy use, as well as to overloads and emergencies. Smart grids use edge computing, 5G, IoT, cloud, advanced streaming analytics, and AI to assess grid conditions in real time and rapidly adapt and respond to ever-changing demands. Customers can support overload management by reducing their consumption in response to current conditions.

For example, they can respond to alerts and notifications via phone apps that advise them to: 

Smart meter technologies drive greener, cleaner, smarter, energy solutions

Energy solutions like smart metering and smart grids have many eco-friendly benefits including the reduction in diesel and gas consumption, as utilities would no longer need to dispatch meter readers in trucks. 

Smart meters can support:

But greener energy isn’t just about the power that gets used; it’s also about the energy that’s wasted – about two-thirds of all energy in the U.S. annually. Smart meters can pinpoint energy wasted by not turning off lights or leaving devices on standby to help eliminate wastage. Because the cleanest energy is energy that isn’t used at all.

Discover how SAP’s utilities solutions can support your smart metering journey with AI-powered processes and flexible energy analytics.