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A smarter world faces many hurdles
THERE is not much to see in the city of Bakersfield, north of Los Angeles, but recent events have put it on the global electricity-industry map. As in many other Californian communities, Pacific Gas & Electric (PG&E), the local power utility, had installed smart meters in most households. Soon afterwards customers started complaining about rocketing power bills. For some people they almost trebled. Predictably, this caused a political storm. Local politicians and consumer groups jumped on the issue. Enterprising lawyers launched a class-action suit. PG&E admitted that some of its meters had technical problems, but the higher bills were clearly due to a combination of exceptionally hot weather, increased charges and changes in the rate structure.
An independent auditor found nothing wrong with the smart meters, and California's regulators did not stop PG&E from installing more of them. But utilities and regulators elsewhere, spooked by the incident, have become much more careful before embracing the technology. "Bakersfield is likely to slow down the installation of smart meters--not just in the United States but worldwide," says Ahmad Faruqui of the Brattle Group, a consultancy. Bakersfield also demonstrates that a smarter world will meet with resistance. The reasons are part technical, part institutional. A list as long as your arm
Technology is a good place to start. Sensors are getting ever cheaper, but for many applications they are still much too expensive. HP, for instance, likes to point out that its super-sensitive accelerometers are made in the same factories as its printer cartridges. But the firm's sensors are still too pricey to use them for anything but high-value applications, such as oil exploration. RFID tags are a cautionary tale. They were supposed to revolutionise retailing but the readers, software and other gear needed to make them useful is still not cheap enough to be universally adopted.
Equally important, standards for such things as smart meters need to be sorted out. Setting them too early would hamper innovation, but in their absence utilities will hold back from investing, worried that they might bet on the wrong technology. Standards could also become a weapon of industrial policy, in particular in countries that see clean technology as an engine of growth. When China's State...