how and when they use electricity if they pay flat rates. And yet the economics of generating power at different times of day are very different, so we’ve insulated the consumer from the economics of how the product is generated and delivered. That’s the single biggest thing that should be done to create a more efficient market, is to have more transparent pricing. I mean that’s been true of so many other markets, outside of the utility market.”
Consumer readiness:
“You’re starting to see ADT and Comcast and Verizon enter the energy space through bundling of home security and energy, and there are going to be high-end customers who engage at that level. Then down at the low end you may have customers that are willing to have you tell them, ‘It’s a really hot day 10 times a year, tell me to turn down my air conditioning.’
“I think a well-designed program is diverse and reacts to the needs of these different groups [of consumers]. And the demonstration projects are trying that. They’re cutting different segments of the user community and trying different levels of automation, different amounts of information.
“What I think we’ve found out is that as much as we inside the energy business would like to think that people care a lot about how much energy they consume, the answer is they care No. 1 about their cell phone bill, No. 2 about their cable bill, No. 3 about their car and their mortgage, and energy ranks about fifth on the list of consumer concerns.”
The best international markets for electric smart grids:
“The most exciting opportunity right now is post-Fukushima Japan. The Japanese government has committed to implementing smart meters as a load-control program to deal with their significant shortage of electricity as a result of shutting down a large number of nuclear power plants. Tokyo Electric Power has publicly stated their intent and has issued tender documents to let what will be the world’s largest smart metering project. And when I say world’s largest, I always caveat outside of China. TEPCO itself is 32 million electric meters. Japan total is about 80 to 85 million electric meters, so these are big projects.” [Previously: Itron In Deal With Panasonic For Huge Japanese Smart Meter Market]
Manufacturing in and selling to China:
“In the electric space, 60 million smart meters are being deployed annually in China—which is a very large number—that are being manufactured by all local suppliers. Very low cost, very low quality meters, and as far as we can see, nobody is making any money. So that is not a market that we are apt to enter in the near term.
“There are some entry points for us in the Chinese market. They are not obvious…. We did supply the electric meters on the Three Gorges Dam, so when it gets to high end commercial/industrial metering, where you need a highly accurate and complex product—that, by the way, has quite a lot of IP in it; it’s a very sophisticated product—that’s differentiated enough that you can sell profitably in the market, but as you go to volume, low-cost, low-quality, then we’ve not found a way yet. We’re still looking at that.
“However we are using it as a low-cost manufacturing site, and we did announce that we have both a gas and a water-meter factory in China, and that is mainly for export markets.”
Competing with Chinese manufacturers:
“The greatest challenge that any manufacturing company faces—
