Upgrade, evolution or revolution: Australia's perspective
Over the next seven years, it is estimated that Australia could achieve the following by investing A$3.2 billion in smart:1
- Decrease electricity consumption by a minimum of 4%
- Raise GDP by at least A$16 billion over 10 years
- Create 18,000 new jobs
However, the current suspension of TOU tariffs in Victoria could impact the overall pace of introducing smart in Australia. While consumer protection and the need for clear and concise communications are important, pricing signals from the introduction of TOU tariffs would generally allow for better management of energy demand. This would ordinarily deliver cost benefits from lower infrastructure requirements in the medium to longer term.
Smart's impact on the P&U value chain
In generation, smart will provide more data that can help with better decision-making on load forecasting and demand management. As reserve margins come down, and as technology allows for better use of distributed generation, smart can offset the need to build additional generation capacity.
Distribution companies, meanwhile, are expected to benefit from greater demand transparency, while better forecasting could facilitate network upgrade planning. Most likely to benefit from a smarter network infrastructure are distribution companies in less densely populated areas. They will be able to react more quickly to outages as smart grids provide real-time information to utilities about where they happen and their severity. Advanced smart grids are also capable of "self-healing" — they can automatically take corrective action such as rerouting energy, to avoid or minimize the impact of network failures and blackouts.
While retailers will need to spend substantial amounts of money on billing systems and increased data management capabilities, they will benefit from greater information on individual consumer demand profiles. This will enable them to customize offerings to customers.
In a smart world, customers will also take a more active role in their energy use, deciding when to use or turn off appliances and other electrical goods within their homes or businesses. Smart appliances will make this easier over time. Customers will also benefit from innovative tariffs that are based on cheaper prices for off-peak energy. Their bills and interaction with retailers will enable a more detailed understanding of how they use energy.
Communications with customers about the long-term benefits of smart will be essential as metering projects shift from pilot programs into actual rollouts at an aggregate level. Utilities will need to design and implement change management programs to encourage take-up and to facilitate a cultural shift toward seeing energy differently. The fact that the costs of smart meters are already being passed on to customers has sparked some debate about the merits of smart technologies. Clearly, if utilities and the regulators fail to educate consumers and get their buy-in, customers are unlikely to see an increase in perceived value — just an increase in costs.
1 "Smart grids will create jobs and boost GDP," The Australian, 19 September 2009.
In a smart world, customers will take a more active role, deciding when to use or turn off electrical goods. Smart appliances will make this easier over time.
The Council of Australian Governments (COAG) has committed to a national mandated roll-out of smart meters to areas where it can be demonstrated that benefits outweigh costs. Progress under the initiative varies greatly across the states and territories, from the roll- out of advanced metering infrastructure to participation in the Solar Cities Program and implementation of a smart grid network trial for electric vehicles.
What is driving smart?
Reliability — The development toward smart in Australia is progressing rapidly as an aging grid infrastructure struggles with increased periods of peak demand, population growth and the continuing warm Australian climate. The heavy use of air-conditioning units and other cooling devices adds to demand.
Climate change — COAG considers smart meters integral to consumers managing their energy consumption and reducing their greenhouse impact. Broader energy concerns permeate the economy, notably the continued use of coal-fired generation to supply base-load energy demand.
The need to address climate change remains on the political agenda. Having set ambitious targets to reduce Australia's carbon pollution emissions to 25% below 2000 levels by 2020, the Australian Government continues to focus on the development of clean energy technology to help households, businesses and communities transition to a low carbon future. While policy measures are geared toward more efficient use of energy, the current focus is on smart meter implementation rather than smart grids.
How smart is Australia?
Progress in Australia varies greatly across states. So far, Victoria and New South Wales lead the rollout of smart meters, with some utilities taking a broader approach to smart that includes advanced metering infrastructure (AMI).
Back in 2006, COAG committed to a nationally mandated roll-out of smart meters in areas where benefits could be proven to outweigh costs. These smart meters support time-of-use (TOU) pricing, which offers lower prices for off-peak energy use. This gives consumers a better understanding of electricity pricing at different times of day (particularly at periods of high demand) and allows utilities to manage demand for peak power more easily.
Since then, the Ministerial Council of Energy has developed guidelines and requirements for smart meter roll-outs and in September 2010, the Energy Networks Association (ENA) released a National Strategy for Smart Electricity Networks. The strategy is designed to provide a framework for the smart network activities that the electricity distribution businesses are undertaking jointly through ENA.1
Many Australian utilities are now in varying stages of taking the necessary steps to upgrade their metering and related infrastructure. The industry estimates that a national smart meter program will cost between A$2.8 billion and A$4.6 billion. Each household can expect to pay between A$150 and A$250 for the new meters. This will come on top of potentially higher energy costs if they continue to use energy at peak hours (where TOU-tariffs are implemented).2
Victoria, which represents 27% of the Australian market by customer numbers, is currently the leading state for smart meter roll-out. The Victorian State Government mandated that distribution network service providers PowerCor Australia, SP AusNet, United Energy Distribution, CitiPower and Jemena should roll out advanced metering infrastructure (AMI) to approximately 2.5 million homes and businesses by 2013.
However, in January 2011, the Victorian Government commissioned a review of the A$2 billion state project, following concerns over TOU -tariffs and fears that the potential benefits of smart meters may not justify the infrastructure and implementation costs.3
New South Wales will demonstrate Australia's first commercial-scale smart grid project. The Australian Government has committed up to A$100 million to develop the "Smart Grid, Smarty City" Project under the National Energy Efficiency Initiative. The project will see 15,000 residential homes trial new in-house displays and technology that informs consumers about energy usage, costs and carbon emissions. In addition, the project will trial two fleets of electric vehicles and commence testing battery storage and the effects of battery charging on the energy grid.
The Queensland Government is also trialling smart projects, committing A$5 million to the Townsville Solar City Project. Led by distribution company Ergon Energy, the demonstration project is part of the Australian Government's A$94 million Solar Cities Program and includes the installation of 1500 smart meters and 500 solar power systems to selected homes and businesses in the region.
South Australia has focused its smart metering efforts on the A$80 million Adelaide Solar City Project. Also part of the Australian Solar Cities Program, the initiative plans to deploy approximately 5,000 smart metres in South Australian homes and businesses, with roughly 1,000 devices already installed.
In Western Australia, which due to its geography operates in isolation from the National Electricity Market (NEM), there were initial concerns over commitment to smart meters.4 However, in June 2010, Western Power launched a smart meter trial incorporating the installation of 10,500 smart meters over four years. In addition, Western Australia is also part of the Australian Solar Cities Program through the development of the Perth Solar City smart grid project.
In the Northern Territory, the Power and Water Corp. is deploying 400 smart meters under the Alice Springs Solar City project, another participant in the Australian Solar Cities Program.
Meanwhile, the Australian Capital Territory, is home to an electric vehicle (EV) trial. The smart grid trial, run by provider Better Place Australia, includes the installation of EVcharging points in homes, businesses, car parks and shopping centres throughout Canberra. The first charging spot in the EV grid infrastructure was opened in late October 2010
1 "National Strategy for Smart Electricity Networks", Energy Networks Association, September 2010
2 ""Smart grids will create jobs and boost GDP," The Australian, 19 September 2009"
3 "Smart meters could be abandoned", ABC news, 4 January 2011
4 "Smart Metering in the Australian Landscape (Strategic Focus)," Datamonitor (DMTC2334), September 2009
