If you buy the newspaper or fork out your hard-earned to look behind its online pay wall, the Australian Financial Review (January 11th, 2012) carried an op-ed plea for action on rolling out smart meters from a major utility perspective.
Written by big energy player AGL’s respected head of economic policy and sustainability, Tim Nelson, and his energy policy manager colleague Anna Stewart, the piece called out for an outbreak of economic rationalism on the electricity front, namely enabling time-of-use charging to customers by installing ‘smart meters’.
As Nelson and Stewart conceded: ‘… much has been written about the rollout of smart meters and, on the whole, the commentary has been less than complimentary.’
Then they asserted: ‘Whether you agree with the rollout or not, the fact is that smart meters will enable more sophisticated electricity pricing, potentially benefitting all consumers – not just the “off-peak people”.’
Under the current system of broad-based pricing, as they correctly identify, inefficient users and heavy peak time users are effectively being subsidised by everyone else.
Have the choices changed?
But is a utility-dominated smart meter rollout the only choice, or even the best choice for Australia? Given the march of information and communications technology, and the converging visions for a smart grid, an ‘intergrid’ and the ‘internet of things’, are there smarter paths to follow?
Paths that step outside the utility-centric view of the energy sector that has prevailed for over a century. Paths that could shift the main action to the consumer side of the Billing Meter.
Much talk, little rollout
Although it’s been talked and argued about for a decade or so in Australia, the smart meter rollout hasn’t featured much actual rolling out. Nearly a million units have been installed in Victoria, but it remains politically controversial there, in large part because the cost is high by international comparisons, the dis-benefits for many people – especially those on low incomes with large bills – are readily apparent, and the proponents have never fully ‘made their case’. (Example of media reporting here)
And yet, there is an economically (and even environmentally) rational argument for change, and many consumers are being hurt by rising electricity prices, while society collectively pays for uncontrolled peak demand. Nelson and Stewart quoted a consistently rational veteran economics commentator: ‘As Alan Mitchell wrote in The Australian Financial Review on December 19, the way to curb both peak demand and rising energy bills “is to replace inefficient uniform retail pricing with time-of-day metering and prices that reflect the actual cost imposed by consumers on the system”.’
Action needed, but what?
On Twitter, Ben Waters (@BenWatersGE) at GE Australia was quick to applaud the well-argued Nelson/Stewart piece. GE with its Ecomagination arm is a great example of an innovative mega-business that wants to transform the energy system, to be more efficient, more renewable and a whole heap smarter – with billions to make it happen – and hopefully they’ll be thinking outside the utility square as well.
It seems many of us agree action is needed. But what action?
NBN part of the answer?
The original plan for the national rollout of smart meters in Australia assumed a dedicated broadband network sitting behind them to make them smart. Under that scenario, which fitted the technology of a decade or more ago, the flow of data from and back to the meters would be controlled by energy utilities, distributors who own the networks and retailers who own the customers.
That was before the National Broadband Network (NBN) came along. All that bandwidth, looking for good uses, means that energy data and control is going to be taking a different path. This isn’t necessarily well understood, yet, but it will be.
Here’s an alternative plan
There is the makings of a new approach that can live on the consumer side of the meter.
It goes like this. Install inexpensive digital “interval meters” in homes to do the formal billing part, attach low-cost WiFi transmitters, and feed the energy use data via wireless routers on to the internet and from there on to any digital screen – smart phone, tablet, computer, TV and more.
Consumers can see all of their data in real time whenever they want. They can share and compare with others. And they can get an array of energy services from an ever widening choice of providers, still including retailers, but not limited to them.
Other players can enter the picture
Water companies, telcos and newspapers all have customer bases that could be extended to incorporate energy. Social networks have huge followings, as do many big brands. Solar installers and home energy auditors may want a deeper relationship with their customers. Communities may want to unite to become networks of energy saving, just like they’ve begun uniting to install their own wind farms.
Much is possible in a new order for energy. What are the business opportunities you can see?