Australia: Smart meters could become a $2 billion industry over the next few years, says Catherine Zoi, executive director of meter maker Bayard

Smart meter charge jolt
Chris Jenkins
JULY 18, 2006

NSW power utility Energy Australia is planning to test a new breed of advanced electricity meter with 10,000 customers as it moves to install a half-million so-called smart meters over the next two years.

The company expects to spend about $100 million on smart meter systems up to the end of the current electricity pricing regulation period, in 2009.
The new meters will enable the company to send data back and forth between the meter and its own systems, and possibly pave the way for the introduction of plug-and-play smart appliances that can be remotely switched off during peak demand periods to minimise power use.

To transmit the data, the advanced metering trial will also test several communications systems, including cellular wireless and broadband over powerline.

In contrast to the century-old mechanical meters, smart meters record not only the amount of electricity used, but also the time at which it is used, opening the door for time-of-use pricing that varies pricing across peak and non-peak periods in a way similar to long-distance phone charges.

"The fact that we're able to get 30-minute interval data means customers will be able to have tailor-made pricing," Energy Australia managing director George Maltabarow said.

"It will revolutionise our ability to service our customers."

By establishing a data link with the meter, the company will eventually be able to make service changes as customers ask for them. "We'll be able to do a lot of on-demand services," Mr Maltabarow said.

Energy Australia has 260,000 customers using smart meters at present, with 50,000 customers on time-of-use tariff plans.

However, current smart meters lack the communications functions that will feature in the new units being trialled.

The advanced meter trial will commence at the end of this year, with 10,000 users scheduled to be testing the new meters by the end of the current financial year.

Energy Australia's plans add to a growing list of smart meter projects around the country, with utilities such as Country Energy being among the early adopters.

Over the past few years, the issue has been taken up by the Council of Australian Governments as part of plans for a national retail energy market.

A letter from Prime Minister John Howard to the council last week again pushed development of the technology. Also last week, Victorian Deputy Premier John Thwaites announced that households and small businesses in the state would receive smart meters from 2008 in a project reportedly worth $730 million.

A 1000-user trial for the project is scheduled to take place at the end of the year.

Cost savings are used to sell the technology to the electricity-using public, and Energy Australia says its own studies show cost savings of 10 per cent to 30 per cent, but for the power utilities, the main driver of smart meters is to improve demand management, smoothing out peaks and reducing the need for expensive infrastructure such as power stations.

By cutting peak demand, smart meters are also expected to be useful in reducing greenhouse gas emissions.

According to Energy Australia, smart meter technology shifts about 5 per cent of peak demand to other times.

Power companies say the smart meters are as much about shaping consumer behaviour as they are about new technology.

Energy Australia is the middle of a strategic pricing study, in which 1300 users are using smart meters with an inbuilt display.

The test is to work with "peak dynamic pricing events" that bump normal charges of about 8c to 9c per KW/h to up to $2 per KW/h for a few hours.

There are 12 such pricing events scheduled over the course of the trial, with pricing spikes timed to coincide with predicted real demand peaks.

Users are given up to 24 hours notice of an impending price spike, and can select notification methods including phone calls, SMS and email.

The trial began in March and is scheduled to run for two years. The meters also provide a vital window on customer usage patterns. "Ninety per cent of the benefit comes from the meter's ability to measure and record things," Mr Maltabarow said.

Data collected by the new breed of meters can be used to examine customer use characteristics and tailor services and tariffs accordingly, executive director of meter manufacturer Bayard Catherine Zoi said.

"In the competitive retail market, they can look at which customers they really want to go after," she said.

Utilities can also use the system to control power-hungry devices such as air-conditioners and pool filters, switching them on and off to cut usage in peak price periods, paying consumers incentives for consenting to hand over control.

"That's certainly in widespread use in lots of states in America, with lots of happy customers," she said.

Smart meters with communications built in also make remote meter reading possible, as well as other network monitoring functions, she said.

Australia-wide, smart meters were likely to become a $2 billion industry over the next few years, but savings of up to $3 billion could be realised by the energy industry, Ms Zoi said.

In Queensland, the Department of Energy has been talking to both Energex and Ergon Energy about a targeted introduction of smart meters.

Energex has between 20,000 and 30,000 smart meters installed at customer sites across two Brisbane suburbs as part of a trial, but the use of the technology in the state is still being evaluated.

Western Australia has decided that all new domestic-grade power supplies must use smart meters capable of time-of-use pricing, although these would continue to be manually read, Western Power metering services manager Andrew Wood said.

"We will have 20 per cent of our single-phase meters changed by 2008. This will be equivalent to about 100,000 customers," Mr Wood said.

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