With a better understanding of the complexity involved in the transformation of the electricity industry the words ‘smart energy’ are becoming more prominent. BuddeComm believes that the term ‘smart grids’ is too narrow and that eventually ‘smart energy’ will become the accepted terminology, especially once the communications developments in national broadband networks and mobile broadband start to converge with smart grid developments.
Smart energy signifies a system that is more integrated and scalable, and which extends through the distribution system, from businesses and homes and back to the sources of energy. A smarter energy system has sensors and controls embedded into its fabric. Because it is interconnected there is a two-way flow of information and energy across the network, including information on pricing. In addition to this it is intelligent, making use of proactive analytics and automation to transform data into insights and efficiently manage resources.
This links with the telecoms development known as the ‘internet of things’ (IOT). For this to happen various functional areas within the energy ecosystem must be engaged – consumers; business customers; energy providers; regulators; the utility’s own operations; smart meters; grid operations; work and asset management; communications; and the integration of distributed resources.
With energy consumption expected to grow worldwide by more than 40% over the next 25 years demand in some parts of the world could exceed 100% in that time. This will produce an increase in competition for resources, resulting in higher costs. In an environment such as this energy efficiency will become even more important.
Quite apart from any increased demand for energy in specific markets, the move to more sustainable technologies – for example, electric vehicles and distributed and renewable generation – will add even more complexity to operations within the energy sector
Concerns about issues such as energy security, environmental sustainability, and economic competitiveness are triggering a shift in energy policy, technology and consumer focus. This, in turn, is making it necessary to move on from the traditional energy business models.
As a consequence utilities could end up in a similar situation to that of the companies that invested in the building of the internet infrastructure – they may own the means of delivering electricity and associated services, but may not be able to take advantage of the new business opportunities that will arise. This will limit their opportunities for future growth.
Another problem will surface when, due to users reducing consumption and producing energy themselves through energy efficiency strategies, the traditional pricing models become inadequate in terms of maintaining the energy infrastructure.
The potential for transformation of the energy industry to smart energy is still at a very early stage. Valuable advances have already been made in some areas but consensus needs to be reached regarding a collective approach and technical standards.
Significant progress has been made within the industry in relation to the deployment of smart technologies that, over time, will create a smart national grid. The report provides an overview of all the major smart grid projects and their players, including the international acclaimed Smart Grid, Smart City project.
M2M and The Internet of Things
With the NBN now well and truly underway it is important to look at what will be the real value of this new infrastructure.
The infrastructure that is now being built offers a range of features such as ubiquitousness, affordability, low latency, high speed and high capacity. It will link millions of devices, such as sensors, that will enable us to manage our environment, traffic, infrastructures, and our society as a whole much more efficiently and effectively.
This ‘Internet of Things’ – other names used include: M2M, Pervasive Internet and Industrial Internet – is going to be a real game-changer. It will transform every single sector of society and the economy and it will be out of this environment that new businesses – and indeed new industries – will be born. This is one of the reasons so many overseas ICT companies are increasing their presence in Australia. The NBN is an ideal test-bed for such developments. A great deal of attention is being paid to cloud computing and the NBN can be viewed as one gigantic cloud.
The number of connected M2M devices will grow to somewhere between 25 million and 50 million by 2020. From a very low level the market will double again in 2012 and this will most likely also be the case in 2013.
Smart Meters in Victoria – Case Study
What at one point looked like a disaster story is rapidly turning into a success story. While things have certainly gone wrong in the deployment of smart meters in Victoria the lessons that have been learned have led to a turnaround of affairs and the State is currently looked upon as an example of the benefits that can be gained from smart meters.
With the benefit of hindsight it is clear that the vision of smart grids and smart meters we share today did not exist when the legislation for the rollout was passed in 2008. This led to some of the underlying elements of the plan being built upon the wrong foundations.
This Victoria rollout was prompted by serious electricity outages earlier in that decade. With temperatures more frequently soaring into the 40s an increasing number of air-conditioning systems were being installed and the capability of the electricity supply to deliver sufficient energy during these peaks was being seriously tested.
In 2006 the Council of Australian Governments (COAG) launched a cost benefit analysis for the rollout of smart meters. At that time BuddeComm argued that the MCE (Ministerial Council on Energy) should consider the broader option of smart grids rather than look at smart meters in isolation.
The program ran into serious difficulties after the Auditor-General of Victoria questioned the cost-effectiveness of the project, as costs were blowing out, from $800 million to $2.3 billion. Furthermore, a consumer revolt was brewing, similar to those taking place elsewhere in the world. Consumers were forced to pay for the rollout which they perceived did not supply them with any benefit – there had been no consumer consultation or involvement at all. At the same time electricity prices were increasing significantly and it was perceived that meters only served to benefit the electricity companies, who were using them to increase costs further.
The debate was heavily influenced by a media frenzy, fuelling the discontent.
To the credit of the Victorian government they made some tough decisions about the rollout and got the project back on track. They learned from the lessons. Not all the mistakes could be undone and to a certain extent they will have to live with that, but the lessons are extremely valuable for the other states where such rollouts are still to take place.
In December 2011 the government decided to continue with the rollout; however it is implementing the recommendations of the Auditor General. By late 2012 they had turned the corner and turned the project into a positive one.
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