Will Australia get Smart Grids?
Excellent government initiatives
Australian utilities stand at the threshold of some important decisions. The State Government of Victoria has mandated the rollout of new electricity meters from 2009 – and at this very moment the Commonwealth Government (through COAG) is investigating a national policy.
The current debate originated, a few years ago, from the utilities’ need to be able to capture electricity usage in 30-minute intervals. This enables differential pricing by time-of-day and enables utilities to discourage certain types of ‘non-time-critical’ use during periods of high demand. Reducing peaks has a major impact on electricity generation costs – alleviating the need for new power plants and cutting down on damaging greenhouse emissions.
Victoria should be commended for initiating the debate.
The once-in-a-lifetime smart grid opportunity for Australia
It soon became clear that the additional information these meters generate can no longer be kept in the meter to await a bi-monthly or quarterly meter reading!
So what had been a metering problem became a communications problem (unfortunately in most utilities these two activities are dealt with in separate divisions). However, utilities are increasingly accepting the fact that they will have to consider the deployment of communications technology to enable the information to be sent electronically on a regular cycle.
How often does a country get the chance to replace 10 million electricity meters? Surely this generation has the obligation to use this opportunity to get it right.
Global warming – a new important political consideration
The key reason the smart meter issue was raised was the understanding that one can’t go on building power stations forever, and that a far more efficient use of energy was required for a modern society such as Australia. On top of that are the environmental considerations, and the responsibilities that rest upon both the utilities and the state and federal governments.
Seventy per cent (70%) of the cost of the smart grid overhaul is associated with the physical replacement of the meters in residential homes. We can afford to pay a bit more for a smart meter that can be left there for the next 15 years. Furthermore, smart meters are gateway products; home-owners can link other applications also, and upgrading simply becomes a software update, not a meter replacement.
This is all the more reason to go for an open standard, which will allow customers and utilities to add plug-and-play devices to the smart grid connection in the home or on the utilities’ infrastructure. Already many new energy saving and reliability improvement applications are becoming available and this will only increase over this market over the next few years. Interoperability should be a key element in the technology selection. Globally the IP standard is accepted by every single company in the communications industry, it therefore simply also has to be the standard of any smart grid network.
40-year-old proprietary solutions are not smart
From a strategic point of view it is obvious that meter reading constitutes only a small part of a much bigger process of modernisation – one that is being undertaken by the leading utilities all over the world to deal with those economic and environmental issues. The term ‘smart grids’ is rapidly gaining currency – it involves embedding computer and communications technology throughout electricity networks to deliver significant benefits in operational efficiency, fault anticipation, problem isolation/service restoration, asset management and the like.
In the rush to get Victoria’s plans underway by 2009, a proprietary system – containing 40-year-old technologies – and based on narrowband, has been suggested. This would address the 30-minute interval reading, but it does not take into account the smart grid options that are required to create all the other economic and environmental benefits. Unfortunately the federal government plans are linked to the Victorian plans, and so Victoria could drag the whole of Australia into an inadequate solution that would exclude smart solutions for another 15 years (changing meters in people’s homes is not something you would wish to do every few years).
Shouldn’t a clever country go for smart solutions?
The potential benefits of a full smart grid implementation are dramatic. Some US studies have suggested that savings of between 10% and 25% in electricity demand (and greenhouse emissions!) are achievable. Given that electricity consumption is the cause of around 40% of greenhouse emissions in the USA there are few initiatives that promise such significant benefits at a time when global warming has become one of the hottest issues confronting humanity.
On a more everyday level, efficient electricity networks ultimately flow through to tangible savings to the consumer.
So what is the solution?
This raises the question of what level of communications will be needed to support advanced smart grid deployments. One camp, led by the Victorian State Government (not by its utilities) argues that a low performance ‘narrowband’ solution is all that is needed to read meters, and the sooner we get on with this the better! As mentioned, the risk in this approach is that, since utilities can only upgrade meters every 15 years or so, the communications solution that is deployed today is what the utility will be stuck with for the next generation of investment.
A limited, narrowband communications solution will not support the real-time information flows that are involved in a smart grid deployment. It will not have the capacity to support communication between the utility and the plethora of increasingly intelligent appliances that we can expect to see in coming years. One only has to think back 15 years to see how progress would have been limited if the decision had been taken to lock into that old 486 computer with its 32 Mbytes of memory and 20 Mbytes of hard disk capacity for the next 15 years!
Let’s make smart decisions
The pressure to modernise electricity grids is commendable! However, if in our rush to make progress we take short-sighted decisions that foreclose our future for the next 15 years or so, Australia will be the loser.
Our country needs its politicians to lead the way in this important area, with a clear and far-sighted vision for the future.
The meter manufacturers would be only too happy to come back in few years’ time and do it all again, with proper smart meters next time, but this is about our future. If we get it right now, it will be the Australian people who will profit from lower prices and a cleaner environment. If we install dumb meters it will be their tax money that will be wasted. Furthermore, they will not be able to profit from the cost savings that a smart grid can deliver.
The broader picture
Finally, the benefits of smart grids go beyond the utility. Governments are able to make decisions on the basis of a societal cost/benefit analysis and could therefore recommend solutions which a utility alone may not. The multi-utility and non-utility potential of high speed communications to the house delivered in conjunction with electrical infrastructure is another benefit of a smart grids, this could help developing compelling business models.
Building on this, we shouldn’t try to solve communications for last mile requirements in isolation from other network communications needs and thus preventing synergies from being obtained. Other Government initiatives such as Broadband Connect, Broadband Guarantee, Clever Networks and the Fibre-to-the-Home Expert Task Force are all closely connected to each other as well as to Smart Grids.
Paul Budde
Australia – Broadband Power Line – Demand Side Management
Australia – Broadband Power Line – Smart Grids
Australia – Broadband Power Line – The Market in 2007
Australia – Broadband Power Line Projects and Forecasts
Australia – Energy Utilities Markets
September 12th, 2007 at 4:33 am
Great post. I wish you success. The shift to smart power metering (ultimately real time) is one of the least well-understood (outside the power industry) yet most important economic opportunities of our generation. The stakes are enormous. I wish you all the best in shaping and hopefully moving the debate. Not sure how popular Facebook is in Australia but this sound like a great issue to form a group around to put pressure on the regulators and politicians to ‘do the right thing.’
February 4th, 2008 at 12:43 pm
Would it be possible to have these issues aired at the 1000 Summit to be held by the Rudd Government in April This could be an ideal forum to raise Federal awareness of the need to take the most far-sighted policy possible.