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Monday, December 13, 2010

Is this the start of a great Smart Grid consumer awakening in Australia?

It had to happen, didn’t it? Australia finally may be catching up with a growing world realisation – the 'smart grid' ain’t so smart without consumers in the picture, front and centre.

So what’s going on?
Billed as ‘a comprehensive view of the strategies, priorities, and challenges for Smart Grid adoption in Australia’, the new 2010 Australian Smart Grid Study, produced by the business and technology services company Logica, came out today (Monday, December 13th Australian time). It follows the first similar survey in 2009 - just 12 months ago, though it seems a lot longer given the fast pace of smart grid awareness growth that is revealed - and in a central finding it argues that ‘the Smart Grid will not happen without consumer involvement’.
More of the Logica report soon (you can see the whole thing at http://t.co/59UBaNW via @Logica), but first, some context. As a colleague of mine with a senior-level marketing background frequently laments, energy utilities in Australia have tended to regard customer relationship management as having an address to send their quarterly bill to.

Yet the rise of the smart grid means those same traditional utilities will come to be awash with data about how and when energy is being used by their customers, potentially down to the individual appliance level, and will be able to exert real time demand management control over many thousands of premises and millions of electrical circuits.

That is where things are headed. It means the 19th and 20th century model of electricity supply will be transformed in the next decade or so of the 21st century, and there’s a lot more to it than so-called 'Smart Meters'.
The Logica study is based on survey responses from personnel working in many of the major energy generation, distribution and retail companies on Australia. Thus far, it argues, there’s been too much focus on the supply side implications of the smart grid and not enough on the demand side.
It says: ‘There is now an increased awareness of the importance of the customer in the development of the Smart Grid. This represents a significant change from last year, when Smart Grid pilots and thinking tended to be more technologically oriented and focused on the grid. This is a positive development. The whole purpose of the electricity network is to deliver power to commercial and residential consumers, but in the past the distributors left customer engagement to retailers. In too many cases this attitude was initially carried through to the Smart Grid, but the realisation soon hit that in the world of the Smart Grid, the customer is king.’
What the Logica study confirms for Australia is being echoed in many places, in Australia, North America and beyond.

·         Well-known Australian-based communications technology commentator and blogger Paul Budde had this to say on a similar theme last week: ‘Unfortunately, marketing the benefits to the customer has been something of an afterthought in the development of smart meters and smart grids, and the industry is paying dearly for that oversight. There appears to be very little interest among customers in regards to smart grids and smart meters, and this is mainly because the benefits have not been communicated well to consumers. Perhaps if the industry had had a smart grid vision instead of a smart meter vision, they would have been able to explain to the customer that they would be provided with tools that would enable them to manage their energy use better. This would result in saving energy which would ultimately lower the costs – to such an extent that it could even lead to a neutral outcome in relation to the ever-increasing electricity prices.’ http://ow.ly/3kTKZ

·         Another blogger in North America, William Pentland for Forbes.com, wrote a few days ago about ‘Why smart people are suspicious of smart meters’. Pentland, citing a study by the privacy specialist research group the Ponemon Institute, concludes that utilities and industry groups need to expand efforts to educate consumers about the impact of smart meters, which in turn are part of the wider smart grid. ‘The ability to access, analyze and respond to highly granular levels of information from all levels of the electric grid is the source of the major benefits provided or expected to be provided by the smart grid, according to the National Institute of Standards and Technology (NIST). Vastly more information may be created, collected and analyzed by the smart meters compared to the data generated by dumb meters and gathered by monthly meter readings. This may explain why the more consumers appreciate the centrality of data to the smart grid, the less they trust smart meters. Consumers who claim to have the best understanding of the smart grid expressed the most concern about the smart grid’s impact on their privacy. Perhaps the most troubling concerns relate to how the collection of personal information will threaten their personal safety and reveal personal details about their lifestyle.’ http://t.co/qWGO50a

This all gets pretty important for Australia, and everywhere else of course. A Smart Grid that works for consumers is a politically-palatable proposition that responds to householders and businesses facing rapidly escalating electricity prices. It makes strong sense for the business case of superfast broadband rollouts, including the $43 billion National Broadband Network (NBN) in Australia. It explains how we’ll have flexible demand to match variable supply from distributed and renewable energy generation sources including wind and solar.

The Logica study says: ‘The Smart Grid is not some vague prediction for the future. It is happening, here in Australia, right now and has moved forward dramatically since the 2009 study. It is, however, an evolution. It will evolve incrementally, project by project, as technologies like smart meters are adopted, as practices like feed-in tariffs are implemented, as distributors develop smarter infrastructure, and as the electricity network and the communications network become more integrated.
‘In a huge change from last year, every distributor interviewed for this report has now developed a Smart Grid strategy and implementing Smart Grid pilots, many of them quite substantial. The announcement by the Australian Government in June 2010 of the $100 million Smart Grid, Smart City project, to be undertaken by a consortium led by EnergyAustralia and largely based in the NSW city of Newcastle, is one of the most advanced and large-scale Smart Grid implementations in the world. It has been designed as a very large scale pilot, with details of its implementation and the lessons learned to be shared with the entire industry.’

There are now very major questions for official policy, utility business models, the IT sector and many other industry areas, and for consumers themselves in terms of behaviour and decision making, and much more. I believe this is a vital discussion for the future of the electricity system, and therefore the whole economy and society, and its not yet receiving the attention it deserves. What do you think?

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