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Saturday, January 15, 2011

Have the smart meter champions been too smart by half?

It’s always dangerous to play the public as suckers.

Around the world the evidence is mounting that the champions of smart meters have been doing just that, and now they are paying the price. Right when they need the people on their side!

Take Australia. Until several days ago, Victoria was the only state in Australia committed to a full smart meter roll-out, after what seems like nearly a decade of ongoing agonising, and suddenly that’s under renewed doubt too.

All it has taken is a change of government, with the arrival of a new Coalition Energy Minister who made political capital in Opposition bagging the then Brumby Labor Government’s smart metering execution.

The core allegation is that ‘consumer benefits have been overstated’ (*see further information on this and links below). It’s an allegation oft-repeated in Australia, North America, the UK and I imagine outside of the English-speaking world as well.

Here are some thoughts – 10 of them, in fact:
  1. We are going to end up with ‘smart meters’, sooner or later, whatever. In the digital age, I don’t think we’ll be staying with ‘dumb’ old-style electro-magnetic meters that have to be read manually.
  2. But a lot has changed in both current technology and future vision terms since we first started talking about the (now not-so) new wonder, smart meters. And is a heavily-regulated mass rollout of smart meters at mass consumer expense still the answer?
  3. Well, not actually. The main game is now the smart grid and even more ambitiously the ‘intergrid’ and the ‘internet of things’ – billions of appliances of all kinds bound together in a technology network (shades of The Terminator and SkyNet?). In this scenario, smart meters are a good workhorse in the scheme of things but not the cutting edge.
  4. It seems the original plan for smart meters in Australia, and elsewhere, was to perpetuate the utility models of the 19th and 20th centuries with some 21st century tweaks, like time-of-use charging, remote meter reading and that little ripper, remote service connection and disconnection.
  5. At first the consumer wasn’t really in the picture. The behind-the-scenes plan was for a dedicated broadband network to carry all of the energy data and any other communications back and forth between the utilities (supply) and the homes and businesses (demand). At what cost in Australia, no one was quite sure, but figures like $11B have been bandied around.
  6. Strangely, everyone inside the smart meter tent was largely ignoring the rising existence of the internet on the consumer side of the equation. Oh no, they had too much data to handle, although it’s more reasonable to think they simply wanted to control the data and the control functions if new-fangled ‘energy services’ and ‘demand management’ ever really caught on!
  7. But now the $40B-plus National Broadband Network is on its way in Australia, massive capacity for data management has moved into the ‘cloud’, new consumer-side technologies are emerging and the old-school smart meter plan is unraveling at pace.
  8. At the same time energy efficiency has finally become fashionable, fuelled by rising electricity prices and carbon reduction imperatives. So traditional utility models now will be challenged in ways not dissimilar to how traditional media, especially newspapers, is being confronted by social media and new communications.
  9. In all of this the new mantra of late 2010 and 2011 is that engaging the consumer is everything. That will mean sharing the data and control functions in real (and real time) and useful ways with the consumers who want that level of engagement, and providing effective energy services for those who want benefits with minimum personal effort. System benefits will flow if the consumer is successfully engaged en masse.
  10. The ‘smart’ meter will be a useful player on a very big stage. Yet Australian smart meter champions have already invested much time to achieve relatively little. So we should assume the smart meter die-hards will struggle to come to terms with how both communications and energy technologies are transforming around them, perhaps leaving them behind?   

The journey that began with smart meters was like trying to get to the upper atmosphere and test the beginning of sub-space. The far more expansive smart grid journey, powered by internet protocols, is more akin to using the moon as a jump off point for inter-stellar travel.

Love the view, who’s looking forward to the trip?

*On January 4th, just days into 2011, Melbourne’s popular Herald Sun newspaper reported that the new Coalition State Government, in its first two months in office, may ‘suspend the installation of electricity smart meters while it reviews the embattled major project’.

It continued that: ‘Energy Minister Michael O'Brien will this month seek details on the cost and legal implications of delaying the rollout ahead of an audit of the $2 billion system. A full review of potential improvements and whether it is worth dumping the scheme for an alternative will be commissioned amid concerns that consumer benefits have been overstated (my emphasis). Every household and small business is paying to replace old meters with the digital technology, even before their installation.’

From Opposition, last year, the now Minister O’Brien had quoted an Auditor-General’s report in November 2009 as identifying cost-benefit analysis that found ‘the business case for AMI (smart meters) in Victoria is likely to be negative’ … with rollout costs blowing out from $800 million to at best $1.6 billion and potentially up to $2.25 billion.

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