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Can not-so-smart meters help the NBN?

It was interesting to witness Conroy's recent enthusiasm to spruik the NBN's role in supporting the Smart Grid, Smart City initiative. What a pity that Conroy hadn't yet seen the damning report from the Victorian auditor-general about that state's smart-meter roll-out.

Stephen Conroy's choice to front up to the recent launch of Smart Grid, Smart City initiative — a commercial-grade "smart grid" that manages energy more efficiently than current distributor-centric systems — was a curious one.

But there he was, standing with Resources Minister Martin Ferguson and Environment Minister Peter Garrett not for a rousing rendition of Blue Sky Mine, but to spruik the NBN's role in supporting the $100m utility network.

After Garrett called smart grids an "energy internet", Conroy said the NBN will "enable a whole range of efficiency and productivity gains across the economy ... this smart grid project is an important start point as we move to ensure Australia gains maximum value from our broadband investments".

Government bodies have been linking the smart grid and the NBN for years, trying to build up the network's next-generation cachet and its role as a facilitator in all kinds of industries. What a pity that Conroy couldn't have seen the damning report from the Victorian auditor-general, which has closely examined Victoria's nation-leading smart-grid roll-out and found it wanting in many ways.

(Smart meter image by EVB Energy Ltd, CC2.0)

The smart grid in Victoria, where a host of companies are planning to push interactive "smart meters" out to 680,000 households by 2013 — seems to be yet another case of wishful thinking and head-in-the-clouds policy-making. And while that's not always a bad thing, in this case it doesn't seem to be helping. The auditor-general slammed the state's recent smart meter technical trials as poorly managed, badly scoped and improperly monitored — and questioned why some $6 million was spent testing technology that's still too immature for general deployment.

That can hardly bode well for Smart Grid, Smart City, which was meant to be yet another touchstone in Conroy's never-ending quest to talk up the NBN's prospects. Yet with high temperatures buffeting Victoria and much of Australia over the past weeks, smart meters and smart grids are on the minds of power authorities — and home owners are justifiably wondering just how much they're going to be socked for all these political playthings. Remember free citywide Wi-Fi? Remember Conroy's web filter? Heck, remember Petrol Watch?

Smart meters and smart grids are on the minds of power authorities — and home owners are justifiably wondering just how much they're going to be socked.

Home owners, after all, will directly or indirectly wear the costs of installing the smart meters, which are supposed to reduce the often ridiculous charges that electricity distributors pay generators during demand peaks. For their trouble — and for the expense of a taxpayer-funded NBN connection — consumers will get higher bills and a chance to reduce them back to current levels by washing their dishes or clothes in the middle of the night rather than the hours people are normally awake.

Industry authorities talk dreamily about the day when they can control everybody's appliances over the NBN, powering air conditioners and other devices on a rotating basis to normalise input costs and better match demand and supply curves. They've even created a Smart Networks Committee within the Energy Networks Association (ENA), which has actively engaged itself in the government's NBN legislative review (PDF).

The NBN's role in this smart grid paradigm is mainly to provide two-way communications to every household in Australia — making it relevant more for its ubiquity than its massive capacity. Yet given the auditor-general's conclusion that the Victorian roll-out isn't even commercially viable, one wonders whether the smart grid can evolve from being a vague conceptual goal to an actual revenue generator. Where is the money in shuttling tiny packets of smart meter data back and forth?

Harry Kestin, energy industry business manager with location systems specialist ESRI Australia (which supplies geolocation services to help utilities track smart meters and other physical assets), believes smart grids offer potential but said Victoria's approach has been half-baked from the beginning.

One wonders whether the smart grid can evolve from being a vague conceptual goal to an actual revenue generator. Where is the money in shuttling tiny packets of smart meter data back and forth?

"There are massive implications for the use of these meters, both in terms of governance and how information is provided between the various regulatory bodies," he explained. "The business case is ultimately going to have a much broader scope than Victoria's: for example, one part of the smart grid is to enable distributed generation, so consumers can generate electricity and feed that back into the grid."

"But the Victorian version is a relatively cut-down version of that," he added. "The roll-out in Victoria is a simplified version, and the other states are waiting for Victoria to pilot it and make the major mistakes."

And here they are: the dismal report card from the auditor-general casts serious doubts on the approach currently being taken. This, in turn, does not bode well for visions of the power company automatically turning on and off dishwashers, washing machines, and air conditioners from afar.

At the very least, the kind of NBN-attached smart meter network so many people envision is impossible without appliances that can communicate over a wide-area network. In a country where nearly half of households still haven't shelled out $50 for a digital set-top box, can we honestly support a business case built on the theory that consumers will shell out for brand new, globally connected appliances that don't even exist yet?

The whole idea is fanciful: smart meters, as we all realise, are nothing more than a way of boosting utility company profits by getting consumers to pay more for the energy they're using. Or, as the report concluded, "in order for consumers to benefit from the cost savings, the distributors will need to pass on the savings through to retailers who will need to pass on the savings subsequently to consumers."

Fat chance — especially when there's going to be an NBN to pay for.

Can smart meters ever actually benefit the customer? And can they really be expected to cost-justify the NBN, even in small part?


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