A fast-tracked, universal roll out of smart meters could deliver hundreds of millions of dollars of benefits to consumers and the industry, a new report from the Australian Energy Market Commission has found.
The AEMC is calling for 100% uptake of smart meters across Australia’s National Electricity Market by 2030, in a renewed bid to get the demand-side of the grid match-fit for the shift to renewables.
The call was issued alongside the release on Thursday of a weighty 159-page draft report from the AEMC reviewing how and why the rollout of smart meters should be fast-tracked – and why efforts to achieve this have failed, thus far.
According to a cost benefit analysis conducted for the Commission by Oakley Greenwood, one of the key reasons in favour of a fast universal rollout of smart meters is net benefits across all NEM regions to the tune of $507 million.
The report says this money would come from savings through reduced costs for meter reading, reduced installation costs due to the scale of the rollout, and through greater ease around certain aspects of grid maintenance and fault and load management.
For consumers, who are purported to be at the centre of the AEMC’s reasoning, other benefits might include better access to the latest innovations in energy efficiency, energy management, eMobility, demand-side flexibility services, and solar and battery optimisation.
The AEMC also argues that a smart meter rollout could bring forward a tipping point in technology competitiveness, consumer preference, and investor confidence resulting in a more competitive two-sided market.
To achieve this goal of universal smart meter uptake by 2030, the report recommends potential changes to the energy rules to support a more coordinated program of meter replacements, while also ensuring appropriate safeguards for privacy.
This might include the progressive retirement of old “dumb” electricity meters by distribution network service providers (DNSPs) under a legacy retirement plan, with retailers required to replace the retired meters within a set time frame.
The foundation to a smart, green grid
Ultimately, however, the AEMC’s main argument is that Australia’s main grid simply can’t transition properly and successfully to renewables without a critical mass of smart meters across households and businesses.
“You can’t run a smart system on the old, ‘dumb’ technology like traditional accumulation meters,” said AEMC chair Anna Collyer in a statement on Thursday.
“Smart meters are foundational to a more connected, modern and efficient energy system that allows all consumers to get data about their household energy use.
“Consumers can make informed choices which in turn open the way to greater retail options that suit their family or business usage patterns,” she said.
“They also allow providers, in a secure way, to get the information they need to provide better service to consumers.
“The sharing of power quality data with distributors would also help manage supply and reduce future spending on expensive poles and wires.”
Reform, Review and Report
The AEMC’s Review of the Regulatory Framework for Metering Services was announced nearly two years ago after a suite of reforms introduced in 2017, to stimulate household demand for smart meters, fell flat.
According to the report, with the exception of Victoria, where a smart meter rollout was mandated, uptake across NEM jurisdictions averages at around 30%. At the current installation rate – typically driven by solar installation – it will take another four to five years to get to 50%.
The report cites industry cooperation as proven a significant barrier to uptake, which it adds, “appears to have been laden by market participants’ misaligned incentives and the framework’s complexity.”
Another of the key roadblocks to the uptake of smart meters comes from the very group the AEMC says stand to benefit the most – consumers. Here, the problems stem from concerns around privacy, increased costs and general distrust of energy market incumbents.
Just last year, an annual survey conducted by Energy Consumers Australia asked households how willing they were to share their energy usage information with companies and the answers revealed persistent concerns around trust.
According to the data, just 31% of respondents said they would be willing for their data to be shared, while 36% said they would be willing, but with some concerns. Another 21% said they were not on board, at all, while 12% were unsure.
Customers are also worried about the cost of smart meter roll-outs, which can escalate beyond original estimates – as was the experience in Victoria.
This is where robust cost and benefit assessments for smart meter roll-outs will become very important.
The Oakley Greenwood report seems to appreciate this, noting: “The financial impacts of the rollout will matter to customers, which means these impacts will need to be considered in the development of the rollout policy and its implementation.”
According to its analysis, savings to consumers through avoided costs more than offset the price of bringing forward the smart meter capital costs.
Meanwhile, the industry will need to get better at letting consumers in on how to use their smart meters to cut their energy costs even further, while also playing a part to make the entire grid smarter and cheaper to run.
The draft report is open to submissions until 02 February, 2023, with a final report expected early to mid-next year.