Will smart technology reduce electricity prices?

If you are looking for a way to lower your ever rising electricity prices, you may want to take another look at smart meters and smart grids.

A new green energy paper was released by the Department of Industry in the interim before their white paper is released. It sets out just what effect power privatisation and smart meters will have on the energy market and on consumers' wallets.

What are smart meters?

This technology uses real time to judge how much electricity is being used. Households that opt to have smart metering no longer have to worry about having a meter read or an estimate bill. Instead, the information from their meter will be sent wirelessly to their electricity supplier and they will be charged accordingly.These use real-time information so consumers can better understand their energy use and adjust this where necessary if price signals change.

How will smart metering help?

The green report sets out the aims of the Australian Government going forward. New technology and the development of a worldwide energy sector has resulted in the need to further develop the Australian energy market, and this includes the way in which electricity is measured.

The green paper indicates that flexible pricing could be made more common. This is where pricing can differ during peak hours. It is during this time of the day that electricity becomes more costly to deliver, as the poles and wires become overloaded when demand increases. 

When people move to smart metering systems, they may also be offered new plans. This includes tariffs to encourage consumers to use more power during the off-peak periods rather than during peak hours.

Reducing these peaks in consumption may help to encourage lower electricity prices.

Will smart meters become mandatory?

Smart meters have been rolled out in Victoria as a mandatory enterprise. This has created a more innovative market as it was coupled with the privatisation of energy businesses in the state. This meant that these businesses had to create more attractive tariffs and market offers in order to attract customers. When you do an electricity comparison in this state you may notice this difference.

Other states and territories are making these metering services more competitive to encourage customers to voluntarily switch. However, this means they must make sure the benefits outweigh the costs.

There is concern that consumers will react against these, however, as smart meters are high cost items. However, chief executive of Infrastructure Partners Australia, Brendan Lyon spoke to the Sydney Morning Herald about this on September 23.

"It is fact that the cost of the privately operated grid in Victoria and South Australia has been consistently cheaper than the inefficient public grids in Queensland and NSW," he said.

He claims that since 1997, network costs in Victoria have decreased by 18 per cent in real terms. In comparison, these increased in NSW by 122 per cent and in Queensland by 140 per cent, he said.

"The Australian Government supports access to smart meters and other technologies for consumers who want them, as they empower consumers to lower their bills. The Australian Government is pursuing ongoing energy market reform to put the maximum downward pressure on electricity bills," the green report indicates.

What are smart grids?

Another technology that may revolutionise the electricity sector is the advent of smart grids. These may be able to improve the reliability of electricity services.

Essentially, they provide a way to identify and resolve faults on the grid. This helps to manage voltage. It also means that any infrastructure problems can be quickly and efficiently resolved by using the proper maintenance. 

Smart grids also feature smart appliances, such as meters, to hep consumers manage their peak time use. A range of pricing structures is also available and again this is designed to lower reliance on the grid during peak time. Other appliances used include energy management tools that allow remote access of certain items such as pool pumps and air conditioners. This means you can turn them off when you are not at home so they are not using any more energy than they need to.

Smart grids are also better able to accept large volumes of decentralised and renewable energy than conventional grids. They can also include smart sensors in the local substations. These are able to use infrastructure more productively, which will make energy more reliable in the long run. 

Another report, Smart Grid, Smart City was cited by the green paper. This found that these smart technologies are able to provide a net benefit of more than $27 million to Australia.

Smart technology has the potential to radicalise the energy industry in Australia by making it more reliable and reducing the cost of this service in the long run.

Posted by Liam Tunney.