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Utilities charge their customers for water and electricity use by periodically reading meters that accumulate usage over time. While this method gives an accurate and fair reading within a given time period, it is not a very useful tool for customers who wish to monitor and modify their behaviour or use patterns.

The advent of advanced information and telecommunication technology allows much more refined and interactive means of measurement and communication. The ability to capture, process and display more information about consumption patterns than is possible with traditional or 'dumb' accumulation meters permits providers and consumers to manage electricity and water usage in revolutionary ways.

What is smart metering?

Smart or Advanced Metering is a new way of measuring and managing energy and water use. It involves two important elements:

• a meter that is able to capture usage information over short time intervals, typically 30 minutes or less;
• a communication system, preferably two way, that can transmit the usage information to the service provider in real time and receive control instructions.

Smart meters offer a wide range of functions and capabilities for service providers and customers that are not available with traditional meters. They can even facilitate customers to enter the role of service providers by becoming electricity generators by making it easier to feed and sell solar and other renewably generated electricity into the grid.

Various communication options are possible, such as over the electric power distribution lines, telephone lines via a modem or using mobile phone or other wireless technology.

The Victorian Government has commenced a state-wide rollout of smart electricity meters for all Victorian electricity customers, not just large users.

The NSW government recently announced that every NSW home and business will be fitted with smart electricity meters, but has not yet committed to a specific timetable.

The Ministerial Council on Energy (MCE) has undertaken a cost benefit analysis for a mandatory national rollout of electricity meters, and will soon make a decision on whether to pursue this.

However, it is likely that government initiated roll-outs of electricity smart meters will occur across Australia in future, and developers will need to comply with the requirements of electricity utilities undertaking the roll-out. At the same time, developers may be able to influence the implementation, particularly in relation to metering of more than one commodity, such as the inclusion of water and / or gas smart metering.

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Key Issues

Benefits

Smart metering has a number of potential benefits. For service providers it can:

• reduce ‘meter to bill’ costs due to remote reading capability;
• improve outage detection;
• reduce demand for peak electrical power, with consequential infrastructure savings, better targeting of network investment and improved security of supply;
• provide remote electrical load control, such as shutting down some equipment at peak load times;
• capture usage information at a resolution not previously possible, to inform the design, implementation and evaluation of demand management programs;
• improve detection of unauthorized usage and losses;
• provide improved demand forecasting to assist with medium and long term infrastructure planning;
• facilitate the introduction of innovative pricing mechanisms, for example peak and critical peak tariffs, drought pricing or differential pricing of indoor and outdoor water use;
• make it easier to change tariff structures.

For consumers it can:

• enable feed-in legislation to be implemented;
• improve billing, such as more detailed information on consumption patterns;
• yield real time comprehensive information on usage and costs, enabling consumers to make more informed choices about how they use energy and water;
• facilitate switching between retailers, as with telecommunication providers;
• provide access to value-added services from providers such as time of use tariffs and efficiency packages; and
• allow the selling of solar or other renewable electricity to the highest bidder.

For developers:

• Improved demand management can allow reductions in infrastructure sizing and payments;
• Emergency load shedding can allow smaller sized backup plant requirements, reducing capital costs.

To gain the maximum benefit, smart metering needs to be undertaken in conjunction with the appropriate price signals, controls and education measures to give consumers the incentive to take action and change their behaviour. It is not enough just to roll-out the hardware on its own.

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Risks

There are a number of risks associated with smart meters which should be considered when selecting and installing them as part of your development:

• There are technological risks associated with hardware failure. This can be managed with thorough research into available products and by establishing the support of the manufacturer and supplier before purchase and installation.
• There are risks associated with the security and reliability of automatic transmission of data. It is important to ensure that safeguards are built in to the network.
• In such a rapidly developing area, there is a risk that meters may become obsolete if, for example, combined water, electricity and gas meters become cheaper or gain the support of utilities and other service providers.
• Local conditions may significantly impact on costs and benefits.

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Savings

Estimated savings from smart meters vary considerably from study to study. To achieve the desired outcome, positive action on the part of the service provider and others involved is required to ensure people understand how to fully use the capacity of the smart meter to manage their consumption.

Electricity meters

Smart meters could result in a reduction in total electricity use of about 5%, dependent on the implementation of support packages such as demand management programs and innovative tariff structures. Energy Australia recently found that 3,000 residential customers on a smart meter trial had reduced their power bills (not energy use) by 10% on average, with around 15% of homes saving 20% or more.

A major potential benefit of smart electricity metering is a significant reduction in peak demand through critical peak pricing. This has become a critical issue for many electrical distribution systems, especially in summer due to the rising use of air conditioners.

A recent report estimated annual greenhouse savings of 1.5 to 3.5% of Australia’s total emissions from a national smart electricity meter roll out.

CASE STUDY
Country Energy undertook its Home Energy Efficiency Trial (HEET) in the ACT in 2005/2006. Smart electricity meters with in-house displays were installed in 150 homes.

These provided customers with real-time information about their consumption and costs. The tariff included the usual off-peak, shoulder and peak rates plus a critical peak rate of $0.37/kWh, limited to 12 times per year and applicable only with at least 4 hours notice.

The trial resulted in average energy savings of around 5%, but more importantly a 30% peak demand reduction in response to the critical peak price events.

Overall, customer bills were reduced by about 16% on average.

Water meters

Although there is limited empirical data on the water saving potential of smart meters, the capacity of smart metering to inform the design, implementation and evaluation of demand management programs indicates there is significant potential for water savings.
There is also considerable potential for savings associated with improvements in leak detection resulting from the installation of smart meters. A metering initiative currently being undertaken by Wide Bay Water in Queensland is anticipated to result in savings of 182ML/a in leak detection alone.

CASE STUDY
Wide Bay Water Corporation, responsible for water and wastewater service provision in Hervey Bay, Queensland, are in the process of replacing the 20,000 domestic water meters within their jurisdiction with smart metering systems. The smart systems use:

• a standard Elster meter
• a Datamatic data logger called a Firefly
• a Datamatic transceiver called a Road Runner

The initial objectives of the Wide Bay Water project are twofold: improved leak detection and enhanced understanding of customer water use patterns at the household scale. It is hoped that improving understanding of water use will eventually enable differential daytime/night-time pricing with water used at night charged at a lower rate than that used during the day. Wide Bay Water anticipates that lowering charges for night-time water use will encourage off-peak water use, thereby reducing peak demand and deferring the need to upgrade water mains.

Forecast savings associated with the Wide Bay Water program are considerable. It is anticipated that savings resulting from improved leak detection will amount to 182ML/a, and savings associated with new off-peak pricing will be to the order of 914ML/a.

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Costs

There are financial costs associated with the purchase, installation and operation of smart meters. These costs vary significantly depending on the technology selected, data transfer requirements and analysis objectives, and the quantification and allocation of costs and benefits is difficult. At this early stage in their implementation, the full costs of installation and operation are still being established. Below are some indicative costs of installing smart electricity meters in various places. It is currently difficult to ascertain costs of water and gas meters.

Sustainability First in the UK estimates the cost of new large scale installations of electricity meters, including an in-house display, to be $300 - 450, plus annual running costs of $10-20 using mobile phone communication technology. Smaller scale projects would incur higher upfront costs.

In Ontario, Canada, 4.3 million smart electricity meters with an in-house display will be installed in homes by 2010. The set up cost is estimated at about A$300 per household, adding about $4 per month to consumer’s electricity bills to cover the initial and ongoing costs. Again, this focuses on the replacement of existing meters.

The cost of the state-wide roll-out of smart electricity meters in Victoria, including the replacement of existing meters, is estimated at about $400 per household.

While these costs may seem high, a cost benefit analysis for the Ministerial Council on Energy suggests there are overall positive net benefits of $179m - $3.9bn nationally for a distributor led rollout.

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Barriers

The present lack of standardised metering technology, combined with rapidly changing metering and communication technologies, may discourage the installation of smart meters. National standardisation is needed, particularly for communication protocols, to ensure consumers can switch providers if they choose to, and that a chosen technology will not become obsolete in the short term. The Ministerial Council on Energy is addressing this.

Victoria is the only jurisdiction that currently has any regulation that applies specifically to the roll out of smart metering. It has established a minimum functionality specification for smart meters, and conducted trials in 2007 to confirm the suitability of existing technologies.
Some state regulators have introduced regulatory provisions that provide incentives for demand management, and thus indirectly encourage smart meters.
There is a lack of knowledge in the general community about the role and potential of smart metering systems. However, research shows that most consumers are keen to have this sort of information. The 150 participants in the HEET program were all keen to continue with the in-house display provided. A study by the UK Future Foundation found that:

• 36% of people have no idea how much energy they use
• 70% want more information on home energy use and appliance running costs
• 82% say in home displays would encourage action to save energy

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Benchmarks

The MCE and the Victorian Government have suggested minimum functionality specification for smart electricity meters. These include

• Import and export energy recording in 30 minute intervals
• Remote reading of interval data (routine reads and special reads)
• Local reading by hand held device
• Local reading by customer via a visual display
• Customer disconnect and reconnect
• Time clock synchronisation
• Controlled load management at meter
• Quality of supply and other event recording
• Interface for in-home displays
• Loss of supply and outage detection
• Tamper detection
• Communications and data security
• Customer supply monitoring
• Interface to a Home Area Network
• Supply capacity control
• Remote firmware upgrades

Gas and water have generally lagged behind smart electricity metering in terms of development, uptake and innovation. They will require most but not all of the above features, and will have their own special requirements. For example, water meters could discriminate between indoor and outdoor water use.

However there are emerging trends and technologies which are setting higher benchmarks for metering. These include:

• Technologies which integrate metering of water, electricity and gas. For example the AMPY ecoMeter, currently being used in a metering trial by South East Water in Melbourne.
• Meters and analysis tools that can disaggregate water use data into component end uses are under development.
• Actually providing in-home displays or on-line usage data, and not just the interface.

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Development phase actions

Feasibility

In light of your environmental objectives, consider whether smart meters might play a role in your development. It may have an important role in progressing toward your organisation’s corporate sustainability goals by taking a lead in best practice.

Talk to electricity, gas, water and meter suppliers about current and future developments in smart metering. Developers have an important role in facilitating the take-up of smart metering technology. Take an active role in encouraging the installation of smart meters.

If there no plans to implement smart meters through your utility or retailer, are you able to ‘go it alone’? A cost of around $300 to $500 per house is small for what is likely to become a ‘must have’ item.

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Planning

If you have decided to include smart meters in your development, now is the time to investigate available technologies, consider your budget and determine whether you are going to focus on single purpose smart meters or invest in combined metering. In collaboration with the utility, you will need to determine whether you will be installing smart meters instead of, or in addition to, traditional meters.
 

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Design

You will need to plan for the space, power and data communications requirements of smart metering equipment. How will smart metering system chosen work with the proposed communications infrastructure?

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Completion

Post occupancy evaluation is essential, especially in the early days of the implementation of smart meters to add to the knowledge base. In conjunction with service providers, establish a rigorous evaluation process to help in determining the benefits and costs of smart meters. There are examples of previous studies to inform the design of the evaluation process.

If you don’t have the in-house expertise to design and conduct an evaluation, there are energy consulting firms who will undertake this for you.

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ESC 2006, 'Review of Electricity Distribution Prices 2006-10: Final Decision, Fact Sheet 2', Essential Services Commission, Melbourne.

Sustainability First 2006, 'Smart Meters: Commercial, Policy and Regulatory Drivers', Sustainability First, London.

Department of Primary Industries 2007, Advanced Metering Infrastructure: Minimum AMI Functionality Specification – Victoria, Melbourne

Reidy, C 2006. Interval meter technology trials and pricing experiments: Issues for small consumers, Institute for Sustainable Futures, UTS.

Ministerial Council on Energy has a number of Consultation and Information Papers on its website http://www.mce.gov.au/index.cfm?object=object.showHome (accessed 10/04/2008)

Ontario smart meter costs
http://www.ontariotenants.ca/electricity/articles/2005/ts-05a27.phtml (accessed 10/04/2008)

Energy Australia smart meter trial http://www.smh.com.au/articles/2006/01/27/1138319450051.html (accessed 10/04/2008)

Total Environment Centre, 2007. Advanced Metering for Energy Supply in Australia. Available at
http://www.tec.org.au/index.php?option=com_content&task=view&id=599&Itemid=316 (accessed 10/04/2008)