The final independent report from the landmark Smart Grid, Smart City project has been released.
This initiative was led by Ausgrid and its consortia partners for the purpose of supporting and informing the industry-led adoption of smart grid technologies in Australia and was allocated $100 million by the Australian Government in 2009. The program ran for four years, from 2010 to 2013, and in total, around $490 million was invested in the Smart Grid, Smart City Program by all contributors.
The Smart Grid, Smart City Program was arguably one of the widest-ranging technology assessments of smart grid products in the world. The program:
● Saw the deployment and testing of several smart ‘in-grid’ and ‘customer-focussed’ technology groupings across the Ausgrid network and EnergyAustralia retail business in New South Wales;
● Examined the impacts and benefits of additional distributed generation and distributed storage solutions;
● Involved approximately 17,000 electricity customers in consumer-focussed trials examining how residential customers could contribute to peak demand management through behavioural changes.
The findings of the report not only suggest that smart grid technologies can play a role in addressing a number of the challenges currently facing the Australian energy sector, it also supports the need for tariff reform to keep pricing reasonable and fair and emphasises the importance of demand management.
This report demonstrates that there are four key aspects to realising these benefits and improving consumer pricing outcomes:
● Technological development and deployment of enabling (smart grid) technologies;
● The introduction of cost reflective electricity pricing including dynamic tariffs;
● Consumer behaviour change with respect to electricity consumption (to better manage any future growth in peak demand);
● Energy market reform (many aspects of which are already underway).
The report states that realising the potential benefits of smart technologies requires an integrated solution – if any one aspect is not implemented, then the extent of net national economic benefits available will be reduced.
It is suggested that ‘A large proportion of the net benefits identified can be derived from the economic deployment of a number of in-grid technologies which improve operational efficiency, reduce capital investment (through better managing peak demand) and deliver improved reliability for consumers at a lower cost.’
Energy Networks Association CEO, John Bradley, welcomed the release of the final report. “This first commercial-scale smart grid demonstration project shows a smarter energy grid has the potential to provide $28 billion in net benefits to the Australian community,” Mr Bradley said.
“However, the analysis also highlights this is only possible through smarter tariff structures, so customers are rewarded for using energy efficiently and network costs are evenly shared.
“If we stick with current electricity tariffs using outdated meters, the report predicts a more costly system with consumers paying $10 billion more than they need to, due to over-investment in onsite generation and storage.
Mr Bradley said the analysis highlighted the risk of unfair cross-subsidies increasing, if ‘early adopters’ of new generation and storage technology pass costs to other users.
“Tariff reform is essential if we are to avoid an electricity world of ‘haves’ and ‘have nots’ where those with onsite generation and storage are effectively cross-subsidised by other users, which in the report is estimated at $420 per year.
“Fairer prices and smart grid technology can achieve customer bills which are $156 per year lower than would occur if we keep the current system, for an average customer who does not have onsite generation or storage,” Mr Bradley said.
Mr Bradley said the report also highlighted the important role that smart grid technology can play in remotely monitoring electricity supply, finding faults and restoring power quickly and more efficiently.
“The report estimates these benefits in managing reliability, safety and power quality at approximately $15 billion for the Australian community,” Mr Bradley said.
Mr Bradley said the Smart Grid Smart City analysis was highly consistent with the recent two year analysis by the CSIRO Future Grid Forum, which highlighted the cost of over investment in onsite generation.
“The CSIRO Future Grid Forum identified a scenario in which customer bills were 30% or $600 per year higher in 2050 because of uneconomic over-investment in onsite generation.
“The Smart Grid Smart City report also indicates that if customers have easy access to meaningful information about energy use then they can respond to opportunities to save energy, particularly at peak times, which benefits them and the entire system.
“There are strong benefits for vulnerable customers, and the study found these customers are willing to shift the time they use energy and are empowered by the new tools and incentives.
“This follows recent evidence in an AGL study that vulnerable customers were significant beneficiaries of electricity tariff reform.
“The AGL analysis showed 64% of customers were better off with smarter tariffs, with the benefits most strongly felt by “Households in Hardship”, followed by “Working Couples” and then “Concession & Pensioners,” Mr Bradley said.
“The Smart Grid Smart City project shows the opportunity for Australia to harness the power of new technology and consumer choice.
“However it also shows how exposed we are if we leave the wrong pricing incentives in place, allowing unfair cross subsidies to emerge between electricity consumers.
“To achieve the $28 billion in Smart Grid net benefits, we urgently need to remove the remaining roadblocks to networks, retailers and other providers using smart meters where they provide value to consumers.
“Network businesses are already embracing dynamic change. Many of the solutions explored in the Smart Grid Smart City Report are extensions of the current innovation in demand-side management, advanced metering, embedded generation and network pricing enabled by Australian network businesses.”
The full report can be viewed here.