Smart City project identifies up to $28 billion in potential economic benefits for Australia if smart grid technologies get the green light.
The four-year, $100 million government smart grid technology trial known as the Smart Grid, Smart City project, has released its cost-benefit analysis. The first of its kind in the world, the report identifies up to $28 billion in net economic benefits that could flow to Australia if smart grid technologies were to be implemented across the national electricity system.
Depending on the level of electricity demand growth, the report finds the roll-out of information technology-enabled equipment in the electricity network, such as smart meters and the automated detection and resolution of network faults, could provide a net present value benefit to the country of between
$9.5 billion and $28.4 billion.
Backed by federal government funding as part of its Energy Efficiency Initiative, Smart Grid, Smart City is one of the largest and most ambitious commercial-scale trial deployments of smart-grid infrastructure and applications ever undertaken in the world.
Centering on the use of information and communications to improve the efficiency of electricity generation, distribution and usage, the trials were led by New South Wales network company Ausgrid, with support from industry and government partners including IBM Australia, GE Energy Australia, Grid Net, the CSIRO, TransGrid and Energy Australia.
Technologies and applications trialled in Smart Grid, Smart City included:
• Grid applications – grid-side monitoring and control technologies to reduce network operating costs and support the future planning and implementation of lower-cost networks;
• Customer applications – residential electricity consumption, reliability, customer behaviour and responses to feedback technologies and pricing models. This included an electric vehicle trial and investigations into the interoperability of electricity metering with gas and water metering;
• Distributed generation and distributed storage – distributed generation and distributed storage within electricity grids, at the level of small communities; and,
• Supporting information and communication technology platforms – integration of various high-speed, reliable and secure data communications network and associated IT systems with the electricity distribution network, including interoperability with the National Broadband Network.
In its cost-benefit analysis, Arup and consortium partners Energeia, Frontier Economics and the Institute of Sustainable Futures (UTS) quantified the potential economic benefits from the mix of smart-grid devices, customer-feedback technologies and dynamic electricity tariffs trialled in the project and developed a business case for implementing the most effective of these at a national level.
They found the largest economic benefits came from technologies that improved the overall reliability of the network. Notably, fault detection isolation and restoration (FDIR) technologies, which allowed for rapid detection and repair of network faults, was found to have potential to deliver billions of dollars in benefits if used nationally.
The consortium also found the trial of in-home electronic and online tools for monitoring and adjusting electricity usage in near-real time, coupled with smart meters and alternate pricing models, gave households unprecedented control over when and how much electricity they consumed. This led to a smoothing of consumption over the daily cycle and reduced call on the grid at peak times.
Energy Networks Association CEO John 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 per cent or $600 per year higher in 2050 because of uneconomic over-investment in onsite generation,” he said.
“The Smart Grid, Smart City report also indicates 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.”
Arup principal and project director Dr Richard Sharp said the cost-benefit analysis was a rigorous examination of the Smart Grid, Smart City project that would feed into the ongoing reform of regulations governing electricity supply and distribution.
“…at the household level, we can use technology to change electricity usage patterns so as to dampen demand at peak periods, reducing capacity requirements over the long term. Given the right mix of technologies, a smart grid is achievable. This means we get more out of our existing electricity infrastructure, and can stage investment in new infrastructure over longer periods,” Mr Sharp said.
To achieve the $28 billion in Smart Grid net benefits, Mr Bradley said industry urgently needed 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,” he said.
“A low-cost transition to the smart grid will require commercial business responses within a clear government policy framework –consistent with the five steps outlined by the ENA roadmap – the Road to Fairer Prices.”
Landmark report also acts as a warning: ENA
The landmark Smart Grid, Smart City final report doesn’t only show the benefits of new technology, it also includes a $10 billion warning for customer energy bills under current power pricing, according to the ENA. Mr Bradley welcomed the report, saying a smarter energy grid will have major benefits to the Australian community. However, he noted the analysis also highlights the estimated $28 billion of total net benefits across the grid 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,” he said.
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,” he said.
“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.