02 November 2010

Intelligent Energy System Should Be Re-Designed

Energy Market Authority recently announced a $30 million pilot project for the Intelligent Energy System (“IES”).  The IES is a step towards a smarter power grid, which will provide consumers with more information, choice and control over their electricity usage, thereby improving energy efficiency for the country as a whole.

The pilot project will involve around 4,500 residential, commercial and industrial consumers.

With its advanced metering infrastructure, or smart meters, the IES will provide the following potential benefits to households:
  • Choice of electricity retailer and pricing plan.
  • More information to monitor and manage energy usage.
  • Better control of major home appliances to reduce energy usage.

Many of us may be curious about our electricity consumption.  But for most of us, it is a one-time exercise — once we find out how much electricity each appliance uses, that's it.  Even now, we do not keep monitoring our electricity consumption real time; once every two months when our electricity meters are read is often enough.

Most, if not all, of us know how to reduce energy consumption.  The challenge is whether we are prepared to change how we use our electrical appliances.  If we want to change, it will not be because the smart meter tells us how many kilowatt-hours we can save by, for example, raising the air-conditioner temperature setting — we know we will use less energy the higher the setting; what matters is the setting we can accept.

Most of us cannot or will not substantially change our energy consumption pattern because it is tied to our lifestyle.  For those who use the air-conditioner when they go to bed or those who sun their laundry after washing, it means nothing if electricity is cheaper at other times of the day.

Having similar energy consumption patterns over the course of the day and having no bargaining power individually, the majority of households may find the electricity pricing plans not differentiated enough to offer meaningful choice.

Smart meters will help the power grid operator to detect localised outages quickly, but only fractionally faster than feedback from affected consumers.

Individual smart meters may be nice to have, but the reality is that consumers have to bear the cost eventually, directly or otherwise.  The pilot project costs $6,667 per consumer.  What is the estimated cost to each household to fully implement the IES?

Will the savings, if any, in household electricity billings ever be significant or meaningful enough to offset the capital and operating costs of the IES?

A more practical way may be to install a single smart meter for each group of households in a neighbourhood (for example, strata titled properties or blocks of HDB apartments).  The councils of the strata titled properties or the town councils of the HDB apartments can choose electricity retailers and pricing plans.  These bulk meters can provide the desired real-time feedback to the network operator, the electricity retailers and others.  It's far simpler and more cost effective.

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