Providing a better understanding of how and when energy is used could help consumers and municipalities cope with increasing electricity costs, says Hymie Pedro, business development manager of smart metering solutions company Hefcom.
Following the National Energy Regulator of SA's announcement that electricity prices would climb by 24.8% this year, with subsequent yearly increases of 25.1%, and 25.9%, companies and consumers alike are faced with the sobering reality of increasingly expensive electricity.
“What's important is enabling people to see their consumption much better and providing tools to municipalities to assist them in managing high electricity consumption,” says Pedro. “Smart meters enable the management of electricity consumption in a more proactive manner.”
Smart meters are an advanced version of standard electricity meters, with a demand control element and a consumer interface installed in the home. According to Hefcom, they help connect users and suppliers of electricity, by providing information to both parties, and communicating it via wireless technology to a central management system.
From here, commands can be sent to the device to disconnect, reconnect or limit power consumption. A typical smart meter will enable two-way communication, record real-time consumption remotely, report tampering, and manage energy demand.
Pedro hopes Eskom will introduce punitive and differentiated rates in the near future, as it will assist consumers in deciding when they use electricity, and at what price.
“As with cellphones, where you have various tariffs for calling at different times of the day, if you decide to take a bath when everyone else is cooking dinner, then you'll pay more. It puts the choice back in the consumer's hands.”
Power trip-ups
Cost is the biggest challenge in the implementation of smart meters locally, says Pedro. “It's like with any technology, if you go for something smarter and have a device where you can send a demand to it and it can respond, then it's going to cost a few rands more.” He adds it will take a couple of years for the price to stabilise.
“But it doesn't have to be expensive. Part of the problem for municipalities is that they don't have the budgets for it, but there are lots of creative ways you can start installing smart meters. Some companies fund municipalities and then recoup their expenses from the savings.”
He adds that municipalities often can't see beyond the initial cost, to the potential benefits the meters bring. “There are lots of value-adds, such as collecting other information about water and refuse collection. It allows the municipality to monitor power use remotely and switch it off if bills are not paid.”
Smart meter systems can also switch off individual components in the house, which assists in grid supply management, adds Pedro. This could include electricity feed to non-essential appliances such as swimming pool pumps or air conditioners.
However, Frost & Sullivan research analyst Ross Bruton notes that, while shutting off individual devices is possible, this would bring in legislative aspects around consumer rights.
“The biggest benefit is really for municipalities, because there's no chance of non-payment.” He adds that smart meters also reduce the chance of theft, because they come with software that prevents tampering.
According to Bruton, the greatest advantage for consumers is real-time monitoring of usage and how much they are being charged. “The time-of-use systems will hopefully incentivise demand side management and change consumers' behaviour and habits.”
Pedro notes that awareness and education around smart meters needs to be an ongoing process. “To many people it's a foreign concept; you need to educate users and get them to understand that it's an efficient way to manage their electricity use.”
He adds that there's a huge requirement from businesses for the technology, but that companies often need to get approval from municipalities, which takes time. “One of the biggest problems companies, consumers and municipalities face is incorrect billing. With smart meters you can decide when, and how much you use and pay for power.”
Bruton notes that monitoring electricity usage in real-time allows companies to see usage patterns, which can result in significant savings.
Room for growth
According to the Electricity Regulations Act, of 2006, all consumers with a monthly usage of 1 000kWh or more need to be on smart metering systems by January 2012. While Pedro is doubtful this will be achieved, he says setting the target is an important step in the path towards smart metering in SA.
Bruton adds that the requirement is under revision, because a lot of municipalities don't see it as a realistic goal. Yet, despite funding and specification challenges, a lot of municipalities have put forward plans to install smart meters.
“A new thinking is going to come about, with municipalities becoming more effective in collecting monies, which ultimately means better service delivery,” states Pedro.
Frost & Sullivan released a report in February, forecasting that SA's metering market will undergo a period of considerable change due to the implementation of smart metering systems. “Within the next few years, you'll see significantly more smart meters in the market, whether it be upgrades of existing meters, or new systems for electricity notification,” says Bruton.
“There are amazing market opportunities for smart meters,” adds Pedro. “As long as you provide a product that works, that's reliable, and adheres to standards and regulations, there are big opportunities for any company ready to claim that space.”
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