New Zealand - Smart Grids and Smart Cities need Smart Meters

Telecom Investment Research Note

Synopsis

Energy usage is a limited resource that needs to be managed for the long-term benefit of consumers, the power companies and the planet. Energy companies commenced the smarter use of the resource back in the late nineteenth century when power line communications was used to send low level telecoms signals out to activate or deactivate devices along the electricity grid.

Then as this technology was further developed over the last century and into the 1940s and 1950s, New Zealand commenced using ‘ripple control’ to cut peak-demand services by using off-peak usage to heat water systems. This simple method was able to defer infrastructure costs – likewise smart cities, smart meters and smart grids will be able to defer large infrastructure costs while at the same time making the energy grid more efficient.

By the late 1990s time-of-use meters came into play which allowed energy companies to capture electricity usage in 30-minute intervals. This enabled differential pricing by time-of-day and enabled utilities to discourage certain types of ‘non-time-critical’ use during periods of high demand by charging a premium time-based cost to electricity usage. Reducing peaks had an impact on electricity generation costs – alleviating the need for new power plants and cutting down on damaging greenhouse emissions. But still further progress is needed as electricity usage continually increases.

In this report we look at progress from the time-of-use metering (dumb meters) to smart meters using real-time pricing which will allow smart houses to become part of a smart city that uses smart meters feeding into the smart grid. With adequate planning by government and industry, the smart grids that are needed to manage the smart process will drive down CO2 emissions and further increase the economy’s reliance on non-renewable fossil fuels.