Negative cost benefits for smart meters in most remote areas in Australia


Canberra, Australia — (METERING.COM) — December 7, 2010 – Negative cost benefits are projected for smart meters in most remote communities located outside of the major urban and regional electricity networks (so called “off-grid” communities) of Australia, according to a recent study from NERA Economic Consulting.

The study, which was commissioned and released by the Ministerial Council on Energy (MCE), makes a detailed investigation of eight off-grid communities in Western Australia, Queensland and the Northern Territory, which were selected to be broadly representative of these remote and regional communities.

These communities are highly diverse, ranging from a small local network connecting houses to a dedicated small generator set (typically fuelled by diesel), to larger urban centers with characteristics similar to larger grid connected towns.

The eight communities were Denham, Karratha and Sandstone in Western Australia, Birdsville and Erub (Darnley Island) in Queensland, and Tennant Creek, Nguiu and Engawala in the Northern Territory.

For all but one of these communities the net benefits per meter range from -$100 (Karratha) to -$3450 (Erub) in net present value terms over 20 years, with only one, Sandstone, showing a positive net benefit of $505 per meter.

Erub is a very remote, medium sized community in which all of the residential customers have prepaid meters that do not require a periodic meter read visit. The large net negative result predominately reflects the high cost of establishing backhaul communications from this location, via satellite in the absence of access to 3G communications.

Sandstone is a small community, with a population of approximately 120 serviced by approximately 50 electricity meters, which are read at least quarterly. The positive result reflects the high operational costs associated with providing metering services in this location, with the possibility to avoid these costs in addition to meter reading costs sufficient to project a positive business case.

According to the report the principal characteristics that have a significant impact on the resultant cost-benefit of a smart meter rollout in these communities include remoteness and isolation, the availability of skilled tradespeople, the type of communications infrastructure available, and the prevalence of prepayment meters, whereby a smart metering alternative to an existing prepayment system might not be appropriate.

The report states that a mass rollout of electricity smart metering infrastructure to remote communities in Australia is unlikely to be economically appropriate at this time, particularly if the principal benefits relate to business efficiency improvements. However, there may be considerable opportunities for obtaining benefits from implementing direct load control programs, which because of their uncertainty were not included in the analysis. Prepayment via smart metering infrastructure also needs further investigation, with the potential for the development of local retailer payment facilities.

The report, which has not been endorsed by the MCE or other parties, will serve to provide information for jurisdictional ministers and businesses to make future decisions with regard to smart metering in the off-grid areas.