Global energy demand is on the rise – forecast to increase by almost 50% over the next three decades, according to the U.S. Energy Information Administration. At the same time, extreme weather events are expected to continue, placing a strain on the capabilities of an ageing utilities infrastructure and unreliable energy grids. Consumer awareness of how and when to use energy is crucial in order to optimise energy resources. Smart meters are at the heart of providing customers with the information they need to reduce consumption, lower their bills, and support the environment.

What is a smart meter?

Smart meters are Internet of Things (IoT) devices that are installed in homes and businesses to monitor energy, water, and natural gas usage. Whereas traditional meters only measure overall consumption, smart meters track exactly when and how much electricity – or water or gas – is used and transmit that information to utilities in near real time.

By using artificial intelligence (AI) and machine learning, the data generated by smart meters can be analysed to determine how to reduce operating costs, increase efficiency, and forecast demand. That ability to track usage, analyse it, and plan ahead could result in smart meters saving utility companies up to US$157 billion by 2035. Smart meters are also a gateway for consumers to become prosumers, enabling them to generate, store, and use energy.

Knowledge is power, and smart meter data benefits consumers by helping them:

• Reduce energy consumption with detailed energy usage information that pinpoints energy-hungry activities and appliances.
• Optimise energy usage by taking advantage of time-of-use tariffs and replacing outdated, power-hungry appliances with more energy-efficient ones.
• Manage their costs with notifications that alert them when their account reaches a certain threshold or is higher than usual – to avoid an unexpectedly high bill at the end of the month.

What is a prosumer?

“Prosumer” is a portmanteau word combining “producer” and “consumer”. Energy prosumers typically remain connected to the central grid. However, they are also capable of generating and even storing energy – typically with photovoltaic solar panels and EV batteries. Depending on the amount of power generated, this energy can either be used to offset monthly bills or be sold back as surplus to utility companies or other energy distribution services. This model may be applied to both residential and commercial prosumers, with a growing number of businesses connecting their solar panels and EV fleets to the grid.

Smart utilities billing supports smart, engaged customers

With smart meters, energy companies gain significant opportunities to improve the customer experience. Instead of relying on transactional communications regarding billing and payment, companies can use the data collected from smart meters to facilitate communications that enhance customer satisfaction, trust, and engagement.

Companies can analyse this data and use it to send personalised recommendations to customers via text, e-mail, or as part of the billing process. For example, they can offer pool owners more efficient pool pumps, or encourage those with electric vehicles to charge their vehicles when energy demands – and costs – are lower. This ability to personalise communications while helping customers save money and energy moves utilities from being seen as mere service providers to being valued energy partners. And at a time when there is increasing competition in the energy sector, this opportunity to strengthen relationships with customers is paramount.

Despite these benefits, smart meters have not quite come into their own yet. In the US, 75% of homes have smart meters, whereas about 40% of UK and fewer than 25% of Australian households use them. As smart meter technology evolves, consumers will soon be able to set budgets and receive alerts via an app on their phone to let them know that they have left their cooker on or have a water leak. They’ll also be able to integrate IoT devices such as smart thermostats or smart lighting into their home networks to better understand and manage their energy consumption. And with renewable energy use increasing, consumers will be able to connect solar panels and batteries to the smart grid, becoming prosumers. This will enable them both to store energy and to sell surplus power back to the grid – making them more active and engaged in the wider conversation about energy and the environment.

The benefits of advanced metering infrastructure (AMI)

AMI integrates smart meters, communication networks, and data management systems to provide two-way communications between utility providers and customers.

The benefits of AMI include:

• Increasing reliability and improving outage management by being able to pinpoint outage locations quickly and automatically notify utilities when the power is restored
• Assessing and managing energy consumption by providing accurate information about power usage and patterns that can be used to enhance customer engagement
• Improving data quality and billing by providing accurate readings and alerting customers to usage anomalies as they occur rather than after the event

Smart meters and AMI support smart grids

Increasingly severe weather events have highlighted the weaknesses of existing electricity grids. And the global impact from flooding, forest fires, hurricanes, and heat is expected to continue to increase. As just one example, a recent McKinsey report on climate risk and response noted that in “Ho Chi Minh City, direct infrastructure asset damage from a 100-year flood could rise from about $200 to $300 million today, to $500 million to $1 billion in 2050.” That, combined with rising energy prices, calls for better overall energy management, which is where smart grids come into play.

Smart grids, which integrate smart meters, renewable technologies, sensors, communications networks, and monitoring systems, enable utilities and their customers to exchange information and energy. This enhances the grid’s reliability, quality, and efficiency, optimising energy usage and detecting and adjusting for minor problems before they escalate into major issues.

Smart grids also have self-healing, predictive capabilities. They can identify faults, isolate them, and respond to them, reconfiguring energy flow around affected areas to protect the wider grid. They can also access weather and energy usage forecasts to adjust for upcoming situations. By using predictive analytics, they can also anticipate future maintenance and system management requirements.

Can smart metering and smart grids help eliminate overloads?

The short answer is “yes”. The connected, communicative nature of smart meters and smart grids allows for a much more nuanced response to everyday energy usage, as well as to overloads and emergencies. Smart grids use edge computing, 5G, IoT, cloud, advanced streaming analytics, and AI to assess grid conditions in real time and rapidly adapt and respond to ever-changing demands. Customers can support overload management by reducing their consumption in response to current conditions.

For example, they can respond to alerts and notifications via mobile apps that advise them to:

• Reduce their energy consumption or switch off non-essential appliances and devices in the event of impending brownouts or power cuts.
• Turn heating systems down during cold spells and reduce air conditioning usage during heatwaves to decrease the surge in demand and lessen the risk of power cuts.
• Save money by charging electric vehicles and running washing machines, tumble dryers, dishwashers, or other appliances when your energy supplier’s time-of-use tariffs are lower.

Smart meter technologies drive greener, cleaner, smarter energy solutions

Energy solutions such as smart metering and smart grids offer many environmentally friendly benefits, including a reduction in diesel and gas consumption, as utilities would no longer need to send out meter readers in lorries.

Smart meters can support:

• The integration of renewables into smart grids, reducing dependence on gas, nuclear, and coal-fired power
• Smart technology that can switch heat pumps and other appliances on and off to align usage with supply and demand without negatively affecting homeowners
• Encouraging consumers to use renewable energy when the supply is strong so that excess demand does not need to be met by carbon-based energy sources
• Supporting local energy, which is cleaner energy – a decentralised smart grid will be able to connect microgrids where prosumers sell excess solar or wind energy back to utilities or even trade it with their neighbours
• Evolving smart cities. While cities only cover 2% of the Earth’s surface, UN research shows that they account for more than 60% of greenhouse gas emissions and use 78% of the Earth’s energy

But greener energy is not just about the power that is used; it is also about the energy that is wasted – about two-thirds of all energy in the US annually. Smart meters can identify energy wasted by not switching off lights or leaving devices on standby to help eliminate wastage. Because the cleanest energy is energy that is not used at all.