Last year, following months of debate and speculation around a national rollout of smart meters, the states, territories and the Commonwealth agreed on a plan to reduce electricity prices.

As far back as 2002, when Australia's electricity prices were stable and competitive by developed world standards, the Parer Review stated that: "All states and territories should work towards moving retail price caps and mandate the installation of interval (or smart) meters."

While the recommendations were not prioritised at the time, circumstances have changed dramatically over the past three years with the cost of electricity rising by around 40 per cent nationally, and by as much as 72 per cent in NSW according to the NSW Independent Pricing and Regulatory Tribunal.

The rapid escalation of electricity prices can be attributed to the growing need for electrical appliances in households with ABS statistics showing that nearly 75 per cent of households now use air-conditioning, 57 per cent have a clothes dryer and over 80 per cent have a home computer. But the real issue lies in the fact that while Australian households only account for around 25 per cent of total electricity use, the household contribution to peak demand levels is estimated to be around two-thirds.

Spending billions on expanding networks for the capacity needed to meet peak demand, which spikes less than 1 per cent of the time, is no longer viable. Unlike conventional utility service meters which use electro-mechanical counters to record only the most basic consumption information on a quarterly basis, smart meters automatically record and relay usage data at regular intervals to precisely measure energy use, thereby taking pressure off the networks by giving consumers the capacity and incentive to shift consumption to off peak times of the day.

According to the final report of the Australian Energy Market Commission (AEMC) Power of Choice review, an increasing number of consumers are already getting their accumulation meters upgraded to interval or smart meters with around 550,000 interval meters and 3500 full-function smart meters installed in households across NSW. Although Victoria is the only state to mandate a rollout, more than 10,000 smart meters have been installed in WA homes as part of energy efficiency programs and 360,000 interval meters are being installed on a new-and-replacement basis in Queensland – and those figures are set to rise considerably with Frontier Economics estimating that savings from peak demand reduction are likely to be between $4.3 billion and $11.8 billion over the next 10 years.

The widespread dynamic pricing trials conducted across North America, Europe and Australia, and analysed by economist Ahmad Faruqui in 2010, showed that critical peak pricing pilots averaged a 20.7 per cent reduction in peak demand in households with technology driven demand response leading to an even greater 34.1 per cent reduction in peak demand.

Smart meters get the green light

Add reduced manual meter reading costs, remote connection and disconnection services, instant fault and failure alerts, remote system repairs and outage management to the billions of dollars saved on network infrastructure spending and it comes as no real surprise that smart grids and meters now comprise almost a quarter of the global Machine-to-Machine (M2M) market.

The fact is that municipalities and governments across the globe are fostering projects that will eventually lead to the substitution of traditional meters with smart meters as part of larger smart grid initiatives. The global smart meter market, which experienced double-digit growth during 2006-2011, is projected to grow further in 2012 with a CAGR of 12 per cent to 2017, reaching a market value of US $8.2 billion according to global market research firm Lucintel.

Between 2011 and 2017, the installed base of smart electricity meters in Europe is forecasted to grow at a compound annual growth rate of 20.5 per cent to reach 154.7 million units at the end of the period. Berg Insight also expect that, based on current deployment plans, 70 per cent of EU households will have smart electricity meters by 2020.

In 2009, Pike Research forecast the 'Asian wave' of smart meter upgrades to follow the European cycle, but a massive upgrade cycle in China has begun ahead of expectations resulting in an overlap with the European cycle. The Asia Pacific region now represents over half of all global meter shipments, and never less than 40 per cent of global shipments.

Growth in this area goes beyond the installation of smart meters to include the remote monitoring, management and control of grid assets as highlighted by a smart grid study recently released by ABI Research which identifies the need for significant upgrades to effectively deal with today's antiquated, and highly inefficient, electricity infrastructure. With the global demand for power increasing each year, the grid cannot safely and reliably manage current and future loads without substantial improvements.

With benefits spanning energy savings, grid optimisation and greater efficiency by addressing the over-investment or "gold plating" of the network, as well as consumer choice, the crucial question no longer relates to whether or not we will go ahead with a national rollout of smart meters, but to how the rollout will be achieved. Whether the decision is to take a compulsory, or "market-led" approach by which the rollout is run by the network companies or electricity retailers, smart grids, smart meters and the wireless technology used to create the critical connection has been given the green light and is set to completely revolutionise the way that Australia and the rest of the world manages energy.

NetComm Wireless designs, develops and manufactures Grid Net-enabled 3G wireless communications cards for the global smart grid market and plays a key role in the communications component of smart metre deployments both in Australia and throughout the world.