Australia AGL Energy solar smart meter

Australia AGL Energy solar smart meterAustralian electricity generation company AGL Energy has gone public with a change to its business model to service off-grid households with smart metering technology.

The 175-year-old utility is one of Australia's biggest coal-fired power generators but told The Australian newspaper that it needs to "create a more sophisticated business model".

Marc England, head of group strategy and new energy at AGL, will outline the plan in Melbourne today.

Mr England said in an interview with The Australian: “Today we have a very centralised grid business model, but we see the consumer changing and in order to meet consumer needs we need to change our business model.

“We want to have a distributive generation presence in one million homes by 2020.”

Mr England says AGL plans to start rolling out smart meters by the middle of next year.

Bending to forces

AGL concedes that it has to "bend to forces" that have been affecting AGL’s traditional earnings as fewer people rely on the grid for all their power demands.

England said: “We need to supply energy cost-effectively from the grid and to give the consumer the opportunity to produce their own power on their roof.

“A lot of commentators think a large company like AGL is not going to embrace this technology but we have decided to.”

AGL forecasts about 2.5 million of the nation’s 10 million households will be partially or fully off the grid by 2020.

About five million of the 10 million households are expected to have the potential to go off the grid by then. Currently about 1.3 million of the nation’s nine million households have solar panels.

Time-of-use tariffs

Earlier this year, AGL boosted the case for smart meters in Australia with research showing that adopting time-of-use tariffs would lead to economic gains of about AUS$1.6 billion (or USD$1.5 billion).

The AGL study aimed to show the government that the “case for reform tariff” was clear, according to the energy company’s chief economist Paul Simshauser.

The Australian utility industry struggles with fixed charges and a flat variable charge that does not account for the much higher cost of delivering power during peak periods.

Mr Simshauser believes adopting time-sensitive tariffs, made possible by smart metering technology, would deliver gains for householders and businesses.