The Smart 2020 report (see http://www.smart2020.org) on how IT can help in combatting climate change estimates that energy losses in power transmission and distribution (T&D) for India's power sector could be reduced by 30% if better monitoring and management of electricity grids were employed. Specifically there is potential for the use of smart meters that measure consumption in more detail than conventional meters and transfer that data back to the utility company for monitoring and billing purposes. This is also known as telemetering. The Smart 2020 report also advocates the integration of advanced IT technologies and systems into the Energy Internet. The concept of the Energy Internet refers to the use of IT to more intelligently distribute energy across grids so as to avoid imbalances during peak loads and surges in capacity which is expensive from a monetary and energy standpoint. Smart 2020 estimates that the use of IT can lead to global emissions savings worth US$124.6 million.

Al Gore has referred to the need to build an Electronet or a national smart grid for the USA which uses low loss underground wires to deliver renewable energy from the places that produce it such as the Arizona Deserts or the Dakota plains (where sunshine and wind respectively are abundant.). This would not be inexpensive - in fact it requires a US$400 billion investment - but such an investment would pay back within 3 years as power failures due to the existing grid are costing the U.S. US$120 billion a year.

Clearly then, there is a good business case for the use of smart meters. But what of the consumer? To  answer this question we must give a definition of what a smart meter is from a consumer's perspective. Smart meters monitor and record how and when electricity is used by a consumer. This data is then communicated directly to the electricity supply company. A consumer who has a smart meter should be able to use energy more efficiently and effectively and this should lead to significant savings as well as giving consumers more control over their energy consumption.

Thus, smart meters allow the grid to manage electricity consumption. The fundamental problem with exisiting grids is not that consumers are using too much but that they are using too much at the same time. Peak times in most industrial countries occur between 6pm and 8pm when people arrive home from work and turn on kitchen appliances, TVs and so on. To stop people doing this needlessly, electricity companies can increase the price of electricity at peak times.

Currently, consumers pay a flat rate for their electricity. Suppliers, on the other hand, buy at different rates. From an energy efficiency perspective what is needed is a mechanism analogous to landline telephone charges where consumers pay a different rate during the peak period (typically the daytime) and during off-peak periods. The proposed scheme for electricity grids is the use of demand response (DR). DR is the ability of electricity demand to respond to variations in electricity prices in real-time. The essential idea is that consumers will reduce their demand during peak times in response to increasing prices.. This is a key point. The International Energy Agency (http://www.iea.org) has estimated that a 5% reduction of demand at peak time would have resulted in a 50% price reduction during the California Energy Crisis in 2000 and 2001.

Smart Meters have been estimated to have the potential to reduce electricity consumption by 15% by some providers. However while smart meters and DR are attractive in theory both from a environmental and an electricity provider's perspective there are a number of practical issues that need to be considered. To obtain benefit from such a system, consumers would need any smart meter installed in their home to be integrated with a Home Area Network. In certain situations, it might not be practical to reduce electricity consumption as the consumer might be absent from their home and will still need to run devices such as freezers and heaters. And of course, the whole issue of consumer behaviour needs to be considered - the information about pricing will need to be relayed to consumers on a timely basis. It will simply not be good enough to anticipate that consumers will periodically read their smart meters. They will expect convenience. If this is not provided the anticipated benefits in terms of energy efficiency and the environment simply will not materialise.

In essence, what is needed is a system to provide pricing information to the consumer in a timely fashion. Smart sensors can provide the enabling technology for smart meters while Vertoda can enable the publishing of the data generated by smart meters. The integration of Vertoda in a electricity provider's IS infrastructure can facilitiate the provision of usage and pricing information to consumers by email, mobile phone, smart readers or other smart devices within the home.

Smart meters are not an end in themselves. Rather, they should act as a bridge between the supplier and the consumer to help promote better energy usage. Integrating Vertoda can help smart meters play this key role.