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How do smart meters work and can they save you money?

Learn what smart meters can and can't do for you.

smart meter on a wall
Last updated: 15 March 2021
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Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • Smart meters digitally measure your electricity usage and send that data directly to the service provider.
  • The data could help you find ways to save energy and money, and size up a new solar system – if it's in a usable format.

Having a technician visit your home to read your electricity meter may soon become a thing of the past. 

The traditional dial, cyclometer and digital interval meters are gradually being replaced by 'smart meters' which send information about your energy usage directly to your energy retailer, removing the need for manual readings and allowing energy bills to reflect your exact, rather than your estimated usage.

Learn what a smart meter can and can't do, and how it could be used to your advantage – if you access the data in a usable format.

What is a smart meter?

A smart meter is a digital electricity meter that records a home's energy usage in at least 30-minute intervals. The meter sends that data to the meter service provider, usually on a daily basis. Residents can also access this information, but it's not displayed on the meter itself, so accessing it requires a little effort. (See How can I read my smart meter?)

In contrast, the older-style electricity meters measure only passive accumulation and can only display the amount of electricity used between the three-monthly manual readings.

Digital interval meters can also record electricity consumption in 30-minute intervals, but unlike smart meters they're not able to communicate that data to the provider. Interval meters do allow time-of-use pricing, but they still need to be read or have the information downloaded.

Are smart meters available all over Australia?

All homes in Victoria now have a smart meter, and the Australian Energy Regulator (AER) now requires that all new and replacement meters in NSW, ACT, Qld, Vic, SA and Tas are smart meters.

The Northern Territory and Western Australia are not included in the AER's mandate, but rollouts are still occurring in both areas. The Northern Territory's Power and Water Corporation has a new and replacement policy in place for the roll out of smart meters. While in WA, state government-owned Western Power (which covers the south west of Western Australia, from Kalbarri in the north, to Albany in the south and Kalgoorlie in the east) is also now installing smart meters as standard for new builds and meter replacements.

person checking electricity usage on in-home display

An in-home display hooked up to your smart meter lets you keep an eye on your usage.

What are the benefits?

A smart meter:

  • reveals more detailed energy consumption and solar PV export data (compared to old accumulation meters), which could help you find ways to be more energy efficient
  • lets you connect or disconnect remotely, avoiding delays when moving or swapping electricity retailers
  • allows for better monitoring of the quality of electricity supply, including outages
  • could let third parties help customers analyse the data to find cheaper electricity plans
  • provides data that can help consumers investigate better payment and pricing options, such as flexible or time-of-use pricing
  • reveals usage data to assist when designing suitable solar and battery systems
  • may allow customers to trade their energy in the future.

How can I read my smart meter?

While smart meters generate more detailed data on electricity supply and export, the meter itself doesn't display this information for the household.

Instead, customers can only access this information through a third party – their electricity retailer or distributor – or by investing in an in-home display.

The simplest and cheapest way to read your smart meter is through your energy retailer's app. Powershop, Origin Energy, AGL, Energy Australia and Simply Energy all have apps which allow you to track your energy usage using smart meter data, while most other retailers will display this information on your online account. 

The simplest and cheapest way to read your smart meter is through your energy retailer's app

Alternatively, you can buy an in-home display to keep an eye on your usage.

These devices show in real time how much electricity you're using and how much it's costing you.

In Victoria there are incentives available under the Energy Saver Incentive scheme to support the installation of in-home displays.

How do I get a smart meter?

Policies and the availability of smart meters vary across states and energy retailers, but since December 2017 they're the default for any new meter installations or replacements (except in NT and WA, which have their own policies).

This means a smart meter will be installed when:

  • you take up a new energy contract with a retailer and the smart meter is part of it
  • your meter is faulty and needs replacing
  • your home is new and has a new connection point
  • you request one from a retailer (though delays are possible)
  • there's a smart meter deployment in your area.

Can I get a smart meter if I'm renting?

If you want to request a smart meter upgrade, you'll need to get written consent from your landlord first.

"If a landlord refuses consent, tenants can get in touch with their local Tenants' Advice Service to chat through their options," says Jemima Mowbray from the NSW Tenants Union. 

If your electricity retailer is replacing your smart meter as part of an active replacement program, you don't need to seek permission from your landlord.

What if I don't want one?

If your retailer is offering you a smart meter as part of a deployment in your area, but your existing meter is still functioning properly, you can opt out of getting one (except if you live in Victoria).

As long as you haven't waived your right to opt out when signing up to a new energy contract, your retailer must give you two written notices of your ability to opt out. Your retailer is required to inform you about how you can opt out and by what date before the deployment.

But if your existing meter is faulty or has reached the end of its life, you must replace it with a smart meter.

How can a smart meter save me money?

There’s a pattern to how we consume energy. High energy use times on weekdays are during waking hours, peaking between 2pm and 8pm.

If a large number of electricity customers shift their energy use to off-peak times (overnight) there’s less need for expensive upgrades as the current network infrastructure can be used more efficiently.

Beyond regular or flat-rate pricing tariffs, retailers offer flexible pricing plans or time-of-use tariffs to customers with interval and smart meters to incentivise customers to use cheaper, off-peak energy.

Tip: If you're on a flexible tariff, check when it switches from peak to off-peak in the evenings. Run your dishwasher and any other appliances when it kicks into off-peak.

A typical flexible pricing plan operates across three time periods – peak, off-peak and the shoulder. Plans vary widely in both pricing and times depending on your energy provider and the state you live in.

An example of the time periods in a flexible plan in NSW:

  • Peak 2pm–8pm weekdays (not public holidays).
  • Shoulder 7am–2pm, 8pm–10pm weekdays; 7am–10pm weekends and public holidays.
  • Off-peak 10pm–7am every day.
infostration11

An example of a weekday flexible pricing structure.

Peak prices are higher than a flat rate, while the off-peak rate should be lower. The shoulder period may be just slightly lower than a flat rate.

Flexible pricing won’t suit everyone. It will be most beneficial for homes that use a lot of energy in the cheaper off-peak periods.

Tip: When upgrading your appliances look for a time-delay capacity. You can then set them to turn on when off-peak pricing kicks in, even if you're asleep. Or if you have solar, when the sun is shining.

The most suitable appliances to shift to off-peak times are those which guzzle energy and don't need to be used on demand throughout the day. These include:

Can it help me find a cheaper electricity deal?

Depending on how it's presented, the data can be useful to show consumption and average daily usage patterns. However, on its own, it has limited capacity to help you pick the best electricity offer on the market for you.

A 2020 report by the AEMC showed that while 42% of consumers in the National Electricity Market (which includes all states except NT and WA), have smart meters, only 20.8% were on a time of use or flexible retailer tariff at the end of March 2020.

Energy economist Bruce Mountain explains how difficult it is to pick the right retail offer: "It's not just a case of being able to analyse smart meter data and allocate your consumption history across the time period over some reliable period, such as a year. It is also knowing the rates of all competing flexible or time-of-use tariffs on offer in the market. This is a tremendously complex and data-intensive calculation."

On its own, smart-meter data has limited capacity to help you pick the best electricity offer on the market for you

In Victoria, smart meter data can be uploaded to the government's Victorian Energy Compare service, which will combine it with information about your household and current electricity market offers to suggest an optimal electricity retail plan.

For other states (excluding NT and WA), the federal government's Energy Made Easy comparison site also lets you input smart meter data to calculate estimated costs for time-of-use electricity plans.

Mountain advises customers not to swap tariff structures from, say, flat to flexible pricing, if you can't know for sure you're getting a better deal.

A flexible tariff doesn't automatically mean a better deal, and in some instances customers will be charged more on a flexible tariff plan if they can't take advantage of the off-peak or shoulder rates.

How much will a smart meter cost?

As smart meters are now the default installation for most of the country, many energy providers seem to be installing them at no direct cost to the consumer. In these cases, costs are likely absorbed into the daily supply charge for all customers, much like the cost of other equipment like poles, wires and other electrical infrastructure.

One exception is if there are complications with installation and additional onsite work is required – most companies will charge an additional fee for the extra work. For example, Powershop charges a levy fee of no more than $100.

Costs are likely absorbed into the daily supply charge for all customers, much like the cost of other equipment like poles, wires and other electrical infrastructure

Other retailers may charge if the customer has requested the change (rather than, say, simply replacing a broken meter). For example, Origin Energy may charge a meter works admin fee of $60.50. Some retailers may also charge for smart meter installation in NT and WA.

Tip: Be sure to ask the retailer about any upfront and ongoing associated costs of the new meter, and where this will be detailed on your bill. The retailer is required to disclose any associated costs before they install the meter.

Can a smart meter help me choose the right size solar or battery system?

Smart meter data shows household energy usage patterns which is helpful when sizing up a new solar PV system for your home, according to Dean Lombard, senior energy analyst with Renew.

But if you're looking to expand a system or add batteries, on its own it doesn't show the full picture of generation and consumption, only net import and export measured at the meter.

Lombard says, "When Renew does analysis, we have our own models of solar generation that we use in conjunction with the smart meter's usage data.

"If there is an existing solar PV system and they are looking at an upgrade, we use our solar generation model in conjunction with their meter data to get a good approximation of their usage and their generation. Some inverters record total generation data so that also helps."

Almost none of these meters will show you how much solar PV electricity you've generated or consumed in gross terms

Nigel Morris, Solar Analytics

Nigel Morris from Solar Analytics says, "Access to usable data is a big issue for customers with smart meters.

"Thirty percent of homes now have solar and some – but not all – of these have smart meters. But almost none of these meters will show you how much solar PV electricity you've generated or consumed in gross terms."

Solar eclipsed?

This means solar owners can't see how much the solar consumed on the premises has saved them or the potential of a battery in the system, or even what their real energy consumption is.

"Smart meters only measure and share net energy flows which is completely useless and deceptive for design purposes," says Morris.

"The interval of data is typically 30 minutes, so it doesn't show the granular picture of energy flows that are required [to determine optimal battery design]."

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking and corrections at CHOICE.
We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking and corrections at CHOICE.