Antony Funnell: Now to the issue of energy consumption. And later this month, the Australian government is expected to release grant guidelines for a project they hope will eventually lead to the rolling-out of a commercial-scale 'smart' energy grid, and $100 million has been allocated for the pilot project.

So what do we mean by a 'smart' grid and how will it work? Well, the minister responsible for the project is Peter Garrett.

Peter Garrett: The idea is a simple one, even though there's some complexity in it, and that's to have a much more intelligent information-sensitive distribution and consumption network for energy that enables consumers to make informed decisions, that enables generators and distributors to have a much better sense of energy use and energy use patterns, and which also provides for a much greater assessment of faults and problems along the grid, in order that they can be rectified and dealt with much more quickly.

Antony Funnell: And are you expecting that one company, say, or organisation, will take the lead in trying to implement the smart-grid policy across the country?

Peter Garrett: Well what we want to do is a substantially-sized pilot which would be led by an energy distributor. Our expectation is that it would be made up of additional consortia partners which may include retailers, may include technology companies, non-government organisations, local councils, state instrumentalities, community groups and the like.

Antony Funnell: Australia's existing electricity grid is quite old. Is it possible to institute this type of plan within the existing infrastructure that we have?

Peter Garrett: We believe it is. McKinseys did a significant pre-deployment report for the government to look at, and there's been quite a bit of spark reactivity particularly taking place in the United States for example, in Denver, Colorado. And we think that we've got the technology, in a sense, that's ready to be implemented. It's just a case of, in a pilot, of ensuring that we use the technology that we have, including addressing some of those technology deficits that exist.

And the idea here is to really gather up a really solid body of information and data, information that will reduce the risks and uncertainties for smart grid investment in the future, information that will give us a much better idea of environmental and economic efficiencies and information about consumer behaviour as well. All of these information sets are very necessary to inform long-term investment in our grid, and particularly as we move more and more, as I think we must do, to smart grids in that deployment.

Antony Funnell: And just to be clear about this, you're looking at this initiative as a way of improving energy efficiency for the commercial sector as well as the domestic household sector, because a lot of the emphasis that governments, state and federal, in the past have put on energy saving seems to have been focused on the domestic side of the equation, not the commercial side.

Peter Garrett: Your question's quite right. It's from the deployment of energy down through the distribution networks and into the users, into the households. And it's across that entirety of energy grid that we're looking for efficiencies, and there are clearly many opportunities that exist there for them.

Antony Funnell: You were quoted recently as saying that this smart-grid, smart-city initiative was similar to an internet for the energy industry. Could I get you to expand on that for me?

Peter Garrett: Well I think it's pretty clear that we've got very sophisticated communications and technology capacities now, even in existing households you'll see smart appliances that can be programmed to turn on and off at certain times. We've had smart meters, which effectively are a two-way interface between the householder and the distributor or the deliverer of energy into a household. And we've got a significant computing capacity now which enables us to actually understand how a grid is actually working. Armed with that knowledge, and with the capacity to take a real-time temperature test, if you like, on energy use both in terms of informing your decisions and a consumer within a household, but also informing your decisions as a distributor or as a generator, you're effectively building the capacity for a much more interactive and integrated interface in terms of energy use across the grid.

So maybe the internet wasn't designed to work in the way in which we thought it would, it's certainly the case here that by having this really significant commitment for a pilot project, we can determine the best way for a smart-grid to be rolled out and have the information available for those that want to start taking those big investment decisions further down the line.

Antony Funnell: And do you assume there will be synergies between this grid if it goes ahead, if it proves to be successful in this pilot stage, between this grid and the roll-out of the new national broadband network?

Peter Garrett: Yes, we're saying that we recognise that the roll-out of the NBN will be a critical factor. It's not a stand-alone connect for the grid, in terms of the pilot project, but clearly over time, with the expectations that we'll get roll-out of the national broadband network, it will provide an additional communicative element in the grid. But it's not designed specifically to integrate with the NBN, given that the NBN's rolling out where I'm speaking to you from, in Tasmania first. We may find a consortia that proposes a successful smart-grid project to operate in a state where the NBN's not as advanced. In the longer term though, clearly the two will have a great deal to do with one another.

Antony Funnell: Peter Garrett, Federal Minister for the Environment, Heritage and the Arts, many thanks for talking with us on Future Tense.

Peter Garrett: Thanks, Antony.

Antony Funnell: Now as I mentioned earlier, the grant guidelines for the federal government's smart grid project are due to be released at the end of October. But that's not to say that there hasn't already been work on the concept.

In fact, a group of universities and Australia's major publicly funded research institution, the CSIRO, have been toiling away from the past 12 months on their own initiative, called the Intelligent Grid Research Program.

Chris Dunstan is one of those involved. And he's a research principal with the Institute for Sustainable Futures at the University of Technology, Sydney.

Chris Dunstan: Our research through the Intelligent Grid Research Program covers seven projects, and they encompass technological aspects, economic aspects and social aspects. There are five universities involved with the CSIRO, supported through the energy transform flagship. And my particular focus, and it's one of those seven projects, is on what we call institutional barriers, stakeholder engagement and economic modelling. So mine is perhaps the broadest in scope, but other projects deal with integrating renewable energy into the local electricity network. There's a project in Western Australia looking at community consultation around intelligent grid, and there's a couple of projects in Queensland that are looking at how you can make the most of a local level of a range of what we call distributor generation, small-scale generation within the grid.

Antony Funnell: Am I right in saying it's not just about achieving a more efficient electricity system for the country, but also reducing greenhouse gas emissions in the end?

Chris Dunstan: That's very much the focus of our research program. Smart grids, intelligent grid, intelligent networks, these terms get bandied around, and while they've got a common core, as I described earlier, they are, depending on who's applying them, there's a different meaning or a different focus.

The particular focus of our research program is explicitly to achieve significant greenhouse gas emission reductions, by facilitating what we call distributed energy, so local generation, energy efficiency, and managing the load at the customer level, into a smart grid through advanced communications and control technologies.

Antony Funnell: Now in a practical sense, if we have a smart grid in the future, an intelligent grid system in the future, how will that be different from the system that we currently have, the electricity system we currently have, particularly for consumers?

Chris Dunstan: It's not as though the existing electricity grid is completely dumb and the future is infinitely intelligent. There is already quite a bit of advanced technologies and smart technologies within the grid, but in terms of the consumer side of the ledger, things that we'll be looking for are interval meters, smart meters that provide not just a once-off reading of your energy consumption three months after the fact, but a meter that can tell you as a consumer at any particular time what your energy consumption is, how you're using your energy, and also communications so that even if you're not at home, for example, you can log in and find out what energy consumption levels are. And then you can make some decisions about how you use your energy, about which appliances you turn on or off, also how you program your appliances.

So for example, that gives us the opportunity for time of use measuring, so rather than paying the same 12 cents per kilowatt hour, 24/7, the price varies depending on the amount of demand on the system. Many people are familiar with the notion of off-peak pricing, which has been around for many years. This would be much more sophisticated, so you would break it down not just into normal tariffs and off-peak, but prices that would be higher during the day, but in summer they might be higher again, but offsetting that, you've got lower prices for the rest of the time, and in the lower demand seasons, autumn, winter, and so on.

So what it means is that from the point of view of the consumer, you've got much more information to deal with, which can be both a good and a bad thing, but you've got the option there of managing your load. Equally importantly though, is the capacity to plan our network so that we take greater advantage of low emission, local generation, and energy efficiency measures.

Antony Funnell: And just to finish up, the research is under way. Where are you at in the process, and what plans do you have for your final results? Where will they go?

Chris Dunstan: Our program's been running for about 12 months now. So we're starting to get some results emerging. We're putting out some working papers and the like to give an indication of what we're doing. We've got another two years to run with the program. We've got outcomes and reports that will be generated from each of the seven elements of that work, and we'll be seeking to tie it together to provide a sort of a holistic picture of what an intelligent grid would look like, as well as some pretty clear recommendations on how governments and industry might be able to make the most of these technologies for the benefit of the industry, but more importantly for the Australian community.

Antony Funnell: Chris Dunstan, from the Institute for Sustainable Futures at the University of Technology, Sydney. And Chris informs me that his group is keen on tapping into some of Peter Garrett's smart grid money if they can.

And by the way, there's an interesting article on the international push for smart grids in the current edition of The Economist. You'll find a link on our site.

Don't forget we're on Twitter as RN Futuretense, all one word, and if you want to have your say on any issue we've covered, you can now leave a comment on our website directly under the story that matters to you.

Thanks to co-producer Andrew Davies and technical producer Jim Ussher.

I'm Antony Funnell and this is ABC Radio National.