Intimate data about the private lives of millions of Australians will be analysed and monetised by a partnership between a New Zealand company and a subsidiary of the world’s biggest retailer, Amazon.
Smart meters deliver information about household power use and are being installed at a rate of 12,000 a month as the electricity grid juggles a boom in household solar with a nationally linked network of generators and users.
The data goes far beyond how much power you use in a certain time of day – revealing things like the number of televisions you have, the age of your fridge and other appliances, and the number of people in your home.
The information will be shared in a partnership between NZ utility company Vector and Amazon Web Services (AWS), the cloud computing subsidiary of internet behemoth Amazon.
“Smart meters, and the way you consume energy is very private,” said Kaspar Kaarlep, co-founder of power technology company WePower.
“I would compare it to, let’s say, the City of Melbourne selling access to all of its CCTV cameras to Amazon … to develop new products and services.
“This is our private lives. When do I come home? When do I leave? What do I have at my home? Who do I live with? This is all visible in that data.”
Consumer benefits offered
Almost every home in Victoria is connected to smart meters, part of a program that cost consumers $2 billion and, when reviewed by the Auditor-General, was found to provide almost “no benefit”.
A long boom in the installation of rooftop solar systems is seeing more Australian homes hooked up each week.
The key difference for consumers is more accurate billing, and the sacking of meter readers who used to physically visit residences to check how much power had been consumed.
The deal aims to create products and services for power retailers and consumers – and could lead to the first tangible benefits of the costly scheme.
“It’s a really exciting opportunity to really unleash the power of data to make customers products and services and costs much more efficient,” Vector Group chief executive Simon Mackenzie said.
“No one wants to sit and analyse every five minutes of their energy supply.
“This will ultimately evolve into solutions that – through machine learning or other types of technologies – enables customers to opt in to products or services and have it managed in a smart way, privately behind the scenes, to have a better experience and (lower) cost.”
1.6 million homes included
The alliance will use data from 1.6 million internet-connected smart meters in Australia and NZ to gather information on consumers’ consumption and network performance.
That data, analysed, will allow power companies to “develop tailored product and pricing solutions for their customers based on their energy consumption habits”, according to a release revealing the deal.
“The energy industry is really going through this digital transformation,” said Nick Walton, Amazon Web Service’s managing director for the commercial sector in NZ.
What he calls “legacy” meters have been a challenge to altering the electricity grid, but smart meters provide an opportunity to transform how people consume – and create – power.
“We think that can really unlock a lot of the value from this data and start to provide solutions back to customers: With more choice and more visibility into their power consumption patterns,” Mr Walton argued.
“Then (consumers) can take action on choosing to, say, charge things off-peak, or just get greater visibility to make smarter decisions that suit themselves and their lifestyle.”
But concerns remain about how the information will be used.
Kaspar Kaarlep of WePower worked in Estonia – the only other market in the world completely covered by smart meters.
He said greater consumer protections in Europe mean this deal would not be legal there.
“There was a time where we didn’t recognise that what posts you ‘like’ on Facebook is very private and identifiable – smart meters are the same way,” he said.
“When do you work? When do your individual appliances come online and when do they (stop)? How many people do you have there?
“This is all identifiable in the smart meter data – it has literally your entire the pattern of life and behaviour through just monitoring where you live and what you do in your home.”
Vector and AWS say the data is anonymised and cannot be linked back to customers.
Privacy advocates dispute that, because the way some customers use power in certain locations will easily identify them.
For the companies, it’s a tightrope: The more anonymous the data is made, the less value it has overall.
“We’ve been storing information on the AWS platform for a number of years now and we see that they have extensive and really, really sophisticated data management,” said Mr Mackenzie, describing data privacy as the “most critical element” of the deal.
Mr Mackenzie sees the privacy challenge looming when the data is made available to other companies and aggregators, something slowly happening in banking.
“Looking into the future where we have third-party operators that potentially might want to enter the market and say, ‘We’d like to be able to analyse the data and give you a new retail offer, or maybe offer you some solution like an electric vehicle with a home charging device’,” he said.
Both companies insist it is impossible for the data, hosted by AWS, to be linked to the accounts of customers of other arms of Amazon, such as its Prime home delivery service.
“No, that’s not the business model. AWS and Amazon.com are separate businesses inside of Amazon,” said Mr Walton.
“The data is our customer’s data – in this case it’s Vector – and so that’s not how it would work.”
‘Data deals opaque’
The promised protections don’t satisfy consumer advocates.
“We actually can’t really tell what data’s being collected, who it’s being shared with and what it’s being used for,” said Lauren Solomon, chief executive of the Consumer Policy Research Centre.
“All of these data deals tend to have a high degree of opacity.”
Ms Solomon said the analysis could bring “big benefits” to consumers if they are empowered by it – but not if the data is used against their interests.
“What we tend to see within the digital economy is concentrations of data and concentrations of market power in their hands of a few,” she said.
“And that’s where you really need to be starting to think about: Where is value being extracted from this data? And, is the value flowing back to consumers and back to the Australian community or is it flowing into the hands of very large companies with very large market power already to begin with?”
A broader issue is that we think of data in distinct silos: Our phone bills, our power use, our social media history. But in many cases it is being combined.
“We need to stop thinking about the fact that data sits within one sector,” Ms Solomon warned.
“Data is combined across multiple sectors now, which gives companies a capacity to develop very detailed profiles about households and businesses and what’s actually going on.
“That’s not a feature in energy. That’s a feature in every market we operate within.”