SINGAPORE - Consumers could soon be using energy in a more efficient way.

They could be able to use household appliances that switch themselves off during peak periods when electricity prices are higher.

They could even be able to buy electricity at competitive prices in an open retail market. And they could have even more choices when renewable energy sources like solar power - when they are ready for mainstream use - are added to the power grid.

This could be a reality if the Energy Market Authority's (EMA) pilot testing of a "smart grid" delivers promising results.

To be conducted over two to three years, the project will involve several thousand smart metres - indicating electricity use - being placed in households and commercial buildings, and the testing of various systems to manage demand and energy supplies from a range of sources.

"The current design of the grid results in sub-optimal outcomes for all," said EMA chief executive Lawrence Wong as he unveiled the project at the Smart Grids 2009 Summit yesterday.

Consumers and power companies alike currently lack information on the use and transmission of electricity, while the grid is not ready to handle the use of renewable power, or potential demand from electric cars.

"With this pilot, we will bring the capabilities of our power grid to the next level and ensure our electricity grid is ready for the future," said Mr Wong.

Called the Intelligent Energy System (IES), the pilot project follows the just-concluded Electricity Vending System (EVS) trial, which saw 400 households try out smart meters and different tariffs for different hours of use.

If the trial garners good results, EMA will work with Singapore Power to implement the system on a bigger scale, and it will serve as a platform to open up the retail market to competition.

On Wednesday, EMA announced plans to develop a micro-grid on Pulau Ubin to supply electricity and test clean technologies. Solutions developed from this micro-grid could be exported into the IES.

Interested industry players can participate in a pre-qualification exercise, and tenders will be called by middle of next year.

The project will be based mainly at Nanyang Technological University and neighbouring areas such as the upcoming CleanTech Park.

Before "widespread adoption", however, adjustments and refinements will be needed.

"The benefits of smart grid technologies scaled up to a national level have not been evaluated ," said Mr Wong.

Mr David Rouls, managing director of Accenture Smart Grids Services - which is keen on undertaking the project - said Singapore's grid system was up-to-date and well placed for conversion into a smart system.

The trial will help determine which are the best technologies, given that smart grids are a very expensive prospect which can run into "hundreds of millions" - though such costs are hypothetical given no full-scale grids have been set up, he said.

EMA did not give a cost estimate, beyond saying that bidders will submit their estimations after needs had been evaluated.

Nearly all the households in the EVS trials opted for differentiated price plans over a flat electricity tariff.

They also shifted about 10 per cent of their usual electricity load from peak to off-peak periods. Overall electricity consumption dropped by two per cent. Shifting energy demand from peak periods will mean that power companies need not build extra power plants.

Overhead costs will come down and there will be lower carbon emissions, said Mr Wong.