GEODE Position Paper on European Third Energy Package - Smart Metering

The view of the European Commission

In it’s Communication ”Prospects for the internal gas and electricity market” issued on January 10, 2007, the European Commission states that infrequent measurement of consumption prevents any kind of demand response from certain customers.

It is further stated that the extended use of smart metering would enhance competition and other policy goals such as energy efficiency and security of supply, encouraging innovation in the provision of energy services. Smart meters are also good for consumers giving them more frequent readings and the opportunity to modify their consumptions patterns.

Directive 2006/32/EC on energy end-use efficiency and energy services already provides for Member States to use smart metering to achieve energy efficiency targets.

Said directive states that Member States shall ensure that, in so far it is reasonable, final customers are provided with individual meters that accurately reflect the final customer’s actual energy consumption and provide information on actual time of use.
Billing should be based on actual energy consumption, and be presented in clear and understandable terms. Billing on the basis of actual consumption shall be performed frequently enough to enable customers to regulate their own energy consumption.

Position

GEODE agrees that the extended use of smart metering would enhance policy goals such as energy efficiency and security of supply whilst encouraging innovation in the provision of energy services. We also agree in the importance of giving the end-consumer a better understanding of their energy use, time of usage and through increased awareness become more efficient in their energy consumption.

Billing based on actual usage further increases said consumer awareness. It is GEODE´s view that frequent billing based on actual consumption is but one way of creating a better understanding of energy consumption patterns. There are several different ways this effect can be achieved and
some of these are touched upon below.

Benefits of Smart metering

- Increased consumer awareness of how and when energy is spent.
The shorter the time cycle between readings, the more useful is the information for the end user. Hourly readings give a very different understanding of usage pattern than monthly or yearly readings. The closer in time to the actual consumption the data is available to the consumer, the better the awareness. A display in the home showing for example current consumption in kWh, cost in monetary terms or CO2 effect of consumption will be much more likely to change consumer behaviour than information on a bill months later. A web application that can give the customer detailed information on their energy consumption is another way of increasing awareness and drive energy efficiency.

- Increased internal efficiency within energy distributors, distribution system operators and retail energy sales companies.
The internal efficiency improvements due to less manual tasks, improved processes and less error in meter measurement handling have the potential to create substantial savings for the DSO and other involved companies. Also better information regarding the low voltage distribution network holds potential savings. For companies with large energy losses in the network there are further savings to be had.
In one Swedish example, the estimated annual internal savings were approximately 10% of the total investment cost. Several Italian DSO’s were able to generate a good return on investment largely due to savings from decreased energy losses.

- Possibility to create incentives to reduce peaks in power demand.
By steering the end consumer behaviour through time based tariffs, it is possible to steer energy consumption away from hours or days where there is a risk of peaks in power demand. If an installed Meter System supports it, Disconnections on a Rolling Scheme can further help in controlling peaks in power demand.

- An opportunity for energy related services, especially within energy saving consultancy.

The increased knowledge about the end-customers energy related behaviour, gives an opportunity to develop new services aiming at helping the customer become more energy efficient.

- Better information for Investment Planning.
The improved information that is generated by Smart Metering on the low voltage network creates an opportunity for better Investment Planning. The information can be used both for new investments in infrastructure as well as for reinvestments in current networks. Load profiles over time, maximum loads and load distribution in the grid are some examples of what can assist better Investment Planning.

Barriers to Smart Metering

The cost to install a Smart Metering System is a large investment. The return on such an investment takes a number of years and creates a necessity to actively pursue the cost savings such an investment can generate.

It must also be possible to transfer part of cost to customer through the access tariffs or in some other way. The customer stands to gain significantly by Smart Metering and should therefore be able to share at least part of the cost of implementing such a system.

This cost per customer might not have to be substantial. In the Swedish example mentioned above, a 10-20 Euro per year per customer in additional revenue would together with internal savings generate a positive return on investment.

The commission must consider how to allow for an increase in access tariffs, should they implement further actions in this area. As Member States have different ways and levels of regulating tariffs, the way of transferring part of the cost to customers might have to differ between
Member States.

Ownership of Advanced Metering Infrastructure

DSO’s should be responsible for meters and metering in order to facilitate for customers to switch supplier. If for example the energy supplier owns the meter infrastructure, then the meter and possibly part of the supporting infrastructure must be replaced every time a customer switches supplier.
In the UK this is currently a problem, as the intention there is that the suppliers shall own the meters. With a 20% churn it will create an extreme number of meter replacements in the future as well as a large number of competing infrastructures. The only solution would be that most, if not all, of the suppliers agree on the same Smart Metering System and infrastructure.

Conclusion

GEODE agrees that Smart Metering will assist in achieving the energy efficiency goals of the Commission. The development of Metering Systems will create more opportunities for additional services and better information to the end consumers. The investment in Smart Metering for any DSO is substantial in financial terms as well as in effort and time and must not be taken lightly. Projects usually run for several years and needs internal staffing from many areas of the organisation.

GEODE holds that at least a part of the cost of such a system must be covered by the end customer in some form. In order not to create barriers to switching electricity supplier, the Metering Infrastructure should be managed by the DSO.

Groupement Européen des entreprises et Organismes de Distribution d’ Energie
General Delegation:
DELAS & PRAT- París, 205- 08008 Barcelona - Spain
- Tel. (34) 93 414 22 77- Fax (34) 93 209 53 07-
e-mail: info@geode-eu.org
http://www.geode.de
http://www.geode-eu.org

Founded in 1991 it is made up of European independent distribution companies of gas and electricity. The association represents 100 companies in 11 countries, both privately & publicly owned. We serve a population of 18 million.

GEODE participates at the Gas Regulatory Forum of Madrid and Electricity Regulatory Forum of Florence, both organised by the European Commission.

GEODE defends the interest of the local distributors in front of energy authorities on national and international level and allows the exchange of expertise, the share of data and competence.

This release was published on openPR.