Industry is waiting for national energy regulators in each member state to decide how to distribute the costs involved in the roll-out of smart meters, which could fall on consumers, depending on each market's 'peculiarities', John Harris, of smart metering company Landis+Gyr, told EurActiv.
John Harris is the vice president and head of media and communications for the 116-year old Swiss company Landis+Gyr, a worldwide supplier of smart metering products and services.
Consumer groups and NGOs say they have their worries about whether consumers would really benefit from the deployment of smart meters, as opposed to energy suppliers,who they say will definitely benefit, on many levels.
One of the best things about smart metering is that the benefits are spread along the whole value chain. From the point of view of the consumer, the most basic benefit is that you are billed for exactly what you use rather than receiving estimated bills between meter readings, which may occur only once a year or more.
If the meter is also connected to other technologies such as an in-home display or an iPhone app or a web portal, the consumer can see what he or she is using in close to real time, how much it costs and then they can adjust their consumption.
At the same time because exact consumption information is available , a supplier can offer products based on actual usage patterns. For example, a two-person household where both work and leave the house at eight o’clock in the morning and don’t come back until six o’clock at night is going to have a different consumption pattern and different needs than a household with a stay-at-home parent with two children. They are going to use electricity differently. Suppliers can make product offerings based on consumption patterns . For the supplier that’s one advantage.
You can make these offerings to individual consumers, but also energy procurement can be optimized because suppliers have to buy the electricity they sell, whether on the whole sale exchange or else where. They have to buy enough to cover what they foresee they are going to sell.
How does consumers' data get distributed between generators and suppliers?
In most cases the distribution system operator gets the data, and there’s non-personal data and personal data. The non-personal data are things like power quality, voltage control. All of that, the distribution system operator needs. The consumption data would then go to the supplier and the consumer. The supplier needs to know the consumption to bill the consumer. Let’s say the next day, the consumer changes suppliers. Then the distribution system operator would still collect the data, but the consumption data would then go to the new supplier. .
The companies, distribution system operators… are people overseeing those operators, they will know so much about you. This Big Brother image of the industry controlling the consumers and getting more information about their private life to use that for advertising – how ethical is that? There are many questions left unanswered.
Most households of similar population have similar consumption patterns in the same geographical area.
In some countries you have a much higher consumption because people tend to heat with electricity. Southern Europe probably has less. In general, the average consumption in households of similar size is known.
But this is one of the worries of consumer groups still.
The discussion has been going on for a while and you have to take these concerns seriously, but my personal opinion is that a lot of it has been overblown. I mean I get up about the same time as most of my neighbours do, I make coffee the same time as most of my neighbours do, and I leave the house about the same time as my neighbours do. So our consumption patterns will probably be quite similar.
The Germans are working on on a protection profile for smart meters , but the security level is extremely high. It has about the same level as Internet banking.
Is that level of security absolutely necessary in something like energy consumption? You know, for my bank details, yes it is. But is it necessary for my energy consumption? These are things that just have to be balanced. In some countries, the discussion on privacy and data security has been very intense, such as in the Netherlands and Germany. In other places this has hardly been discussed at all, such as in Southern Europe.
Who would pay for the roll-out of smart meters?
That is one of the main questions that has to be answered at the member state level, and that is the negotiations between the distribution system operators, the ones responsible for the metering, and the national regulatory authorities. Because being natural monopolies, the income and investments of the DSO’s are regulated, checked off and approved by the national regulator.
The distribution system operators are saying they do not want to invest in smart meters because they are not sure they are going to recover their investment costs.
But that is a question for the national regulators. It comes down to the negotiations between the distribution system operator and the national regulator and how you divide the investment costs. How much can the distribution system operator recoup via grid-use fees? Or how much would they have to treat as their own investment?
These are specifics which need to be resolved at local, national level – how you divide those costs and what those costs will be.
And the opinions run along the whole spectrum – some energy companies say they need to recover every cent that they invest, whether it be for a pilot project or a demonstration project or whatever else, they want to recoup that investment through the grid-use fees.
But in some other countries regulator has said, that the distribution system operators are going to derive so much benefit from this technology, there will be no increase the metering fees or grid-use fees.
Probably in most places, the truth lies somewhere in between. A lot of it depends on the infrastructure, the market, and the market peculiarities
And you cannot look at the requirements the energy supply system has now, but what will be the requirements in the future – such as electric vehicles, smart grid infrastructure -, you want to have a system that is robust enough…because you will want have a system in place that is strong enough to handle future challenges.
Also, when we talk about smart meters, we don't only talk about energy efficiency, but also about the modernization of societal infrastructure.
So now, the question is, does it economically make sense to roll-out smart meters?
That was the idea behind the economic analysis on the smart meters, that the 3rd Energy Package allows Member States to conduct. The Joint Research Center has recently come out with two sets of guidelines on how to conduct those.
One was for the cost-benefit analysis for smart meters, the other was for a cost-benefit analysis for smart grids. And what the Joint Research Center said was very reasonable. They said, you have to look at the current situation, you have to define the functionalities of the meter. Look at the benefits derived from those functionalities. And they give a seven-step process. And then what they also say is that you have to take a longer term view so not just what you need today, but also what you are going to need in the future. And also look at, what do they call, the qualitative, or non-monetary, costs and benefits. Benefits to society. Are you going to be able to integrate more micro-generation…renewable energy?