EU smart meter roll-out lags behind ambition

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SPECIAL REPORT / Europe’s ambitious plan for 80% market penetration of smart meters by 2020 is failing to live up to expectations. A senior energy official at the European Commission admits that market penetration is still very low, particularly in the new member states, and that there is a big shortfall in investment.

According to Jan Panek, head of unit for the internal market at the Commission’s energy department, so far €6 billion has been invested in 300 smart meter projects across Europe.

“But we need more investment: €50 billion for 250 million smart meters by 2020, and €480 billion to upgrade the rest of the grid system by 2030”, he told an audience at EU Sustainable Energy Week in Brussels.

“All depends on how rigorous and ambitious member states will be in rolling out smart metering systems”, said Panek.

Under the Third Energy Package, a legislative framework to promote an internal gas and electricity market in the EU that came into force in September 2009, member states are required to undertake a Cost Benefit Analysis of smart meter roll-out and submit the results to the Commission.

Although the deadline for submissions was in September 2012, several member states have not yet submitted reports, “including a very important one”, said Panek, without naming Germany. However, he said that the Commission will not be pursuing legal action to oblige the laggards to comply, preferring to keep a dialogue open.

As for those who have already submitted their Cost Benefit Analysis, only two-thirds of member states gave a positive assessment for the electricity industry, and for the gas industry it was more negative, with only one-third giving a positive assessment, Panek said.

Under the terms of the Third Energy Package, there isn’t a blanket obligation to roll out smart meters, but rather a requirement that they be applied where the market conditions are suitable. Given the far-from-resounding results so far, it seems that member states remain to be persuaded on smart meters, despite the evident energy efficiency benefits for buildings.

“Are we on track? Yes we are on track, but not as far as we could or should have been”, conceded Panek.

Low uptake in Central Europe

According to a recently published update of the Smart Grid Inventory Report 2012, there are currently 281 smart grid research and development projects in the EU, and only 90 smart meter pilots and actual roll-outs. Most of the projects are in the EU 15, with a much lower uptake in the newer member states.

Market penetration across the EU is still very low, with only 15-18% of households having smart meters.

Much of the investment in smart meters depends on the Distribution System Operators (DSOs), who have led or supported 116 out of the 281 research and development projects, and they are responsible for 57% of investments in market projects, according to the recent updated study.

The traditional view is that utilities would resist energy efficiency measures, which include the roll-out of smart meters. Some argue that Europe’s utilities are actively lobbying against policies such as the Energy Efficiency Directive due to the negative impact it could have on their revenue streams.

Greens MEP Bas Eickhout argues that utilities need to change their attitude if they are to fully embrace energy efficiency, rather than lobby against it.

“We need a different attitude. We see in Denmark for example, that energy companies really changed their attitude. They changed it from one of selling energy to selling energy services. One of the energy services if of course helping people in isolated areas... That change you see happening in some countries, but unfortunately in many countries you still see a conservative force in the utilities companies, who say: ‘well, we want to sell energy’, well, as long as that is their attitude, then they will always lobby against efficiency”, the Dutch MEP told EurActiv.

Speaking off the record, a Commission official told EurActiv that while some utilities did not want to change their game and face up to new market conditions, others were adapting their business practices and seeing the opportunities afforded by energy efficiency.

Potential for energy savings

More broadly, there are potentially big financial gains to be made in the growing energy efficient technologies market. Eurelectric, the industry association for European utilities, recently published a study estimating that this market could be worth €30 billion yearly to the EU economy by 2030.

“We have a positive outlook on energy efficiency and its business opportunities both through the electrification of transport, heating and cooling, and through new energy management service offers,” Jesse Scott from Eurelectric told EurActiv.

However, utilities that EurActiv has spoken to expressed a clear preference for governments to stimulate demand, rather than impose regulatory restrictions, such as through the Energy Efficiency Directive, which requires utilities to find energy savings of 1.5% per year.

“Energy efficiency has a key role to play in making the energy transition a success. When implementing the directive, member states should follow a market driven approach that best helps the customer to manage his energy consumption,” a representative of the Germany utility RWE told EurActiv.

An official at Dutch energy company Eneco told EurActiv that it views the Energy Efficiency Directive as an opportunity, but that the government should do more to stimulate demand for energy efficiency from consumers.

“We urge for stimulation of the demand-side of the market, because that’s the bottleneck. Concrete measures to support the realisation of the efficiency target could be mandatory label improvements and energy audits for real estate, housing projects and governmental buildings. The creation of a national fund for energy efficiency is also a demand side measure that could lower the investment barrier that consumers are facing”, Eneco said in a statement.

Timeline: 
  • Mid-2013: Commission expected to publish benchmark report on the costs and benefits of an EU-wide roll out
  • By 2020: At least 80% of consumers shall be equipped with an intelligent meter­ing system, if the cost-benefit analysis is positive
External links: 

Commission

  • European Sustainable Energy Week 2013: Website
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