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The German energy agency – Deutsche Energie-Agentur (Dena) – estimates that the introduction of smart meters in the European country could reduce grid investment by 35 per cent until 2030, according to a recent Dena study – ‘Implementation of Smart Meters in Germany: Analysis of Rollout Scenarios and their Regulatory Implications’.

From assessing the benefits of and regulations needed for smart meters from the perspective of grid operators, the research finds that yes, smart meters can take pressure off the German electricity grid and reduce the need to expand the distribution grid until 2030, but this requires significant investment with one million metering points ranges costing between €467 million and €837 million.

Stephen Kohler Dena smart meters Germany

Commenting on the benefits of smart meters in Germany, Stephan Kohler, chief executive of Dena, said: “There are a number of ways in which smart meters can make a contribution to the success of the energy turnaround. In particular, they facilitate the reorganisation of grid operations, optimum harmonisation between electricity generation and consumption and hence better integration of renewable energies into the electricity system. Thanks to the dena Smart Meter Study, more accurate estimates of the costs and benefits facing grid operators can now be made.”

How were smart meters assessed?

The Dena study was broken down into three appraisals. The cost appraisal investigates the investment required for a successful introduction of smart meters along the entire value-added chain for various grid operator types. The grid appraisal evaluates the benefits of smart meters inasmuch as they render further grid expansion and conversion unnecessary, and the regulatory appraisal analyses the organisation of the regulatory framework.

The research was based on the cost-benefit analysis for smart meters and metering systems prepared on behalf of the Federal Ministry of Economics in 2013.

The Dena analysis recommends the installation of smart meters and metering systems at over 50 million metering points in Germany. Distribution grid operators are required to make advance payments for these acquisitions.

Legal framework for grid operators

Mr Kohler explains that due to current German regulations “the return on investment generated by grid operators will be delayed by up to ten years”. “If we want to prevent grid operators from encountering liquidity bottlenecks, politicians must adjust the legal framework,” he said.

The Dena study recommends further development of the so-called incentive regulations. According to these regulations, the Federal Network Agency specifies the fees with the help of which distribution grid operators will also have to refinance the introduction of smart meters. The incentive regulations are to ensure a prompt return on annual investments and costs which will go up over the years.

Legal basis for smart meters

According to the Dena study, the introduction of smart meters can reduce the investment required for grid expansion purposes by 36 per cent until 2030. However, this can only be achieved if the following requirements are met: Firstly, consumers must be actively engaged in saving electricity through smart meters. Secondly, grid operators must have the option of controlling feed-in from decentralised generation systems and the connection of electricity-consuming systems (loads). A suitable legal basis is required to help smart meters develop their full potential.

The extent to which smart meters provide added value to existing control options and may be financially attractive to other market players remains to be investigated and weighed against the associated costs.

Choosing the right technology

The costs associated with the introduction of smart meters can be reduced if grid operators are free to use the most suitable technical solution for their specific grid area, the research finds.

To ensure that the introduction of smart meters is successful and economical, the legislator should set targets, for instance regarding the number of meters that should be installed in a certain period. However, with regard to the technical implementation, the legislator should grant sufficient leeway for grid operators to implement the best economical solution.

Why the report was needed

In summer 2013, the Federal Ministry of Economics published an analysis of a Germany-wide rollout of intelligent metering systems. The Cost/Benefit Analysis concludes that a nationwide rollout of intelligent metering systems in Germany by 2020 in accordance with the rollout scenario recommended by the EU does not make macroeconomic sense.

Given this background, Dena joined forces with eleven German electricity distribution grid operators or their affiliated metering station companies to study the parameters influencing efficient and operative structuring of the rollout of intelligent meters and intelligent metering systems.

The full report – Implementation of Smart Meters in Germany: Analysis of Rollout Scenarios and their Regulatory Implications – is currently only available in German.

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