Smart metering – a global perspective


By Karen Blackmore

Objectives for each country, state or province vary as they start down the path of smart metering. Just as the gas and electric grids that supply each consumer may use differing loads and connections, so are the drivers that entice a utility down the path of smart metering, but ultimately they remain centred around operational efficiency and energy efficiency. Also as varied are the vendors, the implementation methods, tools and logistics, and the business cases to get smart metering under way.

Smart metering or advanced metering infrastructure (AMI) is defined by Energy Insights as a subset of automated meter reading (AMR) with three key characteristics:

  • Uses solid state or computerised meters that collect time series (interval) energy use data and are programmable to support features like time-of-use (TOU) rates
  • Capable of two-way communications between meters and the utility, other distribution and transmission operators, or consumer devices and systems
  • Able to support applications beyond meter reading, such as demand response programmes.

The meter itself is a key element of smart metering but the value of smart metering lies in the interconnectivity and data. That lays the groundwork for many customer, utility and other system operator and user purposes. For the customer, the availability of time series meter data opens the door for load management and pricing programmes such as curtailment or time-of-use and services such as in-home or in-business displays that the customer can use to monitor and manage energy consumption. For utilities, the visibility into meter data at the premise level and transformer level supports revenue assurance through theft reductions, aids in outage management and planning, and serves as a cornerstone of the information needed for the intelligent grid. System operators and generators may use smart metering data for load forecasting and balancing and generation asset management.

Theft reduction, lowering meter data collection costs, reducing peak load, reducing emissions, improving sales of reserve energy, and regulatory mandates are all drivers moving utilities to invest in smart metering. In some instances, the major initiative comes from utilities. In other instances, it is a more regional approach to smart metering with a centralised infrastructure. Europe (Italy, Denmark, the UK, Russia, Sweden), North America (the US – California, Canada – Ontario), Asia-Pacific (Australia, New Zealand) and Latin America (Dominican Republic) all have smart metering initiatives of note.

The big push for smart metering in Italy started as a need to reduce theft losses. Enel, the large Italian utility, embarked upon a 27 million meter deployment using power line carrier for its communications network. Other diversely located countries such as India, Pakistan and Honduras are finding some of the same advantages – reduction of energy losses from theft and tampering – although those countries are much further behind in any sort of large scale implementations. Along with reduction of theft, some additional safety benefits automatically occur – clean electricity or gas via reliable secure connections. Enel also wanted to be able to gather timely information on load and generation needs in order to make future sales of reserve energy supply to other EU utilities.

Elsewhere in Europe, Denmark, the United Kingdom and Russia are installing smart meters in response to increased needs to reduce energy consumption and its inherent emissions. Vattenfall AB in Sweden was an early adopter of reductions in greenhouse emissions, lowering its emissions by 30 percent since 1990. Vattenfall was also an early adopter of smart metering technology, now getting monthly reads from its customers. Oxxio in the Netherlands used the Enel rollout as its model, including some of the technology. By implementing smart metering and transforming its meterto- cash process it has attained as much as 50 percent operational gains in that process.

In the United States, the Energy Policy Act (EPAct) of 2005 laid the groundwork for smart metering through specifying time-of-use rates for consumers who asked. It really strengthened the impetus by specifying grid reliability and now, with the ability to fine utilities for grid failures as of July 2007, smart metering can be used to gather many of the data points needed to manage the grid. In fact, about 50 percent of the states have utilities with some smart metering pilots or installations underway, with additional utilities having announced pilots or implementations in 2008 and 2009. California has led the charge in smart metering, even doing research and trials on energy consumption and consumer reactions before the EPAct was passed. Other states have passed legislation and more are in current evaluation phases of legislation. Within California, utilities have already embarked on full implementations and moved past the pilot states, giving them additional data on the value of smart metering. California utilities are finding energy efficiency gains are cheaper than additional power generation capacity, making it even more necessary to help consumers understand what smart metering can do for them.

Canada approached smart metering from a different standpoint, with Ontario leading the way in that country. Ontario passed legislation to move away from fossil fuelled coal generation and in doing this, mandated smart metering across the province to reduce peak load and capacity demands. Ontario’s approach is different from other regulatory bodies around the world, in that they are staying very much in the centre of the project and have a different model for the meter data management (MDM) repository.

Ontario has currently mandated nine utilities, including the large distribution companies and three small ones, to do smart metering and will name additional smaller utilities once they get plans in place that are cost effective. Some of these smaller utilities are working together via a coalition to ensure procurement savings and to entice vendors that might otherwise not take an interest in small implementations. This makes sense for both the utilities and the vendors and ultimately should save money for consumers. Ontario has also adopted a centralised MDM, being managed by the non-profit independent electricity system operator (IESO), which manages Ontario’s electricity system and operates the wholesale electricity market. A centralised MDM will readily have the data for forecasting demand, while the individual utilities will still have access to the data they need for managing their billing, outage management and other programmes that take advantage of smart metering. Ontario projects the savings of a centralised MDM to be in the millions of dollars for ratepayers, which is the primary reason for adopting this model. Other provinces such as Alberta and Manitoba have utilities working on smart metering. Most of the Canadian provinces have adopted net metering, which smart metering supports by supplying real time information for energy supply and supporting a renewables portfolio for generation.

New Zealand is approaching smart metering from two main drivers: energy efficiency and increase in renewables for generation. Using time-based rates and dynamic pricing signals would shape consumer usage differently than today, where flat rates often incentivise them to use whatever they need and whenever they need it. Increasing energy availability by reducing capacity constraints, but also being more environmentally sensitive through increases in renewable sources for generation, is of key concern.

Australia is still working on a common framework in which utilities can roll out smart metering but certainly is supportive of the initiative and plans to allow the recouping of costs from the customer base. One of the chief drivers for moving to smart metering is security of energy availability, using factors such as energy conservation and outage management improvements. Another chief driver is pricing mechanisms, which more accurately reflect costs and which can also drive more reliability of energy supply. Various utilities have piloted projects, to get through the preliminary concerns of connectivity and networks.

In Latin America, the Dominican Republic has started on smart metering for their commercial consumers, citing reductions in lost revenues from non-technical losses and better reliability as key drivers. Although reducing nontechnical losses is a revenue enhancement for the utility, better reliability is a potential revenue enhancement for the Dominican Republic. Better reliability can lead to economic growth in retaining businesses or potentially attracting new ones. This in turn feeds revenue growth for the utility, particularly when new commercial customers arrive and existing customers thrive.

When we look at the various primary drivers listed above, each relates back to energy and operational efficiency. For example, outage management improvements can increase operational efficiency by eliminating unnecessary crew trips. They can also improve energy efficiency by providing pointers on non-technical losses. Another example is power generation and load analysis, in which smart metering can provide quicker and better information for when to use distributed renewable resources or where to use marketbased rates to reduce peak demand.

Rates that make the most of a consumer’s budget, whether it is a residential or business consumer, should be a driver for smart metering. However, to date most residential consumers in the US don’t take advantage of time-of-use rates when offered, due partly to lack of education about the benefits of such rates to their pocket book and to the environment. At least one utility in Australia has gone around this hurdle by defaulting new customers to time-of-use rates, which is something more utilities should consider. What does draw a residential consumer to smart metering?

Climate change concerns have taken centre stage as evidenced by summits, legislation and initiatives related to reducing greenhouse gas emissions. Energy efficiency helps to reduce greenhouse gas emissions by reducing consumption. In addition, to make energy supply readily available to all, some transmission lines are going to be inevitable. However, utilities are facing continued backlash – the NIMBY syndrome of “not in my backyard” – and energy efficiency measures can greatly help in reducing the volume of lines.

Research was conducted by Energy Insights earlier in 2007 about United States residential consumers’ views and actions in response to climate change issues. Over 80 percent of online-enabled consumers are concerned about climate change. This research further showed that over 50 percent of online-enabled consumers have already adopted use of compact fluorescent lights (CFLs) and over 60 percent have modified thermostat settings to slightly warmer in winter and less warm in summer.

However, a majority of those surveyed believed that utilities should be doing more to help them understand what to do next. Both utilities and vendors need to step up to the plate. Utilities can provide rate programmes that are understandable and easily adoptable by consumers. Vendors can provide in-home tools for managing more than a thermostat and that are easily programmed or even preprogrammed, along with home area networks (HANs) to give consumers the information to actually manage their usage, along with pricing information from the utility and market. Smart metering systems are key to both these areas.

Similar research conducted by LogicaCMG in Western Europe during mid-2007 indicates that 69 percent of residential consumers claimed to do a lot to reduce their energy consumption at home. An even larger percentage thought that smart metering could be part of the solution to provide them with the information they need to take more steps in reducing energy consumption.

Business consumers continue to look at management systems that can give them pricing and market information, usage monitoring and also when to use distributed generation. Net metering mandates in conjunction with smart meters support distributed generation programmes. Distributed generation programmes are small-scale power generation technologies typically located in a home or business close to where electricity is used, providing an alternative source to the traditional electric power system and in which net metering can provide a credit back to the consumer when those mandates exist. Many commercial and industrial customers are already used to time-of-use and demand response type programmes; however, smart metering can enable them to drive better results through timely accurate information. Some countries are instituting demand response and time-of-use programmes for their commercial and industrial customers first, while continuing to evaluate smart metering products and pilots for residential customers.

Because per capita energy consumption in highly developed countries is also higher than in less well developed countries, smart metering not only contributes to energy efficiency for all consumer types within that country, but it works across countries through shifts and reductions in total generation.

Today, many utilities find that smart metering provides meter shop benefits such as reducing meter reading costs, lowering fleet vehicle purchase and maintenance, reducing drive time with its accompanying reduction in carbon footprint, providing first time accuracy in meter reads, and reaching “hard-to-read” meters. Smart metering data is used to enable advanced grid control capabilities such as load balancing and forecasting, and time-based pricing, also contributing to energy efficiency. Equally important is reduction of peak loads, which can defer adding generating capacity. The data from smart meters is essential for market operators and demand response capacity aggregators to perform most effectively.

Operational efficiency at the utility should help customer satisfaction increase. Customers will appreciate improved service times for connection and disconnection of service, better billing accuracy, more timely and better information for managing their energy use, and additional options in rates.

Continued multiple “open standards” committees and ideas flourish, which stand in the way of full integration across vendor lines. These variations in technologies can actually serve as a deterrent for some utilities to finish the business case because of concerns about the continued changes. North America has adopted the C12.22 communications, although each vendor seems to have some uniqueness about its adoption. Europe has its own standards, again with variations. Communications networks continue to evolve – more practical applications for WiMax are the latest network advances to be offered. There is widespread agreement that ZigBee will be the standard for home area networks, although the products and even the standards are still evolving fairly rapidly. There are still many questions related to meter data management repositories: How should they be used? What applications should be interfaced with the repositories? What applications should use meter data as a system of record data, if any? Who should own the repositories? Energy Insight’s research indicates that almost all utilities prefer to use an existing product over building one themselves, which is not surprising considering the vast complexity of a first-time build and the navigation needed between many applications in order to achieve maximum efficiency.

Utilities such as Vattenfall AB and PG&E provide almost evangelistic messages on the value of smart metering. With more successful business cases in many countries and a wealth of pilot projects to draw information from, it seems that smart metering can almost always be justified no matter where one is located, if only the utility takes a thorough look for improvements across its enterprise.

It is critical that each utility and country concentrate on the future and how smart metering fits into energy availability for all. Smart metering deployments are non-trivial, needing cooperation and buy-in from many departments within the utility, some level of support from the regulatory bodies, and of course, the consumers. Additional software and associated process work across the utility, plus risk mitigation in carefully working with all consumers, will be essential in a smart metering project. Other utilities have shown it is not only possible, but also the right thing to do.

In the end, operational efficiency and energy efficiency go hand-in-hand with each improving the other. All the various drivers mentioned above provide an impetus to improve processes, provide better information, tie grid networks together with renewable programmes, and give consumers the services they want. Smart metering is tying the planet together.