The Emerging Smart Metering Landscape

This publication has been discontinued on July 19, 2011.

Introduction

Abstract

Overview

Introduction

Metering technology has remained largely unchanged since it was originally introduced. With greater environmental awareness and more demand for energy services, smart metering offers a potential solution to suppliers willing to introduce it.

Scope

• An overview of the existing level of Smart Metering implementation in Europe and the potential level of opportunity for this in the near future.
• Insight into how greater granularity of consumption data can generate considerable cost benefits by reducing exposure to historical profiling systems.
• Knowledge of the factors driving the implementation of smart metering, such as demand management and legislative intervention.
• An understanding of the potential changes to the liberalized energy market landscape with the introduction of parties to manage the additional data.

Report Highlights

The level of Smart Metering introduction is highly variable across Europe, with little relation to the level of liberalization of markets.

"Legislator push" - that is government mandates - to introduce Smart Metering have been a key driver for the introduction of this technology in many countries, such as Sweden, and in the future, the Republic of Ireland, though in Italy demand management was a key factor.

Customers with non-standard demands, or moving existing standard customers off current times of peak demand can generate significant savings for Suppliers, savings which could potentially be passed on to the benefit of customers.

Reasons to Purchase

• Gain an understanding of the current state of AMM implementation in Europe
• Understand the benefits and potential savings associated with AMI, as a Supplier, through the management of customer demand and settlement.
• Understand the potential changes to the structure of a market incorporating Smart Metering.

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Historically, utilities have been interested only in the volume of consumption of a customer over an extended period of time
    • The methods used to meter electricity and gas customers remain largely unchanged since the first meters were introduced
    • The form of metering applied to a customer is generally split depending on volume of consumption
    • Volume allocation systems rely on profiling of grouped customers to calculate settlement during a particular period
    • Suppliers face many problems in consistently obtaining readings and poor data quality can lead to difficulties
  • Smart metering opportunities exist in different aspects of the supply chain
    • An increased frequency of readings will allow greater accuracy in the allocation of consumption
    • Where a commodity is traded wholesale at variable prices throughout the day, increased granularity will allow greater price reflectivity
    • A beneficial consequence of greater tariff flexibility is peak shedding
    • Smart metering is not restricted to end consumers, and can be installed in the distribution network
    • Larger capacity sites with daily readings can still benefit from the economies of scale of smart metering
  • The adoption of smart metering is driven by different factors in different markets
    • Legislation and market forces are two key drivers for smart metering implementation
    • Microgeneration and corresponding Feed In Tariffs require greater meter complexity
    • Consumers can be made more aware of their demand, and so can aim to minimize their consumption during times of peak demand
    • AMI will remove, automate or simplify aspects of traditional meter management
  • Liberalization of markets creates a paradox of a greater potential benefit, but also a greater potential impediment to adoption
    • The level of adoption of AMR varies throughout Europe, though most countries now have an intention to implement
    • European power markets show varying degrees of liberalization, with most markets having an element of regulation
    • European gas markets are marginally more liberalized than the power markets, yet are still often regulated
    • As markets become increasingly liberalized, they become increasingly cost reflective
    • The financial and administrative burden of AMI is difficult to allocate in a competitive market
    • Regulator or Legislator involvement may be necessary to resolve the question of who pays for AMI
• APPENDIX
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  • Disclaimer
• List of Figures
  • Figure 1: Nearly three quarters of the electricity meters in Europe are found in the top six countries.
  • Figure 2: As demand increases, it becomes more important to understand when demand occurs.
  • Figure 3: Profiling averages the consumption of similar sites so that use at a given time of day can be calculated.
  • Figure 4: An inaccurate reading can take two further readings to be resolved.
  • Figure 5: Where more frequent readings can be obtained, the improved granularity increases the accuracy of the profiling system.
  • Figure 6: A rational market uses the cheapest possible combination of providers of commodity to make up the required demand.
  • Figure 7: Being able to show a reduction in peak demand may offer significant reduction in cost to the Supplier
  • Figure 8: Unbundled Supplier Hub system
  • Figure 9: Greater visibility of energy use allows customers to manage their consumption better.
  • Figure 10: Unbundled Supplier Hub with customers generating.
  • Figure 11: Wholesale costs vary over the day, but correspond strongly to total demand.
  • Figure 12: Unbundled Supplier hub with AMI operator.
  • Figure 13: Electricity: European markets vary in their current degree of adoption of smart metering
  • Figure 14: Power markets in Europe by regulation
  • Figure 15: European gas markets differ strongly in degree of liberalisation
  • Figure 16: Liberalized markets pass through costs and benefits more effectively than closed markets
  • Figure 17: Regulators and Legislator relationships

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