Challenges AMI
Challenges AMI
Deployment in APEC
November 2012
Executive Summary
The purpose of this research is to investigate the major challenges of AMI
deployment in all APEC economies and identify effective AMI polices and best
practices. Two dimensions are put forward including: (1) A questionnaire survey and
analysis of AMI development in APEC region; (2) A review of AMI development
experience of Ireland, America and Australia as the case studies. Based on the above,
we have provided guidelines and suggestions for rational foundation of deploying
AMI policy as a reference for APEC members on developing relevant policies.
Survey Findings
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In the technical aspect, six respondents all reflect that the two-way communications
to the metering system and remote disconnection and connection are the basic and
essential functions for AMI. Other required functions are interval metering data
measurement, supporting load management (e.g. time-of-use rates) and loss of load
detection and outage location identification. The most common communication
technologies applied to smart meter communication network are GPRS and Zigbee,
WiMax and RF Mesh as the secondary common technologies.
From our survey results, we know that safety and privacy issues are also the main
concerns of the customers. Almost every respondent stresses these two concerns.
These are the key social challenges for AMI deployment.
Case Analysis
We choose America, Australia and Ireland as our case studies. As of May 2012, U.S.
utilities had installed roughly 36 million smart meters nationwide, and approximately
65 million smart meters will be deployed by 2015. But there are several problems
such as installation errors, data storage and privacy of advanced metering data, radio
frequencies on health and smart meters hacked in California are drawing a lot of
attentions. On February 1, 2012, California Public Utilities Commission (CPUC)
announced a new policy which allowed PG&E customers to retain their analog meters
or have ‘smart’ meters replaced with analog meters by paying a one-time fee of $75
and a monthly fee of US$10 (US$10 up front and US$5 per month for low income
California residents). This decision also authorizes PG&E to establish a new two-way
electric and gas Modified Smart Meter Memorandum Accounts to track revenues and
costs associated with providing the opt-out option until a final decision on recoverable
costs and cost allocation is adopted.
In Australia, Victoria is the earliest jurisdiction that rollouts the biggest scale of
AMI program in nation. Furthermore, there is a national AMI cost-benefit report
identifying a positive net benefit for Victoria; however, the cost-benefit analysis
behind the AMI decision was not comprehensive enough to provide all aspects of the
economic dimensions of the AMI program. The Victoria case study, therefore,
highlights some lessons for APEC economies that a comprehensive cost-benefit
analysis including risk management and consumer protection should be considered.
Ireland emphasizes technology trial and demand response management during the
beginning stage of AMI deployment plan. The statistical evidence from the
Residential Customer Behaviour Trial is that the deployment of Time of Use tariffs in
combination with other Demand Side Management stimuli results in a change in
energy consumption. Specifically, the residential trial participants achieved reductions
in electricity consumption, both overall and at times of peak usage. After the case
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analyses, several key success factors are presented for AMI roll-out from these
economies.
One of the most important challenges for making a decision on AMI deployment
program is to conduct a thorough cost-benefit analysis (CBA) based on the feasible
alternatives. There are a couple of key components must be clearly evaluated before a
CBA can be made. In order to carry out a more complete CBA, detailed information
on all possible costs and benefits is needed as input data. As the result of a CBA can
be strongly influenced by the selection, definition and specification of the input data,
this step is crucial in avoiding bias in favor or against AMI deployment program.
In summary, the challenges facing AMI deployment include the followings:
- High cost of deploying smart meters. Deploying smart meters requires huge capital
investment and hence it is crucial that the utility company is confident of successful
implementation.
- Large scale of deployment of Smart Meters. The deployment of smart meters in such
a huge volume demands a very highly organized system with properly managed
inventory control.
-Data privacy. There are many concerns related to privacy of consumption data being
raised as Smart Meters are installed at more and more locations. The meters’ data can
be mined to reveal details about customers’ habits like when they eat, how much
television they watch and what time they go to sleep.
- Dynamic adaptation and flexibility of roll-out plan. As is the case with any large
transformation program, the carefully crafted requirements document, which is signed
off and approved after much deliberation, becomes obsolete from the day the project
begins. Dynamic adaption and flexibility of roll-out plan are always a big challenge
for massive deployment of AMI.
- Cost-Benefit Analysis. One of the most important challenges for making a decision
on AMI deployment program is to conduct a thorough cost and benefit analysis, based
on the feasible alternatives. The scope and the items of cost and benefit associated
with AMI are sometimes not easy to be identified.
-Healthy and privacy of consumers. Health and Privacy concerns surrounding smart
meter technology arise from the meters’ essential functions.
Planning stage:
(1) Economic efficiency – the roll-out plan as elaborated in the previous chapter
should be cost effective or benefit cost analysis justifiable.
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(2) Societal equity – although the large customer with more electricity consumption
should be more appropriate for installing AMI and smart meter, a comprehensive
roll-out plan should cover all kinds of customers in order to full-fill the empowerment
and choices of every consumer without social prejudice.
(3) Sustainable development - AMI is essential to encouraging renewable energy
deployment transiting industries to low-carbon and clean-energy patterns, creating
new “green jobs” for more employment, and building an infrastructure for long-term
sustainable economic development.
(4) Security, privacy and health concerns – although AMI provides greater visibility
of and control over the energy usage empowering customers to reduce their energy
costs, the issues of cyber security, privacy and health concerns must be treated
deliberate allow the consumers to opt-out from choosing smart meters.
Implementation stage:
(1) Standardization - There are a couple of AMI standards in this area. The
government should considering an AMI standard format for themselves and power
companies to analyze justifiable benefit/ cost.
(2) Interoperability – Standards of AMI must allow for interoperability. Ensuring
systems and devices are fully interoperable from day one holds the key to the success of
the smart metering program.
(3) Timing - Each AMI standard has different product maturity. In order to cost-down
learning curve, the decisions must be continually adjusted, and quality stabilization
must be enhanced.
(4) Cost-Benefit Analysis – One of the key challenges for making a decision on AMI
deployment program is to conduct a thorough cost and benefit analysis, based on the
feasible alternatives.
Proper policy for important stakeholders: Obligation and the rights of each
stakeholder should be clearly defined. Provide opportunities for communication
and mutual understanding.
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Concerns on privacy and cyber security: MDM including data warehouse
maintenance and accessibility, also data security and network security of the grid,
should be carefully addressed and dealt with.
Cost-benefit analysis: It is important to estimate benefit cost ratio and net present
value from the consumer side, who installs the smart meter or AMI. The
perspective from electric utility or the administrator is equally important.
Particularly from the view point of societal as a whole, policy makers may
ultimately care for.
v
Acronyms and Abbreviations
ACMA Australian Communication and Media Authority
AER Australian Energy Regulator
AEMC Australian Energy Market Commission
APEC Asia-Pacific Economic Cooperation
AMI advanced metering infrastructure
ANEEL Agência Nacional de Energia Elétrica
BPL broadband over power lines
CAISO California Independent System Operator
CBA cost benefit analysis
CBT Customer Behavior Trials
CEC California Energy Commission
CER Commission for Energy Regulation
COAG Council of Australian Governments
CO2 carbon dioxide
CPA California Power Authority
CPUC California Public Utilities Commission
C&LM Conservation and load management
DCENR Department of Communications, Energy and Natural Resources
DER distributed energy resources
DOE Department of Energy
DOI Department of Infrastructure
DPI Department of Primary Industries
DSM demand side management
DTF Department of Treasury and Finance
EAP Energy Action Plan
EEI Edison Electric Institute
EMFs electromagnetic fields
EnC Energy Community
EPACT Energy Policy Act
ERGEG European Regulators’ Group for Electricity and Gas
ESC Victorian Essential Services Commission
ESRI Economic and Social Research Institute
EU European Union
FEA Free Electricity Allowance
FERC Federal Energy Regulatory Commission
GGP Guidelines of Good Practice
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HAN Home Area Networks
IEPR Integrated Energy Policy Report
IHD in-home display
IT information technology
IOUs investor owned utilities
ISG AMI Industry Strategy
KEMA Keuring Van Elektrotechnische Materialen
KEPCO Kansai Electric Power Company
MCE Ministerial Council on Energy
MDMS meter data management systems
MID Measuring Instruments Directive
MPRs market price referents
NEEAP National Energy Efficiency Action Plan
NEL National Electricity Law
NEM National Electricity Market
NER National Electricity Rules
NIAUR Northern Ireland Authority for Utility Regulation
NIB Nordic Investment Bank
NPV net present value
NRAs National Regulatory Authorities
OIC Orders-in-Council
OLR Overall Load Reduction
PG&E Pacific Gas and Electric Company
PLC Power Line Carrier
RF Radio Frequency
RPS Renewable Portfolio Standard
SDG&E San Diego Gas and Electric Company
SEAI Sustainable Energy Authority of Ireland
SEM Single Electricity Market
SMEs small and medium enterprises
TOU Time of Use
TEPCO Technical Projects Company
WAN Wide Area Network
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Contents
1.0 Introduction ....................................................................................................... 1
1.1 Background ................................................................................................... 1
1.2 Purpose of Research....................................................................................... 2
1.3 Research Methodology .................................................................................. 2
1.4 Definition of AMI.......................................................................................... 3
1.4.1 What is Smart Metering?....................................................................... 3
1.4.2 System Structure ................................................................................... 5
1.4.3 Functions .............................................................................................. 6
1.4.4 Benefits................................................................................................. 8
1.5 About this document .................................................................................... 10
viii
4.0 2011 APEC Workshop on Addressing Challenges in AMI Deployment and
Smart Grids in APEC...................................................................................... 87
4.1 Workshop Summary..................................................................................... 87
4.2 Concluding Remarks.................................................................................... 94
ix
Figures
x
Tables
xi
1.0 Introduction
1.1 Background
The traditional method of changing electric energy consumption is termed as
Demand-Side Management (DSM), transferring the electricity consumption from
peak load period to off-peak period by electric customers. However, under the
development of Advanced Metering Infrastructure (AMI), Demand Response (DR)
can ease the integration of renewable generation and central power supply from the
utility generation, by curtailing consumers’ electricity use to cope with instability of
renewable power. In addition, storage technologies can be applied on the transmission
and distribution system to regulate intermittency from renewable power output and
maintain system voltages at reliable levels. Architecture of AMI is the key to integrate
different aspects of the smart grid, including demand response and distributed power
supply from renewable energy as well as battery energy storage system. A
collaborative effort among all the stakeholders is needed to develop a smart grid
vision.
The application of AMI technology promises to provide benefit to electricity
consumers and our economies by better utilizing electric system assets to securely
satisfy consumer energy demands at a lower monetary and environmental cost. This
report reviews the status of the deployment of AMI technologies within APEC
economies, and in particular, discusses the potential application of this technology to
enhance the integration of renewable energy and energy storage, and to advance
greater levels of energy efficiency.
The global market for AMI is supported by various different economies, whose
governments are gradually increasing their interest in energy efficiency. Increasingly,
individual homeowners are being looked for independent efficient energy use. Smart
meters and associated accessories enable consumers to be aware of their energy usage
in real-time, and take appropriate action to cut down. Those economies which are
implementing smart meters have formulated new legislation that supports the
deployment of the technology. Governments and utilities, such as the US government
and Korea's utility KEPCO, have introduced grants and funding for smart meter
deployment, and these are expected to drive the market in the future.
AMI technology uses digital technology and communication to coordinate the
actions of intelligent devices and systems throughout the electricity system: from
large scale generation networked with transmission infrastructure, to the distribution
of power to consumers (factories, commercial buildings, and residences), and down
1
into the equipment and systems that use electricity in these facilities. Through
automation, better information, and coordination, AMI technology helps to provide
the flexibility to integrate variable generation that is a characteristic of some
renewable resources such as wind and solar generators. AMI technology can also
enhance efficiencies in the transmission and distribution delivery infrastructure,
generation, and end-use systems by optimizing system performance and increasing
asset utilization.
The key geographies of AMI include the Australia; Canada; China; Japan; Korea;
US; Italy; Spain; UK; Ireland; France. ,The US currently accounts for around 56% of
the global AMI market, followed by China with roughly a 23.9% share. China is
expected to lead the global AMI market after 2014, as most of the US smart meter
deployment is expected to be completed by then. Grants from the State Grid
Corporation of China, the large consumer base, and policy initiatives promoting grid
modernization and smart metering are major drivers behind the 2012 national growth
rate of 30% in the smart meter market.
2
• A review of advanced metering infrastructure development in Ireland,
American and Australia as case studies.
The first item is used to assess APEC member implementation AMI statue. The
second item assesses how these economies roll-out AMI and practices are being
used. The case studies also identify key success factors or lessons we learned from
these economies.
The findings from these sources are then combined to develop guidance on
how AMI can be best used to enhance the use of renewable energy and energy
efficiency across the APEC region.
“An intelligent metering system or ‘smart meter’ is an electronic device that can
measure the consumption of energy, adding more information than a conventional
meter, and can transmit data using a form of electronic communication. A key feature
of a smart meter is the ability to provide bidirectional communication between the
consumer and supplier/operator. It should also promote services that facilitate energy
efficiency within the home. The move from old, isolated and static metering devices
towards new smart/active devices is an important issue for competition in energy
markets. The implementation of smart meters is an essential first step towards the
implementation of smart grids.”
It is important to note that ‘smart metering’ encompasses more than just the meter
itself. Smart metering should be viewed as a system rather than a single device. It is
essentially a hybrid technology consisting of three high level layers:
The following diagram (Figure 1.1) illustrates the general structure of a smart
metering system.
3
(Source: Figure 6, ERGEG Status Review of Regulatory Aspects of Smart Metering)
Smart meters are the next generation of meters, which can replace existing
electro-mechanical meters and offer a range of benefits for both the individual
electricity and gas consumer and for the electricity and gas systems in general. The
existing standard mechanical meter records the total amount of electricity/gas used
over time. These meters are read manually and the information is sent to the network
company and then used to calculate customer bills. If a meter reader does not have
access to the customer’s meter, estimated consumption information (or a reading
provided by the customer) is used to calculate the bill. If the estimated consumption is
higher or lower than the actual meter read, this is corrected for when the meter is next
read by the customer or the meter reader.
A smart meter is much more sophisticated. It records customers’ actual use of
electricity/gas over short intervals (e.g. every 30 minutes). These meters are
connected by a communications system to the network company / meter data collector
providing the operator with automated, up-to-date information on the amounts of
electricity/gas used by customers. Access to this information provides opportunities to
reduce network operation costs, including reduced costs of visiting customer premises
to manually read the meter and carrying out any necessary connections and
disconnections. There are also savings due to reductions in technical losses and theft.
The data collected from smart meters can be used by electricity and gas suppliers,
subject to data protection requirements, to deliver useful information to their
customers regarding their electricity and gas consumption and costs. In particular, the
installation of smart metering will allow electricity suppliers to create innovative
pricing arrangements that can be offered to customers to support the efficient use of
electricity, such as time-of-use electricity tariffs. This is where the price of electricity
varies at different times of the day to reflect the changes in the costs of producing
electricity. This will allow customers to manage their consumption of electricity in
line with price movements and demand patterns.
Smart meters can facilitate improving energy efficiency by empowering consumers
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with more detailed, accurate and timely information regarding their energy
consumption and costs, thus helping consumers reduce any unnecessary energy usage
and shift any discretionary electricity usage away from peak consumption times.
(Source: Figure 4, NETL Modern Grid Strategy Powering our 21st-Century Economy, Advanced
Metering Infrastructure 2008)
At the consumer level, smart meters communicate consumption data to both the
user and the service provider. Smart meters communicate with in-home displays to
make consumers more aware of their energy usage. Going further, electric pricing
information supplied by the service provider enables load control devices like smart
thermostats to modulate electric demand, based on pre-established consumer price
preferences. More advanced customers deploy distributed energy resources (DER)
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based on these economic signals. And consumer portals process the AMI data in ways
that enable more intelligent energy consumption decisions, even providing interactive
services like prepayment.
The service provider (utility) employs existing, enhanced or new back office
systems that collect and analyze AMI data to help optimize operations, economies and
consumer service. For example, AMI provides immediate feedback on consumer
outages and power quality, enabling the service provider to rapidly address grid
deficiencies. And AMI’s bidirectional communications infrastructure also supports
grid automation at the station and circuit level. The vast amount of new data flowing
from AMI allows improved management of utility assets as well as better planning of
asset maintenance, additions and replacements. The resulting more efficient and
reliable grid is one of AMI’s many benefits.
1.4.3 Functions
We make the definition of AMI by basic and advanced, as the following table:
Basic Advanced
Functions AMI is a metering and AMI is an integration of
information technology (IT) technologies that provides an
system. intelligent connection between
consumers and system operators.
Benefits 1. Establishes communications 1. Integrated Communications
with the consumer 2. Sensing and Measurement
2. Provides time stamped system 3. Advanced Control Methods
information 4. Advanced Grid Components
5. Improved Interfaces &
Decision Support
6
consumed over a period of time – typically a month. Smart meters are solid state
programmable devices that perform many more functions, including most or all of the
following:
1. Time-based pricing
2. Consumption data for consumer and utility
3. Net metering
4. Loss of power (and restoration) notification
5. Remote turn on / turn off operations
6. Load limiting for “bad pay” or demand response purposes
7. Energy prepayment
8. Power quality monitoring
9. Tamper and energy theft detection
10. Communications with other intelligent devices in the home
And a smart meter is a green meter because it enables the demand response that can
lead to emissions and carbon reductions. It facilitates greater energy efficiency since
information feedback alone has been shown to cause consumers to reduce usage.
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in areas with a high population density.
Future inclusion of smart grid applications and potential consumer services should
be considered when determining communication bandwidth requirements.
1.4.4 Benefits
Consumer Benefits
For the consumer, this means more choices about price and service, less intrusion
and more information with which to manage consumption, cost and other decisions.
It also means higher reliability, better power quality, and more prompt, more accurate
billing. In addition, AMI will help keep down utility costs, and therefore electricity
prices. And, as members of society, consumers also reap all the benefits that accrue to
society in general, as described below.
Utility Benefits
Utility benefits fall into two major categories, billing and operations.
AMI helps the utility avoid estimated readings, provide accurate and timely bills,
operate more efficiently and reliably, and offer significantly better consumer service.
AMI eliminates the vehicle, training, health insurance, and other overhead expenses
of manual meter reading, while the shorter read-to-pay time advances the utility’s
cash flow, creating a one-time benefit. And consumers’ concerns about meter readers
8
on their premises are eliminated.
Operationally, with AMI the utility knows immediately when and where an outage
occurs so it can dispatch repair crews in a more timely and efficient way. Meter-level
outage and restoration information accelerates the outage restoration process, which
includes notifying consumers about when power is likely to return.
Using AMI, the utility can receive significant benefits from being able to manage
customer accounts more promptly and efficiently, starting with the ability to remotely
connect and disconnect service without having to send personnel to the customer site.
Similarly, many maintenance and customer service issues can be resolved more
quickly and cost-effectively through the use of remote diagnostics. And AMI enables
new programs and methods for creating and recovering revenue such as distributed
generation and prepayment programs.
AMI also provides vast amounts of energy usage and grid status information that
can be used by consumers to make more informed consumption decisions and by
utilities to make better decisions about system improvements and service offerings.
Instead of relying on rough estimates, engineers armed with AMI’s detailed
knowledge of distribution loads and electrical quality can accurately size equipment
and protection devices, and better understand distribution system behavior. This huge
increase in valuable information helps the utility:
1. Assess equipment health
2. Maximize asset utilization and life
3. Optimize maintenance, capital and O&M spending
4. Pinpoint grid problems
5. Improve grid planning
6. Locate/ identify power quality issues
7. Detect/reduce energy theft
Societal Benefits
Society, in general, benefits from AMI in many ways. One way is through
improved efficiency in energy delivery and use, producing a favorable environmental
impact. It can accelerate the use of distributed generation, which can in turn
encourage the use of green energy sources. And it is likely that emissions trading will
be enabled by AMI’s detailed measurement and recording capabilities.
A major benefit of AMI is its facilitation of demand response and innovative
energy tariffs. During periods of high energy demand, a small reduction in demand
produces a relatively large reduction in the market price of electricity. And reduced
demand can avoid rolling blackouts. According to Edison Electric Institute (EEI), the
direct costs (e.g. power costs) of rolling blackouts in California have been estimated
9
at tens of millions of dollars. Business and consumer losses may be many times
higher. Hence, a modest demand response capability could produce a societal benefit
worth billions of dollars.
The benefits accrued may vary depending on the type of demand response
programs initiated. For instance, demand response distributed to the individual
premise in forms like thermostat and pool pump control allows load to be reduced
without sacrificing consumer satisfaction. However, even just shifting demand away
from peak hours through time-of-use tariffs can have major benefits, including the
reduced cost to both utilities and consumers by deferring building new, expensive
peak generation facilities.
There is also a societal fairness issue that AMI addresses. Modern AMI meters
maintain their accuracy over time, resulting in a more equitable situation for all
consumers. In addition, modern meters are self monitoring, making it easier to
identify inaccurate measurements, incorrect installations and, especially, electric
energy theft.
As reported by Edison Electric Institute (EEI), price and demand reductions during
high-demand periods lead to:
1. Reduced
(1) peak capacity requirements
(2) congestion costs
(3) T&D costs
(4) electrical losses
(5) generation costs
(6) market influence by any one supplier
2. Improved
(1) electric system efficiency (lower operating costs)
(2) electric system reliability (lower maintenance costs)
(3) settlement data management
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AMI programs in APEC economies. The survey is designed to study the key
successful factors of AMI development in APEC. Although the landscape of AMI
programs and technology is changing rapidly, the chapter attempts to describe the
present situation and challenges of AMI deployment within APEC.
Three case studies are given in Chapter 3 which identifies key successful factors and
key challenges of AMI deployment. Chapter 4 of the report presents the APEC
workshop on Addressing Challenges in AMI Deployment and Smart Grids in APEC.
The details of challenges of AMI deployment are given in Chapter 5 including
cost-benefit analysis, key challenges and mitigation strategies from different
perspectives. Each APEC economy will face unique challenges in deploying AMI,
depending on many factors such as market structure, degree of industrialization,
urbanization, population density, status of installed electric power system,
environmental and economic drivers, along with many other factors. Some
challenges must be addressed at the local, regional, or national level, while others can
be addressed in part by global efforts such as the APEC Smart Initiative or the
International Smart Grid Action Network being established as an activity of the Clean
Energy Ministerial.
Overall conclusions and recommendations are provided in Chapter 6 of the report.
To provide a starting point for addressing AMI challenges, Chapter 6 describes
impactful, principles for the deployment of AMI policies, guidelines,
recommendations for APEC economies of smart metering development, and some
areas ripe for further study. Based upon the presentation of the results of this work,
follow-on activities, such as a workshop, may be arranged to further examine findings
of the study and establish a path forward for future progress in these areas.
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2.0 Situation within APEC
The picture of electrification across the world is complex. The economies are in
various states of smart grid development, ranging from no activity, to conducting
demonstrations, and engaged in joint projects with other economies. Each member
economy has unique attributes that influence the benefits of smart grid capabilities and
affect the priorities given to deployment strategies. The following is an overview of
APEC AMI deployment status.
England
The official start date of rollout is 2012, involving visits to more than 27 million
homes to replace meters for both gas and electricity. As of January 2010 there were
estimated to be in excess of 170,000 domestic smart meters installed. In October 2010,
First Utility became the first energy supplier to offer smart meters to all new and
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existing customers across the U.K.
British Gas have committed to providing Smart Meters in all homes by 2019. They
are starting this rollout now, with 160,000 homes in the UK already having a Smart
Meter.
Sweden
Sweden is in the midst of replacing its existing metering infrastructure to comply
with government regulations designed to promote an open and efficient energy market.
Sweden has installed 5.2 million smart meters all over the economy in 2009.
Finland
The Nordic Investment Bank (NIB) and Kymenlaakson Sähköverkko Oy have
signed a 10-year-maturity loan total EUR 15 million for the implementation of a
remote reading system of electricity metering in South-East Finland. The aim of the
project is to improve customers’ means to control and optimize electricity usage.
Approximately 100,000 consumption sites will be included in the remote reading
system by the finalisation of the project in 2013.
Holland
The Netherlands government has announced its intent to replace all 7.5 million
electric meters in the economy by the end of 2012.
Italy
Enel has installed 31 million smart meters in households. The government expected
to finish 3.6 million electric meters in 2011.
Korea
Korea announced a roadmap in November 2009 to develop the grids. The private
sector may invest 24.8 trillion won ($22 billion) by 2030 for the grids, with the state
contributing 2.7 trillion won, according to government estimates in January 2010.
Korea plans to replace all analogue meters at households with the new devices by
2020. The government on Feb. 28 said it plans a 14-fold increase in the number of
meters to 10 million units by 2016.
Japan
At the end of February 2012, TEPCO will reveal requirements of power meter to
potential suppliers after exchanging non-disclosure agreement. First tender for 3
million units is scheduled in October 2012. Meanwhile, the government is planning to
replace 80% of the economy conventional meters with smart meters within five years.
New Zealand
Approximately 1.3 million smart meters are due to be rolled out to New Zealand
households by 2012. However, the economy appears to be unusual in the developed
world in that the rollout is being undertaken by the market, with no government
control, going on to recommend that the government takes a more hands-on approach.
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Australia
In 2010, the government finished technology test in 10,000 households. By 2013
Victoria’s electricity distribution businesses will have installed 2.5 million Smart
Meters in homes and businesses across the state. They expected to finish the
installation of entire economy in 2016.
China
China is reportedly planning to install over 300 million smart meters by the end of
2015, from having only 36 million in 2011.
Brazil
The Brazilian Electricity Regulatory Agency (in Portuguese, Agência Nacional de
Energia Elétrica, ANEEL) planned to install 63 million smart meters all over the
economy before 2021.
Spain
Endesa (Enel group) has installed 22,000 meters in Andalusia (within the
framework of the “smart city” project) with a target to install 13 million meters by the
end of 2015.
France
By the 20th of September 2010 over 47.000 AMM meters have been commissioned.
The government expects to install 35,000 thousand electric meters before 2016 and
accomplish 95% installation in entire economy.
USA
As of May 2012, U.S. utilities had installed roughly 36 million smart meters
nationwide, and approximately 65 million smart meters will be deployed by 2015.
Canada
The Government of Ontario set a target of deploying smart meters to 800,000 homes
and small businesses by the end of 2007, which was surpassed, and throughout the
province by the end of 2010. BC Hydro in British Columbia, Canada is implementing
Itron smart meters to all customers by the end of 2012.
Ireland
From 1st January 2010, around 5,500 household electricity customers nationwide
began using smart meters.
Initiation of the Gas CBT for residential customers is due to complete in June 2011.
This encompassed a roll out of circa 2,000 smart meters to trial participants testing a
range of smart metering enabled stimuli.
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The questionnaire was designed to study the key success factors of AMI
development in APEC. There are totally 27 questionnaires distributed and a total
number of 6 respondents completed the survey.
To fully understand AMI deployment in APEC, five aspects were taken into
account including basic background, policy, economy, technology and society.
The first aspect was designed to study the background information in each economy.
This was not the part of core research but it is helpful in understanding respondent’s
economy power background. The second aspect concerns the smart meter roll-out plan
and status. In this section, we are trying to find out what role should the government or
regulator play in the roll-out process. And what are the most critical challenges they
faced. The third part concerns about the cost and benefit of AMI deployment. The
fourth part, we consider the technical aspect to find out the necessary functions and
communication technologies for smart meter, and how to deal with technical
challenges of AMI deployment in APEC. Finally, the major concerns of the customers
are presented in the society aspect. And we hope to get some suggestions for the social
challenges from the respondents. The survey questions are listed in Appendix A.
Basic background
Table 2.1 basic background of APEC economies
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Hong Kong Total: 2.64 million 3.0 million 14,428 6 times per year International
42,065GWh Electricity
Households: Commission
11,076GWh
Commercial:
20,751GWh
Japan Total: 51.8 million 79 million 1,300,000 12 times per year International
906,417GWh Electricity
Households: Commission
304,229GWh
Commercial:
47,452GWh
Chinese Total: 745 million 12.97 million 746 6 times per year American National
Taipei 198,640GWh Standards Institute
Households:
41,714GWh
Commercial:
31,782GWh
China - - - - 6 times per year China National
Standards
Political Aspect
From the survey results, we can know that Australia, China, Chinese Taipei and
New Zealand now are on roll-out underway. Japan is still planning. And Hong Kong
is at discussing stage.
There are 1.6 million meters needed to be replaced in Australia’s smart meter
roll-out plan. New Zealand is expected to displace 2.25 million meters or 1.5M of
1.99M of connection point. There are 80% of total demand million units meters
needed to be reinstalled into smart meters in Japan. There are 6 million existed
electricity meters need to be replaced in Chinese Taipei. Hong Kong is not yet
defined.
From the result, Australia starts to install smart meter for householders in 2012 and
their target is 20,000 units. China starting form 2010, wants to reach 33million smart
meters. Then China started to install 36M smart meters in 2011, and also plan to
install 300 million in the economy. New Zealand expects to install 1.5 M on April 1
2015. During 2011 to 2012, 10,000 units have been replaced. Chinese Taipei, expects
to reach 1 million meters in 2015 and to 6 million in 2016. Japan started to install in
2011.Japan expect to install 80% of total demand in 5 years.
16
There are some main policies for each economy to encourage metering roll-out plan.
From the survey we can see that most of APEC economies have the same policies of
reducing meter reading costs. The second common is the policy of reducing electricity
theft, and introduction of more complex tariff systems. To encourage smart meters
installation, Japan especially regulates the policy of enhancing customer service for
encouraging smart meters installation.
There are some roles that government or regulatory play in the roll-out process.
From the results, we can see from the result. Most common choices are the definition
of minimal technical requirements and monitoring and reviewing. China has to do
also definition of targeting roll-out units, organizing the target roll-out units,
developing the privacy policy framework and definition of the level of ROI expected.
Comparing to China, Japan only has to do the definition of roll-out timetable.
The result shows that electric power company needs to do installation, maintenance,
meter reading and data management in Hong Kong, China, Chinese Taipei and Japan.
However, New Zealand separated the duties into three part; Energy Service Company
(ESCO) for installation, smart metering system integrator for maintenance and meter
reading, and independent data management company to do data management.
Most APEC members have implemented dynamic pricing programs before meter
roll-out. Hong Kong, Australia, Chinese Taipei and China have adopted Time-of-Use
pricing. Australia and China have adopted critical peak pricing. New Zealand has
adopted days and night pricing. From the questionnaire, there are no dynamic pricing
programs being adopted in Japan.
From the survey, most APEC members have developed dynamic pricing programs
after smart meter roll-out. Australia has different kinds of pricing programs; time-of
use, critical peak pricing, real-time pricing and extreme day CPP. Hong Kong and
New Zealand now are in progress trials underway. China has time-of-use pricing and
critical peak pricing. China also has a multi-step electricity price programs. But Japan
doesn’t have any programs. Chinese Taipei is still in progress.
From the result, financial issue is the most common challenges in applying roll-out
smart meters. Hong Kong, China and New Zealand all face this problem. Hong Kong
also has potential tariff impact. However, Australia faces technical issue in applying
the plan. New Zealand has the challenge of satisfying distribution and retailer need.
Japan has the privacy issue to solve.
Economic Aspect
Table 2.2 Survey result of economic aspect
17
Who pays for the Australia New Zeland Hong Kong Japan Chinese China
roll-out of smart Taipei
meters?
Government
Electric power
company
Distribution system
operator(DSO)
Customer
Others(please specify) Lndepended
nedea
owners
Has the government, Yes No No - Yes Yes
the regulator or the
DSO conducted a cost
& benefit analysis of
the roll-out plan?
Please point out the
three major cost
elements for the roll-out
of smart meters.
Capital cost of meters
Meter installation cost
Meter operation and
maintenance cost
Information technology
cost
Communication set-up
cost
Communication
operation and
maintenance cost
Others(please specify) Inspection
cost of
meters
Please point out five
major benefits from
18
your smart metering
project.
Reducing the theft of -
electricity
Avoided cost of routine -
manual reading
Loss of load detection -
and outage detection
Avoided cost of manual -
disconnections and
reconnections
Avoided generation -
capacity costs
Avoided transmission -
and distribution costs
Energy saving -
19
energy saving. Benefits are so much as loss of load detection and outage detection in
China, Chinese Taipei and Australia. The cost of manual disconnections and CO2 are
also avoided in Japan and Chinese Taipei. And the progress of the deployment project
of smart meters is quite smooth in Japan, where the number of total households is
51.8 million and the number of installed electricity meters is 79 million. In Japan,
the mandatory frequency for electricity meter reading for each household is 12 times
per year. It is expected that the deployment project will be completed on schedule.
Smart meters should benefit consumers. To face the least standards of consumer
trust, utility regulators and other government have a credible plan to keep the cost of
the roll-out tightly under control. And they rely on credible expert utilities to provide
number analysis before deciding whether to approve smart meter rollouts.
Technical Aspect
In the technical aspect, APEC members believe that the functions such as two-way
communications to the meter system and remote disconnection and connection are
basic and essential functions for smart meter. Secondly required functions are interval
metering data measurement, supporting load management (e.g. time-of-use rates) and
loss of load detection and outage location identification.
The most common communication technologies applied to smart meter
communication network are GPRS and Zigbee, WiMax and RF Mesh as the
secondary common technologies.
The primary technical challenge is that integration of different type of meters and
system secondly is how to make sure the meter system is compatible for smart grid
development in the future and ensuring security and privacy protection.
APEC members propose different solutions for the technical challenges. Hong
Kong needs a pilot test on field; Australia will choose proven solutions from vendors,
and New Zealand wants to put competitive or commercial pressure on making some
regulation and guidelines to address technical challenges that they are facing.
Society Aspect
From the survey results, we know that safety and privacy issues are the main
concerns of the customers. Almost every respondent stresses these two concerns.
These are the key social challenges of AMI deployment. On the other hand, some
suggestions are provided for these challenges, for example education campaign for the
consumers, communication with relevant stakeholders, regulations on security and
data access.
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3.0 Case Analysis
In this part, we choose America, Australia and Ireland as our case studies. The
reasons are these economies have their own unique deployment plans, schedules or
some challenges we can learn from. For example, Ireland emphasis on technology
trial and demand response management during the beginning stage of deployment
plan, and America provides an "opt-out option" for the smart meter against.
3.1 America
3.1.1 Introduction
As of May 2012, U.S. utilities had installed roughly 36 million smart meters
nationwide, and approximately 65 million smart meters will be deployed by 2015.
Sections 1252(e) and (f) of the U.S. Energy Policy Act of 2005 (EPACT) state that
it is the policy of the United States to encourage “time-based pricing and other forms
of demand response, whereby electricity customers are provided with electricity price
signals and the ability to benefit by responding to them.” It further states that
“deployment of such technology and devices that enable electricity customers to
participate in such pricing and demand response systems shall be facilitated, and
unnecessary barriers to demand response participation in energy, capacity and
ancillary services markets shall be eliminated.” To help implement this new policy on
demand response, the Act creates new requirements for electric utilities and states
with respect to demand response. States are charged with conducting investigations to
determine how those new requirements should be applied and whether to adopt
widespread time-based pricing and advanced metering for utility retail customers.
EPACT provides specific guidance to Department of Energy (DOE) in encouraging
demand response. Specifically, the Secretary of Energy is authorized to:
educate consumers on the availability, advantages, and benefits of advanced
metering and communications technologies, including the funding of
demonstration or pilot projects; and
work with States, utilities, other energy providers, and advanced metering and
communications experts to identify and address barriers to the adoption of
demand response programs (EPACT, Sec. 1252(d)).
The law also requires DOE to provide a report to Congress, not later than 180 days
after its enactment, that “identifies and quantifies the national benefits of demand
response and makes a recommendation on achieving specific levels of such benefits
by January 1, 2007” (EPACT, Sec. 1252(d)).
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The Federal Energy Regulatory Commission (FERC) Identifies Smart
Grid-Enabled Demand Response as Key Priority for Standards Development to
Achieve Smart Grid Interoperability
On July 16, 2009, the Commission issued a Final Smart Grid Policy to guide and
prioritize the development of smart grid devices and systems, and to adopt an Interim
Rate Policy to encourage investment in smart grid technologies. The Commission
stated that smart grid enabled demand response is a key priority because of its
potential to help address several bulk power system challenges, including reliably
integrating unprecedented amounts of variable generation resources into the electric
grid. To further this goal, the final policy explains that a key priority should be
development of standards to enhance interoperability and communications between
system operators, demand response resources, and the systems that support them.
Emphasis should be put on further development of use cases and scenarios for
demand response, particularly with regard to dispatchable demand response and
various forms of dynamic pricing. Further, the Commission encourages the National
Institute of Standards and Technology and its industry collaborators to continue
investigating potential national interoperability standards for advanced metering
systems.
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The types of time-based rate schedules include:
I. Time-of-use pricing whereby electricity prices are set for a specific time period
on an advance or forward basis, typically not changing more often than twice a
year, based on the utility’s cost of generating and/or purchasing such electricity
at the wholesale level for the benefit of the consumer. Prices paid for energy
consumed during these periods shall be pre-established and known to consumers
in advance of such consumption, allowing them to vary their demand and usage
in response to such prices and manage their energy costs by shifting usage to a
lower cost period or reducing their consumption overall.
II. Critical peak pricing whereby time-of-use prices are in effect except for certain
peak days, when prices may reflect the costs of generating and/or purchasing
electricity at the wholesale level and when consumers may receive additional
discounts for reducing peak period energy consumption.
III. Real-time pricing whereby electricity prices are set for a specific time period on
an advanced or forward basis, reflecting the utility’s cost of generating and/or
purchasing electricity at the wholesale level, and may change as often as hourly.
IV. Credits for consumers with large loads who enter into pre-established peak
load reduction agreements that reduce a utility’s planned capacity obligations.
California
Since the 1970s, conservation and load management programs have been promoted
by the California Public Utilities Commission (CPUC) and the California Energy
Commission (CEC) as alternatives to power plant construction and gas supply options.
Conservation and load management (C&LM) programs have been implemented in
California by the major utilities through the use of ratepayer money and by the CEC
pursuant to the CEC legislative mandate to establish energy efficiency standards for
new buildings and appliances.
In 2001, California suffered from rolling blackouts due to a failed opening of the
electricity wholesale market – caused largely by poor regulation and the greed and
market manipulation by the generators/Enron. The mechanisms of how the wholesale
market failed are beyond the scope of this report, however the outcome was a loss of
faith in deregulation and competition and a decision to increase the power of demand
as one mechanism for controlling the power of the generators - a conclusion was
reached that a factor in the California crisis was the lack of demand response to
mitigate market power.
The CPUC began a rulemaking in June 2002 which it concluded in November 2005
with the aim of “developing demand response as a resource to enhance electric system
reliability, reduce power purchase and individual consumer costs, and protect the
23
environment. The desired outcome of this effort was that a broad spectrum of demand
response programs and tariff options would be available to customers who make their
demand-responsive resources available to the electric system.” Subsequently the
CPUC and the utilities have developed an integrated package of smart metering plus
demand response measures of direct load control and time differentiated pricing
tariffs.
In 2003, the three key energy agencies in California – the CEC, the California
Power Authority (CPA), and the CPUC – came together in a spirit of unprecedented
cooperation to adopt an “Energy Action Plan” (EAP) that listed joint goals for
California’s energy future and set forth a commitment to achieve these goals through
specific actions
The EAP was a living document meant to change with time, experience, and need.
The CPUC and the CEC have jointly prepared this Energy Action Plan II to identify
the further actions necessary to meet California’s future energy needs. EAP II
supports and expands the commitment to cooperation among state agencies embodied
in the original EAP and reflected in the State’s coordinated actions over the past two
years. The development of EAP II has benefited from the active participation of the
Business, Transportation, and Housing Agency, the Resources Agency, the State and
Consumer Services Agency, the California Independent System Operator (CAISO),
the California Environmental Protection Agency (Cal EPA), and other agencies with
energy-related responsibilities.
EAP II describes a coordinated implementation plan for state energy policies that
have been articulated through the Governor’s Executive Orders, instructions to
agencies, public positions, and appointees’ statements; the CEC’s Integrated Energy
Policy Report (IEPR); CPUC and CEC processes; the agencies’ policy forums; and
legislative direction. This document also is intended to be consistent with the energy
policies embodied in the Governor’s August 23, 2005, response to the 2003 and 2004
IEPRs. We expect to update or revise this action plan to reflect any changes needed to
further implement the Governor’s 2004 IEPR response, future energy policies, and
decisions related to the forthcoming 2005 IEPR, as well as other relevant events that
may arise in the future.
All of the utilities in California have now received permission to rollout smart
meters as part of a larger efficiency plans – the main demand response programs in
use are critical peak pricing, critical peak rebates, time of use and automated AC
thermostats. Customer feedback and education will also be used but sometimes as a
support to the pricing programs only.
On top of this, each utility has asked for extra funds to provide services which go
beyond the minimal requirements of the smart metering regulation. There is good
24
evidence that private industry as well as the utilities now have a substantial financial
stake in the success of these programs creating green jobs and business opportunities.
Also, in 2002, the Governor signed the Renewable Portfolio Standard (RPS), SB
1078. This standard requires an annual increase in renewable generation equivalent to
at least 1% of sales, with an aggregate goal of 20% by 2017. The state is aggressively
implementing this policy, with the intention of accelerating the completion date to
2010, and will:
Add a net average of up to 600 MW of new renewable generation sources
annually to the investor-owned utility resource portfolio.
Establish by June 30, 2003, key RPS implementation rules, including market
price benchmarks, standard contract terms, flexible compliance and penalty
mechanisms, and bid ranking criteria under the “least cost-best fit” rubric. Other
key RPS rules will be developed and refined throughout 2003.
Facilitate an orderly and cost-effective expansion of the transmission system to
connect potential renewable resources to load.
Initiate the development of RPS compliance rules for energy service providers
and community choice aggregators.
Coordinate implementation with all relevant state agencies and with municipal
utilities to facilitate their achievement of the standard.
Established in 2002 under Senate Bill 1078, accelerated in 2006 under Senate Bill
107 and expanded in 2011 under Senate Bill 2, California's Renewables Portfolio
Standard (RPS) is one of the most ambitious renewable energy standards in the
economy. The RPS program requires investor-owned utilities, electric service
providers, and community choice aggregators to increase procurement from eligible
renewable energy resources to 33% of total procurement by 2020.
The CPUC and the CEC jointly implement the RPS program. The CPUC's
responsibilities include:
25
The CPUC has authorized the state’s investor owned utilities to replace conventional
customer meters with Smart Meters in order to give consumers greater control over
their energy use. Smart Meters enable a utility to provide customers with detailed
information about their energy usage at different times of the day, which in turn
enables customers to manage their energy use more proactively.
In California, Smart Meter is integrated into a larger package to help control
consumption as a direct method of improving security of supply for the State.
California is the USA's most populous State with about 37 million people. The State
counts 14.8 million retail energy customers which were provided with 91 TWh of
electricity in 2008. Household consumption is one of the lowest in the economy with
an average of 6,150 kWh per year. State-wide sales amounted to 268.1 TWh while
generation was only at about 208 TWh which makes California the largest electricity
importer in the USA.
Smart Meters are being rolled out nationwide and internationally. According to
the Edison Foundation, more than 36 million Smart Meters have been deployed by
electric utilities in the U.S. and nearly 65 million should be in place by 2015. In
California, the CPUC authorized Southern California Edison to install approximately
5.3 million new Smart Meters, San Diego Gas and Electric Company (SDG&E) 1.4
million electric Smart Meters and 900,000 natural gas meters, and Pacific Gas and
Electric Company (PG&E) approximately 5.2 million electric meters and 4.4 million
natural gas meters.
The positive cost/benefit for the utilities is directly related to how successful they
are with their demand response programmes (due to the regulatory framework in
place). The overall success of the meter rollout will now be dependent on the ability
of the utilities and private companies involved to educate and interest consumers.
Rollout is due to be completed in 2012 for most utilities and the full impact of the
programmes may take a couple of years after this to be fully realized.
26
modules attached to gas meters record gas usage daily. This data is periodically
transmitted to us via a secure wireless communication network.
Time-based rates are available to PG&E’s residential, agricultural, and commercial
and industrial customers with a Smart Meter.
On February 25, 2010, the CPUC adopted new rate structures for commercial,
industrial, and agricultural customers of PG&E as part of an effort to implement
dynamic electricity prices for all California consumers. These rates are designed to
reflect the cost of electricity production during periods of high demand. When
combined with PG&E’s Smart Meters, these rates will provide an opportunity for
customers to lower their bills while improving system reliability and reducing
greenhouse gas emissions.
Beginning on May 1, 2010, large commercial and industrial customers will be
placed on new Peak Day Pricing rates. Customers on these rates will pay different
prices for electricity depending on the time of day. On the few hottest days of the year,
prices for electricity used between 2 p.m. and 6 p.m. will increase further. However,
PG&E will notify customers about these peak days one day in advance, so customers
can plan accordingly. Beginning on November 1, 2011, medium and small
commercial and industrial customers will begin moving to new Peak Day Pricing
rates.
Residential customers may elect to enroll in PG&E’s Smart Rate program, which is
designed to encourage customers to reduce their electricity usage at during peak
periods. Participants in Smart Rate may also elect a bill protection option for the first
full summer of participation.
Residential and small business customers can also enroll in PG&E’s Smart AC
program, where they can reduce or shift their air conditioning in response to signals
from the utility. In the near future, residential customers will have the option of
enrolling in a Peak Time Rebate program, where they can receive a rebate for
reducing their electricity consumption in response to demand response signals from
the utility.
I. Energy Efficiency
As stated in EAP I and reiterated here, cost effective energy efficiency is the
resource of first choice for meeting California’s energy needs. Energy efficiency is the
least cost, most reliable, and most environmentally-sensitive resource, and minimizes
our contribution to climate change. California’s energy efficiency programs are the
most successful in the nation.
27
However, to achieve the full energy efficiency potential that exists in California, we
must continue to ratchet up our efforts. We need to focus not only on developing
and supporting programs, but also on increasing public outreach and education;
promoting research, development, and demonstration; and improving the evaluation,
measurement, and verification of efficiency programs.
KEY ACTIONS:
1. Require that all cost-effective energy efficiency is integrated into utilities’ resource
plans on an equal basis with supply-side resource options.
2. Adopt 2006-2008 energy efficiency program portfolios and funding by late 2005.
3. Expand efforts to improve public awareness and adoption of energy efficiency
measures.
4. Promote a balanced portfolio of baseload energy, demand, and peak demand
reductions to obtain both reliability and long-term resource benefits of energy
efficiency for both electricity and natural gas.
5. Integrate demand response programs with energy efficiency programs.
6. Implement actions outlined in the Governor’s Green Buildings Action Plan to
improve building performance and reduce grid-based electrical energy purchases
in all State and commercial buildings by 20 percent by 2015.
7. Work with customer-owned utilities in the implementation of all cost-effective
energy efficiency programs so that they treat energy efficiency savings as a
resource and help California reach its goal of a reduction in per capita electricity
use.
8. Adopt new appliance standards by 2006, supplementing those adopted in
December 2004.
9. Adopt new building standards for implementation in 2008 that include, among
other measures, cost effective demand response technologies and integrated
photovoltaic systems.
10. Increase the availability of State-sponsored low-interest loans for energy efficiency
and clean distributed generation projects.
11. Improve energy efficiency programs for low income, non-English speaking, and
other hard-to-reach communities.
12. Adopt verifiable performance-based incentives in 2006 for IOU energy efficiency
investments, with risks and rewards based on performance that will align the utility
incentives with customer interests.
13. Update and augment, as necessary, utility evaluation, measurement and
verification protocols to assure that energy efficiency continues to be fully
28
integrated into resource planning, emission reduction benefits are quantified, and
compliance goals are verified.
14. Identify opportunities and support programs to reduce electricity demand related to
the water supply system during peak hours and opportunities to reduce the energy
needed to operate water conveyance and treatment systems.
15. Adopt a report on improving efficiency in existing buildings, as required by
Assembly Bill 549, and pursue legislation and regulations to implement its
recommendations.
29
5. Create standardized measurement and evaluation mechanisms to ensure that
demand response savings are verifiable.
6. Provide that the utilities’ demand response investment opportunities offer returns
commensurate with investments in traditional plant.
7. Integrate demand response into retail sellers’ electricity resource procurement
efforts so that these programs are considered equally with supply options.
8. Provide customer access to their energy use information and allow participation in
demand response programs, regardless of retail provider.
9. Evaluate and, if appropriate, incorporate demand response technologies such as
programmable communicating thermostats into the 2008 building standards.
10. Incorporate demand response appropriately and consistently into the planning
protocols of the CPUC, the CEC, and the CAISO.
11. Encourage the integration of demand response programs into a capacity market or
other mechanisms.
California can reduce its greenhouse gas emissions, moderate its increasing
dependence on natural gas, and mitigate the associated risks of electricity price
volatility by aggressively developing renewable energy resources to meet the RPS
requirements. As originally established, the RPS requires 20 percent of electricity
sales to come from renewable sources by 2017. In the first EAP, we set a goal of
accelerating the 20 percent target from 2017 to 2010. We are now identifying the
steps necessary to achieve that target, as well as higher goals beyond 2010, such as
Governor Schwarzenegger’s proposed goal of 33 percent of electricity sales by 2020.
California governor Jerry Brown described his state’s plans to deploy 20 GW of new
renewable energy capacity in accordance with his Clean Energy Clean Jobs Plan. The
recently announced energy targets are a substantial increase from current levels and
depend highly on distributed solar power. 60 percent (12 GW) of the 20 GW target is
intended to come from “localized generation,” or distributed projects less than 20
MW in size. Such projects offer a number of benefits like streamlined grid integration
and reduced siting challenges.
The 12 GW target is made up of three main components:
30
• Behind the meter: 5.2 GW of rooftop solar developed on customer roofs and used
to offset retail power purchases.
• Wholesale generation: 3.4 GW of distributed generation fed into the utility system
through feed-in-tariffs or other utility procurement approaches.
• Distribution Grid Interconnection Capacity: An additional 3.4 GW of capacity that
can be deployed without major upgrades to the distribution system.
KEY ACTIONS:
1. Ensure that all load serving entities meet the state’s adopted reserve and resource
adequacy requirements of a 15-17 percent planning reserve no later than June
2006, through a reasonable mix of short-, medium- and long-term resource
commitments.
2. Provide for the continued operation of cost-effective and environmentally-sound
existing generation needed to meet current reliability needs, including combined
heat and power generation.
3. After incorporating higher loading order resources, encourage the development
of cost-effective, highly-efficient, and environmentally-sound supply resources
to provide reliability and consistency with the State’s energy priorities.
31
4. Establish appropriate incentives for the development and operation of new
generation to replace the least efficient and least environmentally sound of
California’s aging power plants.
5. Evaluate the potential for California’s access to clean coal energy resources and
recommend a California clean coal policy in the 2005 IEPR.
6. Manage California’s aging electricity infrastructure to coordinate maintenance
and outages and to provide orderly retirements.
7. Adopt a long-term policy for existing and new qualifying facility resources,
including better integration of these resources into CAISO tariffs and
deliverability standards.
12. Adapt the state’s transmission planning process to better evaluate strategic
benefits, as well as economic costs and benefits, of proposed projects over
multiple decades, including recommending a range of discount rates to be used
to evaluate transmission lines.
13. Support legislation to expand the CEC’s transmission corridor planning process,
coordinated with applicable federal and state agencies, local governments and
other stakeholders, to designate and preserve critical corridors for potential
development in the future.
32
14. Coordinate the state’s transmission planning process with regional efforts in the
interconnected western states and identify and recommend means to increase
California’s participation in the broader western regional energy planning efforts.
15. Apply the GHG adder as a resource selection criterion in IOU procurement
decisions to more appropriately value the risk of future environmental regulation
in long-term investment decisions made now.
16. Acknowledge the interdependent nature of the energy needs among all the
Western states, Canadian provinces, and Mexico by collaborating with our
regional partners on regional resource and transmission planning, in particular by
addressing overall resource adequacy and deliverability in the West, including
cost allocation, planning, and routing of inter-regional transmission projects.
3.1.3 Problems
Pacific Gas and Electric Co. has found a number of reasons why almost 45,000 of
its Smart Meters haven't worked as planned.
Since mid of 2009, California's largest utility has faced a customer uprising over
the meters, which were designed to measure power use with precision and wirelessly
transmit their data to PG&E. Angry homeowners have accused the meters of gross
inaccuracy, blaming them for monthly bills that in some cases doubled without
warning.
PG&E insists that most of the soaring bills blamed on Smart Meters were actually
caused by high electricity rates and heat waves. However, the company's internal
investigation has found several recurring problems with the meters and their
installation. PG&E's findings so far don't explain every customer complaint about
Smart Meters, and there remain a handful of meters spotted by PG&E that failed for
reasons the utility doesn't yet understand. All of the problems identified to date can be
easily fixed, says PG&E.
The most common Smart Meter problem boils down to human error. Or rather,
several different errors, most involving meters that measure natural gas usage.
PG&E Smart Meters that record electricity use are entirely new devices that replace
old, analog predecessors. Gas Smart Meters, in contrast, are small modules that
installers attach to existing gas meters to record and relay data.
Smart Meters for homes record electricity use once an hour, while those for
businesses record once every 15 minutes. But in roughly 2,900 cases, workers
installed the wrong kind, giving homeowners meters meant for businesses or vice
versa. Putting the wrong meter on an account can confuse PG&E's computer system.
33
Burt said that problem could affect customer bills, although she wasn't aware of any
specific cases in which that happened.
In some meters, a software glitch causes the component that stores energy-use data
to reboot itself occasionally, losing some but not all of the data in the process. Not
every customer who experiences this problem will notice it.
EFF and other privacy groups filed comments with the California Public Utilities
Commission Tuesday, asking for the adoption of strong rules to protect the privacy
and security of customers' energy-usage information. Without strong protections, this
information can and will be repurposed by interested parties.
Security researchers worry that today’s smart meters and their communications
networks are vulnerable to a variety of attacks. There are also questions of reliability,
as PG&E faces criticism from California customers who have seen bills skyrocket
after the installation of the new "smart meters." Unsurprisingly, California legislators
are questioning the rapid rollout. Texas customers are also complaining.
The need for safeguards and standards to protect the privacy and security of
customer usage data continues to be a key issue associated with advanced metering
systems. While one of the potential benefits associated with advanced metering is
the ability to measure and communicate customer usage at a much greater level of
detail than traditional electro-mechanical meters, various stakeholder groups have
raised concerns at the state and national levels regarding the use, privacy and security
of the vast amount of detailed usage data produced by advanced meters. In response
to these concerns, states and the federal government are working on privacy standards
and policies. Policies under consideration include procedures and rules governing
customer ownership, consent, access and use, delineation of responsibilities, security,
as well as the sale and transfer of data.
At the federal level, the Obama Administration examined privacy issues in depth in
its June 2011 smart grid policy framework report. The report recommends that
“State and Federal regulators should consider, as a starting point, methods to ensure
that consumers’ detailed energy usage data are protected in a manner consistent with
federal Fair Information Practice Principles and develop, as appropriate, approaches
to address particular issues unique to energy usage.”
A number of states also took action in the past year to protect consumer data
privacy. For example, as a result of legislation enacted in 2010 (SB 1476), the
California PUC adopted privacy rules for the three investor-owned utilities addressing
disclosure and protection of customer energy usage data generated by advanced
metering, and the investor-owned utilities must file tariff changes that will provide
34
third parties with access to a customer’s usage and billing information (e.g.,
15-minute or hourly price, usage and cost data) when authorized by the customer. The
decision adopts the Fair Information Practice Principles. In addition to the privacy
rules for the three investor-owned utilities, the California PUC also ruled that if
specific electric utilities file applications to deploy advanced metering systems, these
utilities must also address how the privacy rules should apply to their operations.
35
3.1.4 Lesson
This decision modifies Pacific Gas and Electric Company’s Smart Meter Program
to include an option for residential customers who do not wish to have a wireless
Smart Meter installed at their location. The opt-out option shall be an analog electric
and/or gas meter.
This new opt-out option is a service that we are adopting with this decision. This
opt-out option is a service because the standard for metering has been transitioned
throughout the economy and for the most part the world from the older technology,
analog meters, to today’s technology, Smart Meters. In this decision we are not
reversing that transition, however, we do approve an option for those customers who,
for whatever reason, would prefer an analog meter. This option to move away from
the standard will require PG&E to incur costs such as purchasing a new meter, going
back to the customer location to install and service the meter, and monthly cost of
reading the meter. These are some of the examples of the additional costs required to
opt-out of the standard wireless Smart Meters. As a result, this decision further finds
that customers electing the opt-option shall be responsible for costs associated with
providing the option. Issues concerning the actual costs associated with offering the
analog opt-out option and whether some portion of these costs should also be
allocated to all ratepayers or PG&E shareholders will be addressed in a separate phase
of this proceeding.
To allow residential customers to begin selecting the opt-out option immediately,
this decision adopts interim fees and charges, which will be subject to adjustment
upon conclusion of the second phase of this proceeding. A Non-CARE customer
electing the opt-out option shall be assessed an initial fee of $90.00 and a monthly
charge of $10.00. A CARE customer electing the opt-out option shall be assessed an
initial fee of $10.00 and a monthly charge of $5.00.
This decision also authorizes PG&E to establish new two-way electric and gas
Modified Smart Meter Memorandum Accounts to track revenues and costs associated
with providing the opt-out option until a final decision on recoverable costs and cost
allocation is adopted.
This decision further directs PG&E to file a Tier 1 Advice Letter implementing the
opt-out option and to establish a Smart Meter Opt-Out Tariff within 15 days of the
effective date of this decision. Finally, the September 21, 2011 Assigned
Commissioner’s Ruling directing PG&E to establish a delay list shall no longer be in
effect and all customers currently on the delay list shall be transitioned to a wireless
36
Smart Meter unless they elect to participate in the opt-out option. This proceeding
remains open to address cost issues associated with the opt-out option.
3.2 Australia
3.2.1 Introduction
The AMI Program has been developing and evolving since 2004, when it was first
recognized by the Victorian Government that replacing the existing stock of basic
accumulation meters with meters that can record electricity use in half hour intervals
would enable more efficient pricing and assist Victorians to better manage their
energy consumption.
To achieve energy efficiency, and hence a corresponding reduction in carbon
emissions, consumers and the electricity industry both need to work together to:
I. reduce energy demand and waste where appropriate and possible
II. promote the efficient use of household appliances, and limit the inefficient use of
appliances such as air conditioners and pool filters
III. shift consumption patterns to maximize the efficient use of power generating
assets and smooth out peak consumption periods, which cause spikes in the cost
of electricity and create inefficiencies in the allocation of capital to new
generation capacity.
Mindful of these objectives, the Victorian government mandated the installation of
smart meters for every household and small business in 2006, after consultation with
power distributors, as part of the AMI program. Between 2009 and 2013 the AMI
project will replace accumulation meters in 2.4 million homes and small businesses
with smart meters.
The AMI project is a partnership with the electricity industry. Victorian electricity
distribution businesses are responsible for installing smart meters and their
infrastructure. The government has amended the electricity regulations so that
consumers will directly pay for AMI installation costs.
Victoria is the earliest jurisdiction that rollouts the biggest scale of AMI program in
Australia. Furthermore, there is a national AMI cost-benefit report released in
mid-2008 and found a positive case for Victoria (and for most other jurisdictions).
Despite the Council of Australian Governments’ commitment to the development of a
national smart meter legislative and regulatory framework, other jurisdictions have
been more cautious than Victoria with its implementation.
37
strategies, providing conversation plat to several organizations, being the coordinating
role through government, industry, management units, and households. ISG’s main
mission is to make relative laws, cost recovery method, schedules, service level
requirements and to supervise the technical tests.
ISG has three work groups, Customer Response Working Group, Trials Working
Group and Functionality Working Group. They are responsible for promote AMI.
I. CRWG urges electricity distributors make new power pricing systems and give
new the information to consumers.
II. TWG assists ISG in making level requirements of the minimum function;
III. FWG has its technology work group, TechWG. TechWG provides technology
suggestions to the other work groups. The suggestions contents are focus on the
minimum functions from ISG.
Organizational structure is shown in the following figure 3.1.
(Source: P4, Department of Primary Industries, Advanced Metering Infrastructure (AMI) Project
-Stakeholder Forum 2007)
The former Department of Infrastructure (DOI) administered the AMI project until
late 2006 when a ‘machinery of government’ change transferred administrative
responsibility to the Department of Primary Industries (DPI).
38
environment since the early 1990s. As for-profit entities, the industry players bear
commercial and technological risks within an appropriate regulatory framework.
The National Electricity Market (NEM) enables the flow of electricity from
generators to the consumer, acting as a wholesale exchange for the trading of
electricity between generators and bulk buyers. The generators compete to sell their
power into the NEM where retailers can buy it in bulk and then on-sell this power to
customers at retail rates.
The electricity distributors own and manage the network of ‘poles and wires’ that
takes electricity to the consumer. In Victoria, distribution is a ‘natural monopoly’, as
each distributor is responsible for one geographic zone. Due to this, an independent
regulator determines the aggregate charges the distributors can recover from the
retailers, who are not restricted by geographic
zones.
(Source: Figure 1A, Victorian Auditor-General’s Report, Towards a ‘smart grid’ – the roll-out of
Advanced Metering Infrastructure 2009)
39
Key market characteristics
I. Recent energy market reform
a. Victoria has the second highest peak load (in percentage terms) of all the
Australian States (only South Australia has a more peaky load) caused by
factors such as large businesses and industry having peak loads at coincident
times, and the increasing penetration and use of air conditioning in homes.
b. Domestic electricity accounts for approximately 26% (12,638 GWh) of the
state’s total annual electricity consumption.
c. Approximately 70% of households have air conditioning.
40
10% retail services
5% retail margins
41
Victorian Government AMI Policy
All residential and small business electricity consumers across Victoria have access
to the benefits of smart meters and the full capabilities that AMI enable.
I. Consumer benefits: Increase options for consumers to better manage their energy
use and understand greenhouse emissions;
II. Energy Market benefits: Encourage new and innovative products and prices,
enable improvements to consumer service, competition and wholesale trading;
III. Distributor benefits: Deliver operational efficiencies, improve network
management and utilization, defer augmentations and optimize investment.
Since the AMI project began in 2006 the government, in conjunction with industry
and regulatory stakeholders, has:
I. established enabling legislation
II. formulated cost recovery methods
III. set a project schedule
IV. developed specifications and service level requirements
V. supervised technology trials
VI. confirmed its commitment to the AMI roll-out.
The current schedule for rolling out smart meters to Victorian households and small
businesses is presented in table 2 below.
42
data collected remotely, the government gained a waiver from these rules, which is
applicable for a period covering the project implementation timeframe.
In August 2006, the Parliament passed an amendment to the Electricity Industry
Act that gave government the authority to make ‘Orders-in-Council’ (OIC)—which
are enforceable orders by the executive branch of government—to establish a range of
requirements for the deployment of AMI.
In August 2007 the government issued an OIC, setting up the initial regulatory
framework for cost recovery and installation targets for distributors. This OIC was
subsequently amended in November 2008.
The OIC also establishes a regulated cost recovery framework to provide certainty
for electricity distributors to commit to AMI deployment expenditure through to
December 2013.
Orders in Council
The Victorian Government announced the rollout of AMI for all customers
consuming less than 160MWh per annum in 2006. The Government subsequently
decided that electricity distributors would be given an exclusive mandate to roll out
the meters.
The regulatory arrangements relating to the rollout are set out in an August 2007
OIC made under sections 15A and 46D of the Electricity Industry Act 2000, and an
amending order that mandate the initial minimum specifications for functionality,
performance and service levels of the smart meters made on November 2008.
The OIC also establishes a regulated cost recovery framework to provide certainty
for electricity distributors to commit to AMI deployment expenditure through to
December 2013.
In summary, the Orders in Council:
I. establish a regulated cost recovery framework to provide certainty for electricity
distributors to commit to AMI deployment expenditure through to December
2013
II. mandate the initial minimum specifications for functionality, performance and
service levels of the smart meters; and
III. specify meter installation targets for distributors.
43
program scope and prudence by the AER.
The regulatory cost recovery mechanism is essentially ’expenditure orientated’
based on prudent and competitive procurement practice. This is in contrast to a
“forecast orientated” approach, whereby distributors benefit from spending less than
forecast through improved and more efficient practices under an incentive based
regulation approach.
The AMI rollout was around 40% complete at the end of February 2012, with
around 1 million meters installed, many of these already being remotely read. The
rollout is expected to be complete by the end of 2013.
3.2.2 Finding
44
(Source: Figure 4.1, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
Figure 3.3 Calculating the true incremental costs of the AMI Program
(Source: Figure 4.2, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
Figure 3.4 Calculating the costs of the AMI Program for comparison to previous
analyses
45
AMI Program costs from 2016-28, we have only included those costs we consider to
be the efficient costs of the AMI Program.
Deloitte‘s approach to testing the prudency of the distributors‘ proposed budget
expenditure relied on internal benchmarking of distributor costs against each other,
and international benchmarking of broad capex and opex cost categories on a per
customer basis. Drawing on a significant bank of international smart meter rollout
experience, we make the following observations about the distributors’ proposed
budgets for 2012-15, as set out in table 3.2. The table provides the estimated impact
that not approving the distributors’ proposed costs would have on our estimate of total
AMI Program costs over 2012-15.
46
Table 3.2 Assessment of the prudency of proposed costs over 2012-15
Estimated impact
on our total AMI
Cost category Comments
Program costs over
2012-15 ($,2011)
Program One distributor (SP AusNet) proposed program $0 (these were
Management management costs of over 40% higher than the adjusted within
other distributors in 2012-13. Also, all our estimate of the
distributors proposed significant program total costs of
management costs for 2014 and 2015 (CitiPower the AMI Program)
and Powercor). It is our view that these costs are
unnecessary.
IT capex - Two distributors (CitiPower and Powercor) $4.9 million
Connection proposed CPM costs significantly above the
Point other distributors‘ costs over 2009-15.
Management However, the majority of the costs were
(CPM) approved for 2009-11 and are therefore sunk.
Recommend that further proposed CPM costs
for 2012-15 be rejected.
IT capex – One distributor (SP AusNet) has proposed $3.8 million
Network significantly higher NMS costs than the other
Management distributors over 2009-15. Again, most of this
System (NMS) difference was approved over 2009-11.
Recommend that further proposed NMS costs
for 2012-15 be rejected.
Ongoing opex As discussed in section 4.4.3.3 above, the $33.2 million
distributors‘ metering operating costs for 2015
are approximately 21% higher than international
benchmarks.
(Source: Table 4.3, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
47
latter decision incorporates metering costs over 2006-08).
Historical cost data on meter supply capex and meter reading were sourced from
these decisions. Both accumulation meter replacement and manual meter reading
costs were escalated by the projected growth in meter numbers over 2008-28.
Table 3.3 presents our estimates of the avoided costs resulting from the AMI Program,
as compared to the previous analyses.
Table 3.3 Avoided costs resulting from the AMI Program (millions, NPV at 2008)
(Source: Table 4.6, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
48
Table 3.4 Total AMI Program benefits (millions, NPV at 2008)
Oakley
Benefit category Futura Deloitte
Greenwood
Avoided costs resulting from
855 855 802
AMI Program
Benefits derived from
efficiencies in network 1 029 956 587
operations
Benefits generated from
innovative tariffs and demand 413 498 490
management
Other smaller benefits 343 280 151
Total 2 640 2 588 2 030
(Source: Table 4.20, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
The figure below presents benefits over time. The key benefits derived from
efficiencies in network operations and innovative tariffs start from 2014 (after the
smart meter rollout is completed) and ramp up significantly over the next 14 years
49
(Source: Figure 4.10, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
Figure 3.5 Estimated value of Total AMI Program benefits over 2008-28
Figure 3.6 outlines the benefits according to how they are to be realised by customers.
50
(Source: Figure 4.11, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
51
(Source: Figure 4.12, Deloitte, Department of Treasury and Finance Advanced metering infrastructure
cost benefit analysis Final report 2011)
3.2.3 Problems
2. Billing Errors
The introduction of AMI technology has led to a surge in billing errors being
reported. Errors reported by the media include overbilling due to what are believed to
be serious systemic issues, bills soaring by many hundreds or even thousands of
dollars due to faults, and moderate increases which are being blamed on either
previous underestimation by analogue meters, or the ability of smart meters to detect
wider parameters of electrical usage.
52
3. Additional costs being imposed on households without any apparent benefit
4. Cost blow-outs
53
into the project now showing a cost of $2.3 billion. What will the final bill be for
consumers?
5. Privacy concerns
It is reported that collected data, revealing consumer usage of electricity over each
30 minute interval, is to be on-sold for research purposes. This is of concern to a
number of people as they believe this information should remain confidential. Other
areas of concern centre on questions regarding the vulnerability of radiofrequencies
carrying usage data to interception. DPI engaged Lockstep Consulting to undertake a
Privacy Impact Assessment of AMI last year.
Lockstep’s report largely sidestepped technical questions regarding the
vulnerability of radiofrequencies to interception, relying on the fact that all meter to
electricity distributors’ communications and all HAN traffic is encrypted.
6. Fire risk
The proficiency of installers is only one part of the safety equation. There are also
concerns that the high frequencies transmitted by smart meters may couple on to
household wiring, given the close proximity to conductive wiring. In a paper that
household wiring is simply not designed to carry the high frequency harmonics
generated by ‘very short, very high intensity wireless emissions’.
The government has not to-date commissioned testing of this possibility. The
Metropolitan Fire Brigade announced in November that it was examining all fires at
premises that had a smart meter installed, but findings from this have not yet been
released.
7. Health concerns
DPI state in their Health fact sheet that ‘health authorities around the world,
including ARPANSA and the World Health Organization, have examined the
scientific evidence regarding possible health effects and, using prescribed exposure
limits, concluded that the weight of evidence does not demonstrate the existence of
health effects’.
The World Health Organization on 31st May of 2011, pointing out that the evidence
of the existence of health effects is still accumulating, classified ‘radiofrequency
electromagnetic fields (EMFs) as possibly carcinogenic to humans, based on an
increased risk for glioma, a malignant type of brain cancer, associated with wireless
phone use’ (IARC, 2011). These frequencies are in the same bandwidth as that
employed by smart meters.
54
8. No ‘opt-out’ provision available to customers
3.2.4 Lesson
1. Economic merits
The cost-benefit study behind the AMI decision was flawed and failed to offer a
comprehensive view of the economic case for the project. There are significant
unexplained discrepancies between the industry’s economic estimates and the studies
done in Victoria and at the national level. These discrepancies suggest a high degree
of uncertainty about the economic case for the project.
2. Implementation risks
The AMI project has significant implementation risks that have been
underestimated in advice to government. These risks, which relate to technology and
relationships with national systems and processes, have started to materialise and are
likely to erode the projected net benefits.
The advice to government that led to the AMI decision scarcely considered project
risks. The risk management approach was to rely on the electricity industry to address
and bear technology risks. However, the regulatory regime does not give the industry
enough incentive to manage risks and associated costs that consumers are likely to
pay. The project risks are therefore very likely to directly affect consumer prices.
The technology risks were underestimated when the government was recommended to
commit to the project. Sufficient resources were not allocated to manage equipment
trials. The trials did not offer reasonable assurance that the proposed technologies
were viable. However, DPI persisted in advising government to proceed.
The department’s lack of adequate risk management comes from its belief that
industry is responsible for managing technology risks. However, given the extent to
which the department promoted the project, the nature of the regulatory intervention,
55
and the implications for consumers, the department is accountable for effectively
managing risks that have the potential to undermine the economic case.
3. Consumer implications
3.3 Ireland
3.3.1 Introduction
The Commission for Energy Regulation (‘the CER’) is the independent body
responsible for overseeing the regulation of Ireland's electricity and gas sectors. The
CER was initially established and granted regulatory powers over the electricity
market under the Electricity Regulation Act 1999. The enactment of the Gas (Interim)
(Regulation) Act 2002 expanded the CER’s jurisdiction to include regulation of the
natural gas market, while the Energy (Miscellaneous Provisions) Act 2006 granted the
CER powers to regulate electrical contractors with respect to safety, to regulate
natural gas undertakings involved in the transmission, distribution, storage, supply
and shipping of gas and to regulate natural gas installers with respect to safety. The
Electricity Regulation Amendment (SEM) Act 2007 outlined the CER’s functions in
relation to the Single Electricity Market (SEM) for the island of Ireland. This market
is regulated by the CER and the Northern Ireland Authority for Utility Regulation
(NIAUR). The CER is working to ensure that consumers benefit from regulation and
the introduction of competition in the energy sector.
EU Environment
I. EU Legislation
The 3rd Package contains provisions regarding intelligent metering systems, with
the aim of better informing customers of their consumption and helping to increase
56
awareness of energy consumption. The implementation of those metering systems
may be subject to an economic assessment of all the long-term costs and benefits to
the market and the individual consumer or of which form of intelligent metering is
economically reasonable and cost-effective and which timeframe is feasible for their
installation.
The general principle is that consumers must have access to their consumption data.
National Regulatory Authorities (NRAs) must ensure access to customer consumption
data, and the existence of a nationwide harmonized format for consumption data and a
process for suppliers and consumers to access the data must be defined.
Intelligent metering systems are promoted twice in the Directives: first, with the aim
to promote energy efficiency and demand side management measures; second, with
the aim to ensure active participation of consumers in the market. Different provisions
apply for electricity and for gas. There are also a number of EU Interpretive Notes
which cover smart metering published on these directives.
“Appropriate information shall be made available with the bill to provide final
customers with a comprehensive account of energy costs. Billing on the basis of
actual energy consumption shall be performed frequently enough to enable
customers to regulate their own energy consumption”.
II. EU Initiatives
57
On February 8, 2011, ERGEG (European Regulators’ Group for Electricity and
Gas) published its final Guidelines of Good Practice (GGP) on Regulatory
Aspects of Smart Metering for Electricity and Gas (E10-RMF-23-03)12. These
final recommendations aim to provide guidance regarding the European
Commission’s 3rd Energy Package provisions on the installation of intelligent
metering systems for electricity and gas, focusing on customer services, roll-out of
smart meters, cost benefit analysis and data security and integrity.
European Standards organisations are progressing Mandate M/44113 for the
development of an open architecture for utility meters involving communication
protocols and functionalities enabling interoperability. The Mandate has the
general objective to highlight or to harmonise European standards that will enable
Electricity Customer Behavior Trials (CBT) Findings Report (CER/11/080a)
Introduction interoperability of utility meters (water, gas, electricity, heat). This
can then improve the means by which customers’ awareness of actual
consumption can be raised in order to allow timely adaptation to their demands.
According to Mandate M/441, the implementation of this provision requires the
definition of new functionalities for smart meters – in addition to those in the
Measuring Instruments Directive (MID) and as stated by the European
Commission in the Mandate M/441.
The Open Meter Project began in January 2009 with the main objective to specify
a comprehensive set of open and public standards for AMI, supporting electricity,
gas, water and heat metering. This project is due to conclude in June 2011.
In January 2010 a Task Force on Smart Grids was launched whose mission is to
advice the European Commission on policy and regulatory directions at European
level and to coordinate the first steps towards the implementation of smart grids
under the provision of the 3rd Package. The initial duration of the Task Force is
20 months to May 2011.
The status of smart metering for electricity and gas in Europe is diverse and
changing at a rapid pace.
The last publicly available official report on the status of each economy is the
ERGEG Summary of Member State experiences on cost benefit analysis (‘CBA’) of
smart meters published February 2, 2011, but this document focuses on smart
metering cost benefit analysis development rather than specific meter rollout status.
Table 3.5 below is an excerpt from this report and indicates that, out of the 24
member states that responded to the ERGEG survey, as of 1st January 2011 eleven
had completed an electricity CBA & six had completed a gas CBA.
58
Table 3.5 Status of Smart Metering CBA Development in EU Member States
Status of CBA in CEER economies Electricity Gas
Economies have conducted a CBA 111 26
Positive result of CBA 73 54
Economies plan (or ongoing) to conduct a 125 146
CBA (in some cases for the 2nd time - France,
Hungary, Poland, Portugal)
Economies do not plan a CBA 27 58
Economies with no CBA, but no longer 39 0
relevant (yes/no of roll-out already decided)
1: Austria, Denmark, France, Hungary, the Netherlands, Norway, Poland, Portugal, Slovenia,
Sweden, United Kingdom
2: Austria, France, Hungary, Italy, the Netherlands, United Kingdom
3: Austria, France, the Netherlands, Norway, Poland, Portugal, United Kingdom (Poland - study
was TSO, not gov't authority. In Sweden, although result was negative, roll-out for electricity
proceeded.)
4: Austria, , France, the Netherlands, Italy, United Kingdom
5: Belgium, Czech Republic, Germany, France, Greece, Hungary, Ireland, Luxembourg, Latvia,
Poland, Portugal, Romania (Belgium - each region conducting its own, no federal one
planned)(Portugal – to be decided by gov’t)
6: Belgium, Czech Republic, Germany, Spain, Finland, Greece, Hungary, Ireland, Latvia,
Luxembourg, Lithuania, Portugal, Slovenia, Sweden (Portugal – to be decided by gov’t)
7: Lithuania, Slovak Republic
8: Denmark, Norway, Poland, Romania, Slovak Republic (Norway has no gas)
9: Spain, Finland, Italy,
(Source: Page 2, ERGEG Summary of Member State experiences on cost benefit analysis (CBA) of
smart meters published February 2, 2011)
The ERGEG Status review on regulatory aspects of smart metering report,
published October 2009 is still the last publicly available official report on the status
of each economy regarding trials and rollouts of smart metering. Because of the fast
pace of development in the area of smart metering it should be noted that the national
situations which are reflected in the status review may no longer provide a complete
and accurate picture.
Generally in electricity only two economies have undertaken a large scale meter
installation programme for customers - these early adopters are Italy and Sweden
with full roll-outs. In addition, some other economies have decided to undertake a
large scale rollout of smart meters, such as Britain which mandated a national
59
roll-out of smart electricity and gas meters. Other economies are considering
roll-out plans with some undertaking smart metering trials to inform their
decisions.
In gas, there are fewer uptakes of smart meters, with Italy and Britain having
planned roll-outs, while a small number of economies are discussing the
possibility.
The ERGEG Status review on regulatory aspects of smart metering report also
found that the most important policy objectives for supporting and encouraging a
roll-out of smart meters in both electricity and gas are energy efficiency, peak load
management and more frequent meter readings.
Item Content
Structure of power sources Fossil fuel 70.5% ( coal,
gas, fuel oil ) , nuclear
0%, hydro 3.8%, other
renewables 25.7%
Number of DSO(2010)b 1
Total residential customers(2010)b 2 millions
Average electricity consumption of each residential 4,600 kWh
customer in 2010b
Percentage of electricity meters installation of total 96%
residential customers in 2010c
Percentage of residential electricity consumption vs. total -
electricity consumption in 2009a
Notes: Other renewables include solar power, wind power, geothermal, burnable renewables and
waste generation (fired wood, waste wood and other solid waste, industrial and commercial waste,
biogas and biomass etc.).
(Source: a、IEA Electricity Information 2010 (2010);b、Berg Insight (2010/07);c、ABS Energy
Research (2009))
60
In 2010, Thermal power generation ratio has reached 70.5% that is the main
electricity resource. Renewable energy ratio in total electricity generation reached
25.7% due to wind power promoted by government policy. Average electricity
consumption of each residential customer reached 4,600 kWh/per year.
The National Smart Metering Plan is a key Government priority in the context of
enabling the development of a Smart Grid, facilitating more efficient use of energy
and underpinning smart and sustainable economic growth.
The importance of Smart Metering within the Government’s energy policy, and
indeed within its wider economic strategy, reflects the fact that, at EU level, Smart
Metering is seen as a critical tool in managing energy demand in the interests of
consumers and businesses.
On December 22, 2009, the Energy Services Directive (Directive 2006/32/EC) was
transposed into Irish law under the European Communities (Energy End Use
Efficiency and Energy Services) Regulations 2009, Statutory Instrument No. 542 of
2009. These Regulations also amend the Electricity Regulation Act 1999 to allow the
Commission for Energy Regulation to place requirements on energy undertakings in
relation to informative billing.
Provide bills to its final customers, based on actual energy use, at such frequency as
may be specified by the Commission to enable those customers to regulate their own
energy consumption in a timely manner,...”
In May 2009 the first National Energy Efficiency Action Plan (NEEAP) was
adopted in line with EU requirements. The first NEEAP set out the key targets to met
in order to achieve our 2020 commitments, including Action 33:
“We will encourage more energy efficient behaviour by householders through the
introduction of smart meters”.
The second NEEAP, due to be published in June 2011, will reiterate the importance
of smart metering as a key tool for realizing long term energy demand management
objectives.
In March 2007 the CER issued a Demand Side Management and Smart Metering
Consultation Paper (CER/07/038) in which the case for providing domestic and small
61
business customers with time of day electricity prices and smart metering
arrangements was made. This was followed in November 2007 with the publication
by the CER of an information paper, Smart Metering - The Next Step in
Implementation (CER/07/198) which outlined a proposed framework in which the
future scope of smart metering arrangements can be established.
Following on from the conclusions reached in the smart metering information paper
CER/07/198 the CER established the Smart Metering Project Phase 1 in late 2007
with the objective of setting up and running smart metering trials and assessing their
costs and benefits, which will inform decisions relating to the full rollout of an
optimally designed universal National Smart Metering Plan.
In order to draw on the experience and expertise of the electricity and gas market a
Steering Group and a Working Group was established by the CER for the Smart
Metering Project Phase 1. Both groups are chaired by the CER and consist of
representatives from the Department of Communications, Energy and Natural
Resources (DCENR), Sustainable Energy Authority of Ireland (SEAI), the Northern
Ireland Authority for Utility Regulation (NIAUR) and Irish Gas and Electricity
Industry Participants, as figure 3.8.
(Source: Figure3, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering Rollout
in Ireland 2011)
To achieve its objectives the Smart Metering Working Group was divided into four
Work Streams each focusing on separate aspects of the Smart Metering Project Phase
1:
62
Networks: Technical design and rollout of Smart Metering infrastructure.
Lead: ESB Networks (electricity) and Bord Gáis Networks (gas).
Customer Behaviour: Mainly focusing on the design and implementation of all
aspects of the customer behavioral trials, including participant selection,
communications and analysis of results.
Lead: Sustainable Energy Authority of Ireland (SEAI).
Tariffs: Mainly focusing on design of Tariffs (Time of Use) and development of a
Prepayment Market Model.
Lead: Electric Ireland.
Billing / Data: Mainly focusing on data flows from the Smart Metering
infrastructure to Suppliers for customer behavior trial billing options.
Lead: Bord Gáis Energy Supply.
The CER was responsible for undertaking a CBA, which is published alongside the
CBT report, and worked with the Economic and Social Research Institute (ESRI) in
this regard. As part of this work, the CER identified all information requirements for a
CBA, the parties responsible for providing such information and coordinated the
transfer of the required information to the ESRI for their modelling. The CER also
arranged for an independent audit of the supplier and network operator cost and
benefits included in the CBA, which was conducted by Frontier Economies. The
Governance Structure is as below:
(Source: Figure 4, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering
Rollout in Ireland 2011)
63
IV. The key milestone of smart metering project progress
The key deliverables of the Smart Metering Project Phase 1 are depicted below:
(Source: Figure 5, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering
Rollout in Ireland 2011)
Figure 3.10 Smart Metering Project Phase 1 –High level Work Breakdown Structure
Overall, project progress has been very positive with all key milestones having
been achieved. The main highlights to date have been the:
Completion of the electricity technology trials in September 2010, the detailed
report of which is published alongside this CBA report.
Completion of the electricity customer behaviour trials (CBT) for residential and
SME customers in December 2010 and completion of associated analysis and
reporting in April 2011, the detailed report of which is published alongside this
CBA report.
Completion of the ‘smart prepayment’ trial in February 2011, the findings of
which are included in the CBT report.
Initiation of the gas customer behavior trials (CBT) for residential and SME
customers which will complete in May 2011. Associated analysis and reporting
is due to be completed by September 2011.
Completion of the electricity cost-benefit analysis in April 2011. An addendum
to the CBA for gas is due to be completed by September 2011.
64
3.3.2 Finding
Introduction
The National Smart Metering Plan was managed by the CER and consisted of
representatives from the Department of Communications, Energy and Natural
Resources (DCENR), Sustainable Energy Authority of Ireland (SEAI), the Northern
Ireland Authority for Utility Regulation (NIAUR) and Irish Gas and Electricity
Industry Participants. There were three distinct strands to the work; technology trials,
customer behaviour trials and a cost-benefit analysis for the rollout of smart meters.
The Irish CBT is one of the largest and most statistically robust smart metering
behavioural trials conducted internationally to date and thus provides a wealth of
insightful information on the impact of smart metering enabled initiatives on
electricity consumers.
The statistical evidence from the Residential Customer Behaviour Trial is that the
deployment of Time of Use tariffs in combination with other Demand Side
Management stimuli results in a change in energy consumption. Specifically, the
residential trial participants achieved reductions in electricity consumption, both
overall and at times of peak usage.
The CER has worked with industry stakeholders to produce a detailed cost-benefit
analysis (CBA) on a number of options for the national rollout of smart meters in the
Irish electricity market. This CBA delivers a robust economic assessment of all the
long-term costs and benefits to the market and the individual consumer (residential
and SME) of a national electricity smart metering rollout. The analysis indicates that
the rollout of smart metering has the potential to provide a positive net benefit to the
Irish electricity market and consumers. The publication of this report is a major
milestone in the CER’s Smart Metering project, and a key deliverable in the
completion of Phase 1. The findings from the CBA will provide a rich source of
information which will be used to inform energy policy decisions in Ireland relating
to smart metering enabled initiatives such as time of use tariffs, more detailed and
frequent billing, in-home displays and prepayment metering.
The Customer Behaviour Trial included residential consumers and small and
medium enterprises (SMEs). It was managed by the Commission for Energy
Regulation in Ireland with support from the Department of Communications, Energy
& Natural Resources, the Sustainable Energy Authority of Ireland, (formerly
65
Sustainable Energy Ireland), Electric Ireland (formerly ESB Customer Supply), Bord
Gáis Energy, ESB Independent Energy (now part of Electric Ireland) and ESB
Networks.
The overall objective of the Customer Behaviour Trial was to ascertain the
potential for smart metering technology, when combined with time of use tariffs and
different demand side management (‘DSM’) stimuli, to effect measurable change in
consumer behaviour in terms of reductions in peak demand and overall electricity use.
The Residential Customer Behaviour Trial included the additional objective of
seeking to identify a “Tipping Point” that is a point at which the price of electricity
will significantly change usage.
The Benchmark period – 1st July to 31st December 2009. All meters were
installed prior to the start of the benchmark period. Data was collected on a
half-hourly basis from meters during this period in order to establish a
benchmark level of use for participants.
Also during the Benchmark, participants were allocated to either a test or control
group, and were advised their bills would be issued on a calendar month basis
(“calendarised”). These communications issued towards the end of the Benchmark
period so as to minimise any impact such communications might cause. A pre-trial
survey was also conducted in the Benchmark period.
The Test period – 1st January to 31st December 2010. During the test period
participants were in either a test group (i.e., each group tested a different Time of
Use (ToU) tariff and selected Demand Side Management (DSM) stimuli) or the
control group (billed on their existing flat rate, with no DSM stimuli).
Participants in the test groups received a bill, combined with an energy usage
statement. Some of the groups also tested an electricity monitor or an overall
load reduction incentive.
At the end of the benchmark period participants in the Residential and SME Trials
were divided into test and control groups. The test groups were asked to trial different
time of use tariffs and DSM stimuli. The control group was billed on their normal
electricity supplier (Electric Ireland) tariff and saw no changes to their bill. They
received none of the DSM stimuli and were requested to continue using their
electricity as normal.
66
Design of the Time of Use Tariffs
Time of use tariffs were trialled during the Customer Behaviour Trial. A weekend
tariff was also included for Residential participants. The following principles were
used in the design of the ToU tariffs to ensure that the key objectives of cost neutrality
and cost reflectivity were achieved:
The time of use tariff would be neutral in comparison with the standard Electric
Ireland tariff to ensure that the “average” participant who did not alter their
electricity consumption pattern was not penalized financially.
The base ToU tariff would reflect the underlying cost of energy transmission,
distribution, generation and supply as per standard tariffs.
The time-of-use structure (time bands) would be based on system demand peaks.
Tariffs would be based on the cost inputs used in the 2009/10 regulated tariffs.
Unit
Rate(excel ,VAT)
(Source: Figure 2, CER Electricity Smart Metering Customer Behaviour Trials (CBT) Findings Report
2011)
Customer Research
Pre-trial survey of participants in the Trial. Information gained from this survey
provided insights which informed the participant allocation and provided a
benchmark for any subsequent change in behaviour which might be measured
at the end of the Trial.
Non-response survey of those who chose not to respond to the invitation letter
and of those who left the Trial for various reasons before it had ended.
67
Focus groups with non-Trial participants in order to assist in design of the ToU
tariffs, DSM stimuli and some selected communications.
Participants in the Residential pre- and post-trial survey received a thank you
payment of €25 for each survey (credited to their bill in December 2009 and January
2011).
The Prepayment User Trial aimed to conduct a proof of concept pilot to test
whether a Smart Meter could be used as a Prepayment Meter without physical
modification. A key requirement of the Trial was to test real prepayment as opposed
to debt recovery and to test whether the meter could facilitate debits and credits, with
the electronic purse resting with the supplier. It was initially proposed that the Trial
would last six months. This was later extended by a number of months to allow for
additional technical testing.
Once the consumer opted in to the Trial, ESB Networks installed the new smart
meter. This meter returned daily readings similar to the Customer Behaviour Trial.
The daily reads and daily payments were uploaded manually to the system and the
account balance was calculated daily.
The daily balance was made available to participants by phone and by text message.
The balance also incorporated any arrangement due for outstanding payment of
arrears.
Participants could make payments to Electric Ireland through all the existing
payment channels i.e., on-line and billpay.ie, at AIB or Bank of Ireland, by Laser card
or an Ulster Bank visa debit card, through the National Contact Centre and at all
Paypoint, Payzone, Postpoint and An Post outlets.
68
While smart meter data was available, the reporting of potential reductions in
overall or peak usage is not appropriate due to the relatively small number of
organisations included. Organisations with multiple sites having at least two and, on
occasion, three types of stakeholders were included within the research.
The research included up to three in-depth interviews of each stakeholder (one prior
to the start of the Test period, potentially an additional one during the Test period and
a final interview at the completion of the Trial).
Participants were provided with energy usage statements which provided additional
information on time of use data. Participants with office internet connectivity also had
access to an on-line system providing further usage information. In the research
conducted during or after the completion of the Trial, the emphasis was on
determining the degree to which processes and behaviours related to electricity usage
were impacted by the stimuli.
Recruitment of Participants
In order to ensure that the outcome of the Trial would be robust and representative of
the national population, the recruitment process was phased. After each phase the
respondents who opted in were profiled to confirm that they representative of the
national profile. Once recruitment was completed, the set of consumers who had
accepted was compared to the set of those who had not (captured through a
non-response survey) in order to check and confirm for representivity.
Participant selection and recruitment followed a voluntary “opt-in” model using a tear
off slip and achieved an average response rate of 30%.
Time of use tariffs and demand side management stimuli were specifically developed
for use in the Customer Behaviour Trial. These may be summarized as follows:
Four specific time of use tariffs A, B, C and D offering different unit prices for
the night time, day time and peak times, in combination with;
69
。 bi-monthly electricity bill with detailed energy statement
。 electricity monitor
A weekend tariff
Supporting information
Four different time of use tariffs were developed for the Customer Behaviour Trial.
A weekend tariff was also included. These may be summarized as in Table 3.9 and
3.10.
70
Table 3.9 Residential Time-of-Use tariffs 1st January to 31st December 2010
(Source: Table 2, CER Electricity Smart Metering Customer Behaviour Trials (CBT) Findings Report
2011)
Throughout the Trial all participants testing time-of-use tariffs were guaranteed that
they would not pay more for their electricity than if they had been on the normal
Electric Ireland tariff (14.1c per unit ex VAT). Accordingly, all participants received
a balancing credit at the end of the benchmark period and in January 2011. The small
number of individuals who incurred costs above this average were recompensed on a
case by case basis.
71
Table 3.11 Residential Balancing credits as of 1st January 2010
The deployment of ToU tariffs and DSM stimuli are found to reduce overall
electricity usage by 2.5% and peak usage by 8.8%;
The combination of bi-monthly bill, energy usage statement and electricity
monitor is found to be more effective than other DSM stimuli in reducing peak
usage with a peak shift of 11.3%;
Overall energy reduction is linked with the level of usage: Households with
higher consumption tended to deliver greater reductions in usage;
Analysis of the load distribution suggests shifting of load from peak to the
post-peak period and in general to night usage from peak;
Of the tariff groups tested, no single one in combination with DSM stimuli
stands out as being more effective than the others;
The peak and overall load reductions detected for all the stimuli tested proved to
be statistically significant with the exception of the overall load reduction
detected for the bi-monthly bill and detailed energy statement stimulus, although
the peak load reduction for this stimulus was statistically significant;
The data from the Trial provides no evidence of a tipping point, with demand for
peak usage estimated as being highly inelastic relative to price.
Participants adapted usage to realise the potentially positive impact of the tariffs
on their bills. 82% of participants made some change to the way they use
electricity due to the Trial with 74% stating major changes were made by their
households;
Simple information can also be effective: The fridge magnet and stickers
achieved 80% recall with 75% finding the magnet useful and 63% finding the
72
sticker useful;
The electricity monitor was deemed to be effective as a support to those
achieving peak reduction (91% rated it as an important support) and shifting to
night rates (87% deemed it an important support).
Barriers to peak reduction relate to the difficulty of linking behavior change to
bill reduction. These perceptions may have contributed to the current recorded
reduction. This may be hard to address due to exaggerated expectations of
savings and similar exaggerated expectations of consequences if reduction is not
achieved;
Barriers to shifting to night usage relate to safety and convenience.
The OLR incentive was impacted by a low recall rate (58%). However, the
scores for communications, reasonableness of the target and effectiveness of the
OLR incentive in motivating change were all very good.
The detected benefits of the Trial are focused on behaviour changes in response
to the price signals and DSM stimuli applied. No secondary benefits were
identified in increased awareness of general energy efficiency or investment in
energy efficiency enhancements for the home;
The Trial succeeded in making participants more aware of energy usage (54%
agreed) which is in keeping with the reduction in usage recorded. Only 18%
stated that there had been no impact on the way their household uses electricity;
(Source: Figure 3, CER Electricity Smart Metering Customer Behaviour Trials (CBT) Findings Report
2011)
73
Households headed by individuals with greater educational achievement or
social grade achieved higher levels of reduction than those with lower levels.
This was in part related to the typically higher level of usage associated with
these households. Therefore, the impact of education or social grade on the
ability to gain benefit from the tariffs is limited
The impact of the time of use tariffs on recipients of FEA (Free Electricity
Allowance) shows that these individuals exhibited the same level of change as
other households and therefore do not appear to be disadvantaged over other
groups;
Fuel poor households (which lack financial means to adequately heat their homes)
also benefit from the deployment of time of use tariffs.
The Trial focused on commercial organizations with a single site and reasonable
payment history over the previous 12 months. The organizations with multiple sites
were included within the separate multi-site study. Finally, participants were drawn
from the customer bases of Electric Ireland and Bord Gáis Energy Supply.
Recruitment was completed in a similar manner to the residential trial with an
invitation letter which was then followed up by a phone call.
Time of use tariffs and demand side management stimuli were specifically
developed for use in the Customer Behaviour Trial. These may be summarised as
follows:
Time of use tariffs offering different unit prices for the night time, day time and
peak times, in combination with;
74
。 monthly electricity bill with detailed energy statement
。 electricity monitor
At the end of the benchmark period participants were allocated to test and control
groups as in table 8:
75
Time of Use Tariffs
Time of use tariffs were developed for the SME Behaviour Trial. Electric Ireland
tested two different tariffs with two groups, Tariff A and Tariff B. Tariff B had a
slightly higher unit charge during Day and Peak, but was almost half Tariff A for
night use. Bord Gáis Energy continued to price participants on an individual basis and
introduced a customized time of use tariff for each participant. The relativities
developed for the Electric Ireland tariffs were maintained by Bord Gáis Energy in the
development of their tariff. The final tariffs may be summarized as table 3.13:
76
Table 3.14 SME Balancing Credits as at 1st January 2010
the deployment of ToU tariffs and DSM stimuli are found to reduce overall
electricity usage by 0.3% and peak usage by 2.2%, although neither result is
found to be statistically significant;
41% of participants believed that they reduced overall usage with 59% stating
they reduced peak usage. The tariffs were regarded as effective in supporting this
reduction with 71% stating the peak cost forced their business to attempt to
reduce usage at this time.
The main barrier to reduction was the perception that it was not possible to move
the usage to other times. This was stated as a very important reason by 72% of
businesses who stated they did not reduce peak usage and 61% of those who did
not reduce overall usage;
Among the participants who had an overall load reduction the level of reduction
was on average 8.51% with an average peak reduction of 8.33%. Among the
participants who had a peak load reduction the level of overall reduction was on
77
average 5.74% with an average peak reduction of 10.25%.
Among participants who reduced either peak or overall usage, the electricity
monitor was deemed to be effective with 93% of those reducing overall usage
stating it was important and 85% of those reducing peak usage stating it was
important;
The electricity customer behaviour trials are among the largest and most
statistically robust smart metering behavioural trials conducted internationally to
date and thus provide a wealth of insightful information on the impact of smart
metering enabled initiatives on electricity consumers. The CBT looked at the
measureable reduction in customer demand achievable through the use of smart
meters in combination with time of use tariffs and a number of information
stimuli (i.e. detailed billing on a bi-monthly and monthly frequency, in-home
displays, an overall load reduction (OLR) incentive and Web access).
This suite of reports is intended to inform the Commission for Energy Regulation
(CER), the Department of Communications, Energy and Natural Resources (DCENR),
and stakeholders of the possible merits of providing smart electricity meters to
residential and SME customers in Ireland. In addition, the CBA should help cast light
on the relative attractiveness of various design options for implementation of smart
meters and the main sources of risk associated with a rollout. The scope of the three
reports covers all electricity residential consumers and all small-to-medium
enterprises or SMEs (electricity non-profile meter businesses).
78
Approach to the CBA
For the purposes of compiling the CBA, ESB Networks and suppliers were
requested by the CER to provide smart metering related costs and benefits in
accordance with the national smart metering high level design and implementation
assumptions, which had been developed by the CER via the Smart Metering project
industry forums and a public consultation process. The CER reviewed and validated
the submitted costs and benefits, including an audit by a contracted independent third
party.
Some sources of costs and benefits are more amenable to quantification than others,
so the analysis is divided between “quantifiable” and “qualitative” sources of costs
and benefits. To place some structure on the analysis of the quantifiable elements,
costs and benefits are also divided into rough categories by source: networks,
suppliers, generation, and consumers (residential and SME). The validated network
and supplier related costs and benefits were then inputted into a CBA model
developed by the Economic and Social Research Institute (ESRI). Results from the
customer behaviour trials (CER/11/080a) were also inputted into this CBA model in
order to derive the usage-related benefits and to help derive the generation-related
benefits.
The cost-benefit analysis assesses the broad societal costs and benefits of
implementing smart metering rather than the private costs and benefits to any given
subset of affected parties. The CBT Findings Report (CER/11/080a) does illustrate
some distributional effects arising from a move to time of use charging for electricity.
There may also be distributional effects along the value chain, for on the time
required for this analysis such effects have not been modeled. The CER identified 12
high level smart metering national rollout options. The overall attractiveness of each
option is identified for the quantifiable costs and benefits by computing the net
present value (NPV) of the project in 2011, taking into account predicted cash flows
from 2011-2032. However, these results make up only part of the assessment.
Particularly on the benefits side, there are important possible future developments that
might give rise to significant changes in the value of having smart meters in place but
are difficult to quantify at this stage, including facilitation of increased renewable
generation, electric vehicles and ‘smart grids’. These developments are discussed in a
separate section on qualitative benefits and costs.
79
Key Findings of the CBA
The estimated total net present values (NPVs) for the 12 main national electricity
smart metering rollout options analyzed are generally positive, and often
substantially so (see Table 3.15 and Figure 3.12 below):
These positive NPVs remain strong under a range of sensitivity analyses carried
out.
If these results were borne out in an actual deployment of smart metering, the
project would bring about substantial net benefits for Ireland in comparison with
the base case (counterfactual) scenario.
80
(Source: Figure 9, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering
Rollout in Ireland 2011)
Power line carrier (PLC) / Radio frequency (RF) communications shows higher
net benefits than the other technologies examined, although the difference to
PLC / GPRS may depend upon the value of key parameter assumptions.
Informational Stimuli
81
This suggests that one should be cautious in basing decisions about the choice of
stimulus in a rollout on the estimates of quantifiable benefits alone.
(Source: Figure 15, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering
Rollout in Ireland 2011)
Figure 3.13 Summary Comparison of NPVs for information stimuli by ToU A and B
Sensitivity Analyses
Most other sensitivity tests on network cost items showed modest effects,
The project’s viability does not appear to be particularly sensitive to the assumed
discount rate of 4%.
The results of the main sensitivity tests are depicted in Figure 3.13 below.
82
(Source: Figure 14, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering
Rollout in Ireland 2011)
By the end of the CBA period, we estimate CO2 emissions at 100,000- 110,000
Tonnes below baseline each year and annual SO2 emission to be lower by
117-129 Tonnes. Figure 9 below illustrates graphically the total CO2 emissions
reductions by each option.
The value of CO2 emissions is assumed already to be included in electricity
prices, so it is not added into the savings estimates in quantifiable analysis.
83
(Source: Figure 8, CER Cost-Benefit Analysis (CBA) for a National Electricity Smart Metering
Rollout in Ireland 2011)
Figure 3.14 Total CO2 emissions reductions (000 Tonnes) by Options 1-12
Qualitative Benefits
There are a number of potential costs and benefits from a national rollout of
electricity smart metering that are very difficult to put a robust quantifiable
estimate on and therefore they have been excluded from the quantifiable analysis
and are only described qualitatively.
Next Steps
The roll-out of smart meters represents a major national infrastructure project and
the publication of this report is one of the defining milestones in its delivery. Given
the scale of investment required to deliver smart metering, a thorough and robust
analysis is required to substantiate any rollout decision. This CBA, which concludes a
positive net benefit for electricity consumers, will facilitate the further development of
the Smart Metering Project. The next steps for the project are outlined in the Smart
Metering Information Paper 4 (CER/11/080) which accompanies this CBA report.
84
The CER appreciates the significant contribution of all stakeholders that have been
involved in compiling this CBA and the other reports and looks forward to their
ongoing involvement in the next steps for the Smart Metering Project.
II. Victoria
Re-examine the existing governance structure of the AMI project to proactively
identify, assess, own and manage the project’s strategic risks.
Develop, appropriately resource and implement a stakeholder engagement plan
with a particular focus on addressing consumer issues arising from the AMI
project.
Actively engage with the relevant regulator to monitor and oversee the transfer
of expected benefits to consumers.
Commission a program review by the Gateway Unit of the Department of
Treasury and Finance on governance and implementation of the AMI project to
date.
85
Re-assess the economic viability of the AMI project by updating the cost-benefit
analysis to reflect existing and emerging risks as well as the impact of changes to
scope and underlying assumptions.
Use the Department of Treasury and Finance’s business case development
guidelines and other advice to produce an updated cost-benefit analysis.
Obtain assurance from Victoria’s electricity distributors that their candidate
technologies for AMI are capable of achieving the expected functionality and
service specification prior to the further installation of these technologies in
customer premises.
Adopt the Department of Treasury and Finance’s risk management guidelines as
a basis for monitoring and managing the risks that threaten the economic
viability of the AMI project.
III. Ireland
Irish CBT is one of the largest and most statistically robust smart metering
behavioural trials conducted internationally to date and thus provides a wealth of
insightful information on the impact of smart metering enabled initiatives on
electricity consumers. The residential trial participants achieved reductions in
electricity consumption, both overall and at times of peak usage.
The time of use tariff would be neutral in comparison with the standard electric
Ireland tariff to ensure that the ‘’average’’ participant who did not alter their
electricity consumption pattern was not penalized financially.
86
4.0 2011 APEC Workshop on Addressing Challenges in AMI
87
Table 4.1 2011/8/24 agenda
88
Table 4.2 2011/8/25 Agenda
89
Figure 4.1 2011 APEC workshop on addressing challenges in AMI deployment and
smart grids in APEC region speakers
Table 4.3 APEC workshop on addressing challenges in AMI deployment and smart
grids in APEC region minutes
90
date 24th, Aug, 2011 Place Taipei International Convention
Center, Chinese Taipei
Minute
No. Question Respond
Grid system? I can share some experience while we
were proposing the AMI deployment,
as government may host different
opinions against power company.
Since the target of government aimed
at carbon reduction, power company
wanted to maintain the quality of
power supply. In addition, the final
decision of electricity price is
controlled by government, and hence
the motivation of power company to
start AMI deployment is not strong.
Similar situations are expected while
proposing smart grid system, and it is
essential to find out the balance in
between.
4 To all speakers, what is the (1) In the US, few users concern the
acceptance in your economy? accuracy, reliability and contract,
but most users do not care of the
types of meters being used
(2) Power company are considering
value-added services and demand
response, but users concern
power bill and energy efficiency.
(3) The scale of pilot project in
Chinese Taipei is small, hence it
is too early to discuss public
acceptance currently. However,
some might make a fuss while
replacing meters.
(4) Some tension may be caused due
to the influence to their habits,
since they did not aware of the
benefits that new technologies
can bring to them. Therefore,
education is critical, and more
important, it is important to build
up the trust mechanism.
(5) The situation in France is more or
less the same with other
economies. Since unclear power
takes a huge part in france, hence
the price of electricity is cheaper
than other economies. Hence
users concern less about AMI
deployment, so far users are
91
date 24th, Aug, 2011 Place Taipei International Convention
Center, Chinese Taipei
Minute
No. Question Respond
happy with AMI.
(6) Privacy is a major concern in
France, public hearing were taken
place, and we learned from
Brition and Germany to ensure
the security of system and user
privacy.
(7) In Korea, the price of smart meter
is not very expensive, so the
acceptance in public of replacing
old mechanical meters by smart
meteru is high. About the Smart
Grids development in Jeju Island,
about 6000 homes joined the pilot
project and so far they are happy
with the cut down with power
bill. Hence, the acceptance of
AMI and Smart Grid is high.
(8) The development of AMI is fine,
but it is not easy for users to
understand the benefits of AMI.
For example, many of my friend
does not aware of smart meter,
and in this case, it is difficult to
gain public acceptance. From our
viewpoint, utility should offer
enough information for the users
to understand the benefits as well
as the billing as it can cause huge
society effects due to bill raise.
Currently, the cost of AMI is
cover by utility, and both utilities
and users need to be aware of
AMI. The power demand for
home of Japan is about half of the
US, and it can be the adoption of
high efficient home appliance.
5 To Mr.Garibal, what is the ideal The market of power generation,
partnership in between Atos and transmission and distribution is highly
ERDF? controlled by French government, and
EDF takes 95% of the market share,
and the rest of 5 % is shared by other
200 more companies. If consider AMI
as a pure investment, it is hard power
company to pay back.
Back to your question, it is hard to
92
date 24th, Aug, 2011 Place Taipei International Convention
Center, Chinese Taipei
Minute
No. Question Respond
judge the best partnership in between
Atos and ERDF, since EDF is the
biggest customer of Atos. In addition,
EDF control the standards and
schedule of deployment, and Atos is
the execution organization, and hence
we want to enter the market with EDF.
6 To Mr.Seal, can you please give The pre-pay AMI system means that
more details about the pre-pay AMI users can use cash, cheque, credit card
system? and etc. to top up with small amount
of money, and most users are satisfied
with this service.
7 The benefits of AMI relates to the In France, CNI has 10 year experience
purposes, such as usage, time in Time-of-use, they use different
interval, and Time-of-Use. In contracts and refund mechanisms to
California, we are considering AMI control the power consumption. In this
deployment carefully, since different issue, French government is more
aspects need to be evaluated for conservative, they will trial projects in
residential and commercial areas. My different regions to evaluate the results
question is, what are the principles of and collect the response before roll out
smart meter management for for the whole economy.
different areas with different tariff?
8 What are the key issues for the (1) About the standards of
communication standards for AMI power-line and wireless
system? communication in France, there
is not
(2) It is difficult for AMI deployment
to decide the standards first for
products to follow. So our idea
was to use a
9 About the earthquake to hit Japan this This is not an easy question to answer,
year, what actions does the utility take and actually Japan now is short of
in both power supply and demand power supply. Under current situation,
management? some regions are enforced to cut down
the power supply, but it is not a long
run policy. What we consider the most
is to offer enough power to end users
as they need it. One of the possible
solutions is to use smart meter to
control the demand and save energy,
and currently AMI and smart grid are
both under discussion and evaluation.
10 To Brian Seal, as you mentioned 10 It is hard to predict, as there are
multiple facts and one of them is the
deployment projects are currently
combination of various of meters, such
under construction, how will you as water, gas and electricity. Thus, it is
93
date 24th, Aug, 2011 Place Taipei International Convention
Center, Chinese Taipei
Minute
No. Question Respond
project the market size of AMI in very difficult to separate the
contributions from meters.
2012?
For a full system installation, it takes
about 5 years, so the deployment
amount is about 30%.
The replacement by smart meter is not
a one-shot change-up. While we are
promoting the AMI, we will rethink
the market
:
(1) Public Acceptance:
A major concern and challenge of AMI deployment is the public acceptance. For
AMI deployment, not only the available technologies hold the key to success, but also
the incresment of public awareness. As a result, users will understand the system more
and also involve more for fututre system aggregration, and it can be beneficial for
public affair development.
:
(2) Standardization:
:
(3) Privacy and Business Model:
New dervited services and business models are currently under reseach and no
clear conclusion has been made related to the investment and return of revenue for
AMI deployment. However, it is for sure that the services will be based on the power
consumption data of the users, and the following acts and regulations to protect the
privacy of users will be the major public concern for system deployment.
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5.0 Challenges for AMI deployment
Major costs associated with smart metering are the purchasing, installment and
operating costs of the smart meters as well as the investment costs for advanced data
collection and data communication tools. Major benefits typically associated with
smart metering are energy savings due to increased efficiency or sufficiency and due
to load shifting, reduced metering costs, improved security of supply and reduced
non-technical losses. Other indirect benefits of smart metering include consumer
empowerment for knowing the real-time cost associated with energy consumption,
and with consumer choices.
Costs and benefits of smart metering however very much depend on the technical
95
specifications of the smart meters and the smart metering infrastructure rolled-out.
More advanced smart metering systems with a larger range of functionalities could
provide greater benefits and a larger range of benefits, but are also likely to be more
expensive than basic smart metering systems. The technical specifications of a smart
metering infrastructure on the other hand are strongly determined by the policy
objectives pursued with the roll-out of smart metering. While it is possible to give a
rough indication of the costs of different smart meters, it is not meaningful to provide
general numbers of the benefits of smart metering per meter or customer, as these
strongly depend on the individual specifications of the smart meters, the group of
stakeholders concerned, economy or regional specifics and a range of other
assumptions assessed in a cost-benefit analysis.
The costs and benefits arising from a smart metering roll-out also strongly depend
on the local circumstances and the status quo of the electricity system. The potential
of smart metering to contribute to load shifting and energy savings is strongly related
to the types of energy consumption and the consumption patterns. Electricity used for
heating and cooling for example can be shifted easily. However, this will require
automation, which is less likely to be available for household consumers compared to
industrial and larger commercial consumers. With cooling and heating as loads which
are relatively easy to shift, the percentage of load which could be shifted is much
higher in a economy where for instance air-conditioning is widely applied.
The ability to make energy savings also depends on the overall level of per capita
energy consumption. In economies with very high (careless) energy consumption, the
potential to significantly reduce energy consumption might be comparably high.
Likewise, in economies where household budgets are typically very limited and
energy costs are consuming larger shares of the budget, the incentive to realize cost
cuttings, e.g. by energy savings or demand response measures is much stronger. The
latter might be relevant for many Energy Community (EnC) Contracting Parties. As a
result, potential costs and benefits of smart metering can be quite varied in different
contexts and economies.
Most of the costs and some of the benefits related to smart metering can be
estimated before making a roll-out decision. New services and functionalities likely to
arise in the future and provide additional benefits cannot however be properly
estimated before the roll-out has taken place. Manufacturers of products such as
household appliances and the service industry for example will adapt to smart
metering technology and will develop and offer a wide range of specially designed
products and services, e.g. further increasing energy efficiency by intelligent
household control or enhancing consumer welfare with increased comfort.
The costs and benefits of smart metering may be unevenly distributed between the
96
different stakeholders. Clearly costs and benefits directly affect the network operator
or the supplier replacing the old meter with a smart meter and the customer whose old
meter is replaced with a smart meter. But costs and benefits also affect (indirectly)
other market participants, such as other network operators, generators, suppliers or
customers and the society as a whole. Different stakeholders are likely to benefit to
different extents from a deployment of smart metering. Costs might for example only
be borne by one market participant (e.g. the customer), whereas benefits might be
split across a larger number of market participants (network operators, suppliers,
customers etc). Costs might also mostly arise in the short-term, whereas some benefits
of smart metering might only occur in the long-term.
Smart metering is primarily an electricity topic, in particular of course in those
economies where gas plays no or a negligible role in residential energy consumption.
The benefits of an application of smart metering are also generally greater for
electricity than for gas. Benefits from load shifting for example are only applicable to
electricity since fluctuations in electricity production and demand have to be balanced
in much shorter time intervals than for gas, which generally varies at a much slower
pace. Given the nature of gas usage for heating purposes, a load shift from peak to
off-peak times would also make little sense. With regards to savings, the impact on
gas consumption is more limited, as the purposes of electricity usage are manifold
with plenty of individual and independent consumer decisions on whether or not use
electricity on a daily basis, where constant or regular feedback will have the strongest
effect. In our description of potential costs and benefits of smart metering we
therefore focus primarily on smart metering for electricity.
Smart metering has several benefits for network operators. A wide deployment of
smart metering provides a network operator with precise information on the actual
consumption and feed-in at specific sites of its low voltage distribution network,
offering a range of potential savings directly to the network operator. System-wide
benefits arise from optimized distribution operations, improved network reliability
and the contribution of smart metering towards quality of supply, for example by
facilitating the detection of outages and by reducing restoration times.
Potential benefits of smart metering for network operators include improvements in
the security of supply by a faster fault location and power restoration, improved
monitoring of voltage quality, the ability for quick remote disconnection or
reconnection of customers and the ability for remote reduction or restoration of
power.
Smart metering can help network operators to detect and locate faults and power
97
outages more quickly. Reducing the time period between the time the fault occurs and
the time the grid operator‘s control center receives this information (automatically)
via the smart metering communication infrastructure allows the network operator to
immediately dispatch the technicians required to restore the fault. By identifying fault
locations more quickly, the outage time can be reduced. This provides an obvious
benefit to consumers and savings to the distributor from reduced costs by more
accurately dispatching crews. When a regulatory scheme for quality of supply is
applied – linking the actual network reliability (number and duration of outages) to
quality standards and penalties or a quality incentive scheme – network operators can
also benefit from higher revenues following reduced outage duration times.
Smart metering generates real-time, accurate and comprehensive information on the
distribution network (e.g. voltage quality, losses), which allows more accurate
prediction of electricity flows to be used for improved network and maintenance
planning. Detailed information on the current status of the network also provides a
basis for sound investment planning.
Smart metering together with the application of time-of-use tariffs can provide
customers with information on consumption and prices and encourage them to shift
their energy consumption into times when energy prices are at a lower level. Smart
metering can thus reduce the demand at peak times and thereby reduce the maximum
network capacities required to distribute electricity at peak load, which in turn reduces
the need for network investments.
Integrating smart meters into the IT infrastructure of the network operator can also
help to optimize processes and reduce operational costs (process optimization).
Further benefits can also be gained from a multi-utility approach integrating gas,
district heating or drinking water metering.
Smart metering can also have a significant impact on the reduction of commercial
losses (detection of fraud and energy theft). Smart metering allows for an easier
detection of previously unmeasured consumption that resulted from bypassing the
meter. Furthermore, smart metering also provides more accurate information about
the location of losses and theft. Smart meters can also be fitted with anti-tampering
devices alerting the DSO automatically when manipulation of the meter is attempted.
In most economies, the metering function is also provided by the distribution
network operator. The operation and the reading of the meters (metering services)
could also be carried out by the supplier or a separate metering company. Potential
benefits of meter operators may include reduced costs of manual meter reading and
reduced costs through remote disconnection or reconnection. With smart metering,
digital meter data are automatically submitted to the metering operator's data center.
Manual meter readings and manual entering of meter data into data management
98
systems are therefore no longer required. Data can be easily processed and evaluated
and meter-to-bill operations can be significantly improved. Furthermore, not only the
meter reading, but also the disconnection and reconnection of customers can be
handled remotely and (partly) automatically, reducing the need to send out technicians
to customer sites to suspend and resume electricity supply.
Where a large labor force is employed for manual monthly meter readings,
automated meter reading might however have a substantial negative effect on
employment. Also when labor costs are relatively low, benefits from a reduction in
labor costs (operating costs) with smart metering might be lower compared to the high
capital costs resulting from investments in a smart metering infrastructure.
99
metering and more accurate billing or from easier and quicker customer switching
procedures due to real-time metering, allowing customers to change their supplier in
real-time or at very short notice and on any chosen date.
100
The possibility to offer real-time pricing and innovative tariffs, as well as interfaces
between smart metering and household appliances could result in various new types
of energy services being available to customers to help manage consumption (and
costs) and to promote more energy efficient and green energy networks (such as
demand side management, i.e. the direct control of household appliances). Smart
metering can also facilitate pre-payment options which allow customers to pay in
advance and hence to better manage their budgets.
In addition to energy savings, customers may also benefit from more frequent and
detailed meter reading and more accurate invoices reflecting actual consumption.
With smart metering, invoicing is based on real meter data rather than estimated
consumption. Customers would no longer face imposed under/over payments which
might require settling at a later date. This could help to improve customer satisfaction
and reduce the number of customer complaints, compared to traditional metering
when the settlement occurs after several months or a year. It is also possible for a
customer to agree with the respective supplier on how frequently invoicing takes
place and to receive an invoice on demand (e.g. when moving from one home to
another).
Smart metering can also have a strong impact in simplifying customer switching
procedures as smart meters can be easily read at any time on request. Automation and
simplification of data exchange through smart metering should speed up the process
for changing suppliers and simplify the action required from the customer to make the
change. The transparency of individual electricity consumption patterns and costs
provided to the customer by smart metering also allow the customers to make more
informed decisions on the selection of the most convenient supplier, further
facilitating customer switching.
Customers may furthermore benefit from reduced metering and operational costs
through remote meter reading and remote reconnection of customers, if the cost
savings made by the meter operator (or network operator) are passed on to the
customers. Depending on the location of the conventional meters (whether located
outside a building or inside) smart metering may have also the additional benefit that
it requires no more home intrusions by meter readers.
Privacy and security concerns surrounding smart meter technology arise from the
meters’ essential functions, which include (1) Recording near-real time data on
consumer electricity usage; (2) Transmitting this data to the smart grid using a variety
of communications technologies and (3) Receiving communications from the smart
grid, such as real-time energy prices or remote commands that can alter a consumer’s
electricity usage to facilitate demand response.
101
Smart meter hacking is usually conducted for one of two purposes. The owner of
the premises where a smart meter is located might hack the device to alter
transmissions so that use is under-reported and will be billed for accordingly. An
external party, on the other hand, might hack the device’s data transmissions to obtain
information about activities within the premises.
Depending on the type of smart meters, the tariff schemes offered and the market
environment, smart meters can facilitate energy savings, demand response and direct
load control and thereby reduce demand at peak (and off-peak) times, resulting in
lower wholesale prices and reducing the need for investments in generation,
transmission and distribution capacities (avoided costs). With a contribution to
increased energy efficiency and reduced carbon emissions, through reduced
consumption and the facilitated integration of distributed generation, smart metering
can also play a role in mitigating the effects of climate change. A large investment
program, such as deploying a full-scale smart metering infrastructure might also have
a positive impact on economic development and employment.
Regulatory authorities can use smart metering to improve quality of supply
regulation, in terms of reliability and voltage quality, as smart metering provides the
regulator with more precise and detailed statistics on reliability performance (number
and duration of outages).
102
5.2 Key Challenges and Mitigation Strategies
Risk Description Mitigation strategies
1. High cost of Deploying smart meters requires huge The American Reinvestment
deploying capital investment and hence it is crucial and Recovery Act (ARRA)
smart that the utility company is confident of signed into law on February
meters successful implementation. 17, 2009, by President Barack
Obama, and made $3.4 billion
available to utilities for smart
meter implementation.
2. Large scale The deployment of smart meters in such Need to have a good roll-out
deployment a huge volume demands a very highly plan like America start from
of Smart organized system with properly 2005, step by step. April 19,
Meters managed inventory control. If this mass 2012 - The California Public
deployment is required to be carried out Utilities Commission (CPUC)
by a third party vendor, the challenges took action to ensure the
increase as co-ordination and effectiveness of Smart Grid
synchronization between the inherent investments by developing 19
systems can be very complex. metrics that will be used by
Pacific Gas and Electric
Company, Southern
California Edison, and San
Diego Gas & Electric to
report on Smart Grid
deployment, as part of annual
reports to be submitted to the
CPUC. (Source: Decision
Adopting Metrics to Measure
the Smart Grid Deployments
of Pacific Gas And Electric
Company, Southern
California Edison Company
and San Diego Gas &
Electric Company)
Government must authorize
utilities to deploy smart
meters and supervise those
utilities.
103
3. Data There are many concerns related to In 2012, California SDG&E
privacy privacy of consumption data being is joining ‘’Privacy by
raised as Smart Meters are installed at Design’’ code of conduct for
more and more locations. The meters’ all smart meter deployments.
data can be mined to reveal details about The system of rules would
customers’ habits like when they eat, apply to smart meter
how much television they watch and manufacturers, grid
what time they go to sleep. The retention managers, utility billing
and storage of this data make it operations, and other to apply
vulnerable to security breaches as well privacy and encode by default
as government access. all settings.
4. Dynamic As is the case with any large • Some utilities owned
adaptation transformation program, the carefully Smart Meters supporting
and crafted requirements document, which is consumer devices with
flexibility of signed off and approved after much Home Area Network
roll-out plan deliberation, becomes obsolete from the (HAN) or comparable
day the project begins. Dynamic consumer energy
adaption and flexibility of roll-out plan monitoring.
are always a big challenge for massive • Customers with Smart
deployment of AMI. Meters using a utility
administered Internet or
a web-based portal to
access energy usage
information or to enroll
in utility energy
information programs;
5. Cost-Benefit One of the most important challenges for Using California Standard
Analysis making a decision on AMI deployment Practice Manual: Economic
program is to conduct a thorough cost Analysis of Demand-Side
and benefit analysis, based on the Programs and Projects 2001
feasible alternatives. The scope and the for conducting CBA.
items of cost and benefit associated with
AMI are sometimes not easy to be
identified.
6. Healthy and Health and Privacy concerns Allowing consumers choices
privacy of surrounding smart meter technology for not installing AMI, e.g.:
consumers arise from the meters’ essential California’s Public Utility
functions. Commission (CPUC)
104
approved a smart meter
opt-out option for allowing
customers to keep their older
analog meters for a fee.
105
6.0 Conclusions and Recommendations
106
6.2 Guidelines for APEC Economies of Smart Metering Deployment
107
IV. Proper policy for important stakeholders: obligation and the rights of each
stakeholder should be clearly defined, e.g., opt-in vs. opt-out choices of the
consumer for selecting smart meter or conventional analog meter. As
governments are in the process of deciding what should be mandated for all
consumers and what should be left to market mechanism. In fact, the support of a
wide range of stakeholders is critical for the success of the smart metering
program. Stakeholder engagement has therefore been a vital part and will
become increasingly important as the program moves forward. In developing the
pilot AMI project, it is important to consider from the consumer perspective, as
well as the views of industry participants who will take on responsibility for
delivery of the smart metering system. It is advised that various stakeholder
events, workshops and evidence-gathering sessions, or public hearings with all
stakeholders and representative groups, should be held in order to provide
opportunities for communication and mutual understanding.
V. Concerns on privacy and cyber security: MDM including data warehouse
maintenance and accessibility, also data security and network security of the grid,
should also be carefully addressed and dealt with. This is a sensitive issue for the
public and a new challenge that has not been encountered by conventional
electric power systems.
VI. Cost-benefit analysis: there are various perspectives for conducting cost and
benefit analysis. It is important to estimate benefit cost ratio and net present
value from the consumer side, who installs the smart meter or AMI. The
perspective from electric utility or the administrator is equally important.
Particularly from the view point of societal as a whole, policy makers may
ultimately care for.
108
、
6.3.2 Key Considerations from Integration of Smart Grid (scalability、
、integration、
interoperability、 、customer service)
Utility operators need a robust platform that can quickly expand to meet growing
demand across a wide range of applications and provide performance equal to current
dedicated hardware installations. As the utility market grows and changes, and as
long-term demand rises, utility operators must be able to rely on easy scalability for
changing storage, compute, and network requirements
In the past decade, the concerns for energy independence and carbon emissions
have created a need to diversify energy sources of generation away from fossil fuels.
At the same time, electric power customers are seeking ways to reduce energy
consumption as well as become more active in making choices. The evolution toward
the smart grid will greatly depend on integrating the needs of consumers and the
requirements of regulatory bodies while maintaining a utility's own operational
performance objectives.
From government mandates to increasing consumer influence, established energy
supply and demand structures are under pressure to change. The technology
investments driven by security standards, energy efficiency programs, smart meter
mandates, and integration of renewable energy resources are forcing utilities to
improve operations. These same technology investments also open new opportunities
to create business value and revenue when the smart grid infrastructure is flexible,
scalable, and secure. Communications networks are critical to managing
energy-controlling equipment, devices, and applications in the field. The future of the
smart grid requires the network's edge to grow. The smart grid will depend heavily on
the interoperability of converged communications networks that support the seamless
flow of system data across the utilities' business units and business partners.
Communications networks are critical to managing energy-controlling equipment,
devices, and applications in the field. The future of the smart grid requires the
network's edge to grow. The smart grid will depend heavily on the interoperability of
converged communications networks that support the seamless flow of system data
across the utilities' business units and business partners.
109
II. Data access authority: in order to ensure consumers’ interests are protected, the
government should develops a data access and privacy framework to provide
clarity about the ways in which energy consumption data from smart meters can
be accessed, by whom, for which purposes, and the choices that consumers
should have about this. In short, smart meter data can go beyond just capturing
customer behavior in very detailed and expansive ways, and become a key pillar
to support ongoing market research activities by providing valuable insights for
focused research projects.
III. Smart meters would reduce energy company costs by taking away the need to
read meters, and this would mean someone would lose his job. All those meter
reader jobs are gone. What are the savings from those lost jobs is an issue need
to be addressed for further research.
IV. Energy consumers might benefit from the increase in consumption information
available through smart meters by being able to have access to detailed appliance
diagnostics. By identifying individual energy use such diagnostics could help to
identify those appliances where investment in more efficient models would be
economical. Other areas of potential benefits include more refined automation of
heating and hot water controls and the analysis of heating patterns through the
availability of detailed energy consumption data. All these issues are worthy for
directions of future research.
110
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126
Appendix A
127
Questionnaire
Dear participants,
This questionnaire is designed to study the key successful factors of advanced
metering infrastructure (AMI) development in APEC. The information you provided
will help us better understand the effects of challenges of AMI development. There
are five parts in this questionnaire. It would take you about 10 minutes to fill this
questionnaire.
We would be grateful if you would respond to the questions frankly and honestly.
Your response will be kept strictly confidential. Only members of the research team
have access to the information you give.
Thank you very much for your time and cooperation. We greatly appreciate your
help in assisting us with this research.
Yours sincerely,
Chun-Li Lee
Deputy Director
Electricity Division
Bureau of Energy
Ministry of Economic Affairs
Chinese Taipei
128
Please provide the data requested or tick the appropriate box
NO Question Answer
Country:
Basic information :
Name:
1 Country, Name, Phone,
Phone:
e-mail
e-mail:
129
Majority of meters are smart
130
Definition of the roll-out timetable
Definition of the target roll-out units
Organizing the roll-out working group
Definition of minimal technical
What role(s) does the requirements
governments or the
Definition of the level of ROI (return on
regulator play in the
5 investment) expected
roll-out process?
(multiple answers are Developing the privacy policy
allowed) framework
Monitoring and reviewing the roll-out
process
Other (please specify):
Key responsible
6 stakeholder for the roll-out please answer question #6.1 to #6.4
program
Distribution system operator
Electric power company
Energy service company
6.1 Installation
Smart metering system integrator
Customer
Other (please specify):
Distribution system operator
Electric power company
Energy service company
6.2 Maintenance
Smart metering system integrator
Customer
Other (please specify):
131
Distribution system operator
Electric power company
Energy service company
6.3 Meter reading
Smart metering system integrator
Customer
Other (please specify):
Distribution system operator
Electric power company
Energy service company
6.4 Data management
Independent data management company
Customer
Other (please specify):
7 Electricity pricing policy please answer question #7.1 to #7.2
YES (If yes, what kinds of pricing
programs?)
Has your country
Time-of-Use Pricing (TOU)
implemented dynamic
pricing programs before Critical Peak Pricing (CPP)
7.1
smart meter roll-out? Real-Time Pricing (RTP)
(multiple answers are Extreme Day CPP (ED-CPP)
allowed)
Others(please specify):
NO
YES (If yes, what kinds of pricing
programs?)
Time-of-Use Pricing (TOU)
Has your country
developed dynamic pricing Critical Peak Pricing (CPP)
7.2 programs after smart meter Real-Time Pricing (RTP)
roll-out ?(multiple answers Extreme Day CPP (ED-CPP)
are allowed)
Others(please specify):
It is in progress
NO
132
Financial issue
What are the most critical
Technical issue
8 challenges for roll-out of
Customer resistance
smart meters?
Other (please specify):
Part III:Economic Aspect
NO Question Answer
Government
Electric power company
Who pays for the roll-out
9 Distribution system operator(DSO)
of smart meters?
Customer
Others(please specify):
YES (please answer question #10.1 to
Has the government, the #10.4)
regulator or the DSO
It is in progress(please continue to Part
10 conducted a cost & benefit
IV and Part V)
analysis of the roll-out
plan? No(please continue to Part IV and Part
V)
The total estimated cost of million US dollars for the
10.1
smart metering project. year period
The total estimated
million US dollars for the
10.2 benefits of smart metering
year period
project.
Capital cost of meters
Meter installation cost
Meter operation and maintenance cost
Please point out the three Information technology cost
10.3 major cost elements for the Communication set-up cost
roll-out of smart meters. Communication operation and
maintenance cost
Others(please specify):
133
Reducing the theft of electricity
Avoided cost of routine manual reading
Loss of load detection and outage
detection
Avoided cost of manual disconnections
Please point out five major and reconnections
10.4 benefits from your smart Avoided generation capacity costs
metering project. Avoided transmission and distribution
costs
Energy saving
Avoided CO2 costs
Others(please specify):
134
Two-way communications to the meter
system
Interval metering data (load profile
measurement)
Remote disconnection and connection of
load
Net energy metering between power
company and the customer
Supporting load management(e.g.
time-of-use rates)
Which functionalities of Loss of load detection and outage
smart metering for detection
11 households should be
Information display on the meter and/or
covered? (multiple
communication port for in-home
answers are allowed)
display(IHD)
Interface to home area network(HAN)
Firmware Upgrades
Events/Tamper Alarms
Automatic self-registration
Communication port for collection and
transmission of other metered data (e.g.
gas, water)
Others(please specify):
135
Integration of different type of meters
and system
Ensuring security & privacy protection
Make sure the meter system is
compatible for smart grid development in
Technical challenges
the future
13 (multiple answers are
Expanding functions to offer
allowed)
value-added services in the future (e.g.
energy audits, energy management, home
automation)
Others(please specify):
136
EWG 07 2011A – Addressing Challenges of AMI Deployment in APEC
Produced by
Chun-Li Lee
Bureau of Energy, Ministry of Economic Affairs
Yi-Shuo Huang; Chun-Yu Chen; Shiang-Shong Chen; Yung-Fu Huang; Ya-Chi Huang
Industrial Technology Research Institute
For
Asia-Pacific Economic Cooperation Secretarial
35 Heng Mui Keng Terrace
Singapore 119616
Tel:(65) 68919 660
Fax:(65) 68919 690
Email:[email protected]
Website:www.apec.org
137