By Sean Barbara
Malta is a small independent nation state in the centre of the Mediterranean, around 95 km from Italy and 290 km from the North African coast. The island has been a member state of the European Union since May 2004 and is the smallest EU country both in population and geographical size. The size of Malta’s population is roughly 410,000 citizens and its geographical size is limited to around 316 sq km, ranking it highly on the list of most dense populations in the world. The provision of secure, environmentally and financially sustainable energy supply has always been a big challenge for the country. This stems from the fact that Malta is isolated both geographically and infrastructurally.
In Malta, power and water are intricately linked. The country depends on imported fossil fuels to generate virtually all of its electricity demand and electrically powered desalination plants provide over half the water supply it needs. Moreover Malta’s underground freshwater source is continuously being threatened by illegal over-extraction as well as rising sea levels in the future. The country is faced with a series of challenges which need to be addressed now if Malta wants to have sustainable resources for the future. For this reason, Malta’s national power and water utilities – Enemalta Corporation and Water Services Corporation – supported by a strategic partnership with IBM, jointly embarked on a programme to become the first country in the world to build a nationwide smart grid. The utilities will be replacing all current electricity meters with smart electricity meters and will be fixing a probe device to the present water meter, to permit similar functionality for both water and electricity metering and billing operations. The electricity smart meter solution uses power line communication to transmit data to and from the meter. The water meter will transmit data through radio frequency. Both solutions will share the same meter management system, enabling a streamlined and shared meter-to-cash process.
SMART METER SOLUTION ACROSS WATER AND ELECTRICITY
As part of the strategic partnership with IBM, both utilities are in the process of replacing their legacy billing and customer information systems with a shared solution platform which will support their billing, collections and customer contact functions. Moreover the solution will interface seamlessly with the utilities’ Enterprise Resource Planning platform, supporting water production and distribution and electricity generation and distribution.
What makes smart meters so different from its present electricity meters? Put simply, smart meters can store data and can communicate. This permits Utilities to operate much more efficiently whilst providing new and better services to their customers. Apart from these benefits smart metering is being promoted worldwide to support energy efficiency and green initiatives.
The existing electricity meters are dinosaurs in today’s technological age. Suffice to say that since they cannot be accessed remotely, physical visits are needed to read them – forcing the Utilities to issue unpopular estimated bills in the absence of actual readings. Smart metering technology eliminates estimated bills, doing away with another inconvenience to their customers – the remote reading facility would also solve another big problem, namely accessing closed or vacant premises.
The smart meter addresses present metering limitations, reducing substantially operating costs, and in doing so proposes new billing options. Since the smart meter can be programmed to store readings whenever necessary, implementing day and night tariffs is simple. In fact, introducing a structure of differential contracts or tariffs which would provide consumers with more choice and fit their particular lifestyle could very well become a reality in Malta. It has been successfully done abroad where smart meters are installed. The introduction of new tariff structures would not only benefit energy conscious consumers, but also help flatten the electricity demand curve, which would translate into more efficiencies all round.
NEW FUNCTIONS AND SERVICES
One smart meter manages all consumption and device control complexity within a single household. At the same time re-programming of smart meters to introduce new functions or services can be carried out remotely from the utilities’ central office at a fraction of the present cost, and within days rather than months. A classic example could be the introduction of electricity prepayment billing, similar to that on mobile phone. Marketing research indicates a sizable percentage of consumers who prefer to buy power like any other commodity, i.e. pay and consume. Consumers who often have budget constraints, or are accustomed to purchase consumables on a weekly basis, are usually inclined to do the same with electricity. This market segment abroad has been found to be over one third (sometimes even exceeding one half) of the total customer base. In Malta this service would be very well suited for rental apartments, energy conscious consumers and regular defaulters.
Smart metering technology will drastically decrease electricity theft – a situation which is costing the Maltese utilities tens of millions of euros per annum in revenue. The technology to track down electricity theft is embedded within the new smart meter and triggers automatic alarms to head office once tampering is detected. In addition, sophisticated mechanisms are embedded within the communication technology and back-office business intelligence which analyse consumption trends and patterns and are able to pin point areas of potential abuse.
Malta is compelled to reduce CO2 emissions by 20% and generate 10% of its energy by means of alternative sources by 2020. Even though Malta currently produces only 0.02% of its energy from renewable sources, on-site renewable generation is taking off in Malta due to recent incentives and grants by government. People can install their own renewable energygenerating equipment thereby reducing their dependency on national energy, whilst lowering their energy costs. The fascination of renewable energy is that the source is free. Moreover, the cost of this technology is becoming more competitive every year. This is a step, albeit a small one, towards Malta’s contribution as “citizens of the world” to reduce their dependency on fossil fuels and strive towards a healthier environment.
There are several reasons why smart metering should act as a catalyst for the propagation of small-scale “green” microgeneration. Firstly, smart meters register excess “green” energy which is fed into the grid by consumers, allowing them to obtain credit on their electricity account. This incentive, referred to as “net-metering”, provides customers with a financial incentive to invest in RES. Secondly, the technology permits the introduction of tariff systems which will encourage customers to reduce their CO2 footprint, and in doing so, save on their electricity bills too. Thirdly, smart meter technology offers instant consumption display and detailed consumption representations, making people aware of their consumption patterns, thus helping them shift from energy-hungry appliances to eco-friendly ones, as well as to shift consumption patterns from peak to off-peak hours. Consumption information will be available to all consumers with smart meters through a secure internet portal, as well as on their bi-monthly bills.
As people become ever more conscious of their CO2 footprint, the smart meter becomes an effective tool for collecting detailed consumption data. As peak demand rises, shifting consumption from peak to off-peak hours postpones expensive investment in generation capacity and reduces our yearly fuel-oil requirements.
A BENEFICIAL BUSINESS CASE
Introducing Smart Metering in Malta will not be cheap. A smart meter infrastructure includes the installation of smart devices in all premises around the island, together with the communication infrastructure to allow remote access. In addition a robust IT software and hardware platform is needed to manage all new meters automatically and intelligently while storing vast amounts of data. There are also labour, transport, storage, logistic, communication and promotional costs. Not to mention the recurring operational costs to maintain such a system. And yet, even though the total cost of the project is considerable, the decision to carry out this ambitious project in Malta is wise. Implemented according to set targets, the overall benefits to Malta will substantially outweigh the initial investment in the technology and implementation.
The smart metering massive roll-out programme will commence in January 2010. It will take between 24 and 30 months to install all smart meters for the utilities’ 250,000 customers.
Granted, Malta is a microstate and the size of the investment and the number of meters to be installed is compared with other countries. However, being small definitely has its advantages. The world will be watching closely as Malta begins to test whether an integrated solution for water and electricity will contribute to energy-efficiency targets. In tandem Malta will be transforming its utility retail service landscape for the years to come.