“We have been thinking about smart meters for a couple of years now, since shortly after the liberalisation of the domestic energy market in 2005,” says Dr Remon Dantuma, senior policy advisor in the energy and telecommunication directorate of The Netherlands’ ministry of economic affairs.
And Dantuma, who is also responsible for rolling out the smart metering project in the country, says that the final touches are being put to legislation that when – and if – passed, will result in smart metering being made available to all the 7 million household and small business users (defined as having an electricity connection less than 3 x 80 A and gas usage less than 170,000 m3 per day) across The Netherlands.
“Our main starting point is the EU Energy Efficiency Directive but we want to optimise the process and to be able to take advantage of all the benefits, and accordingly we believe that there must be complete roll-out to all users.” Many of the approximately 50,000 larger users are already on some form of ‘smart’ metering. Dantuma explains that the approach being proposed in The Netherlands is that the grid operators – of which there are four main operators, Eneco, Continuon, Essent and Delta – will be responsible for the roll-out of the smart meters, and that they will own the meters. In addition in the case of new connections, new builds and other changes, such as end of lifetime or meter pooling, the installation of smart meters by the grid operators will be compulsory.
However, the suppliers will be responsible for all customerrelated processes, especially the management of the metering data. “Our reasoning is that the smart meter is an important element in facilitating competition. Therefore ‘customer lock-in’ should be avoided. This would be the case when technology becomes a barrier to switching, either physically or administratively,” Dantuma says. “By placing ownership of the meter with independent, noncommercial grid operators, and the management of metering data with the commercial suppliers, we think the best of two worlds can be combined.”
OPEN PLATFORM APPROACH
Describing this as an “open platform approach” in which the meter becomes “the central hub for demand and supply, and an optimal facilitator for energy management,” Dantuma says: “We believe that the smart meter will provide an extra gateway into the home and therefore it becomes an integrity issue that the data should be available – subject of course to the usual privacy requirements – to all those who want to utilise it.
Obviously among these are the network operator and the supplier, but there are also third parties such as smart home application service providers. What we want is that commercial innovative services, eg focused on energy saving, are facilitated optimally by the metering process and infrastructure.
The availability of metering data is crucial in that respect.” On the proposed functionalities of the smart meters, the proposals call for:
- Ability to remotely read how much energy has been consumed or how much put back into the system in cases of individual (decentralised) generation.
- Ability to remotely connect and disconnect the meter.
- Ability to remotely meter and detect power quality.
- Ability for an online interaction between customers and suppliers.
- Ability for a real time response of controllers in energy systems.
These in turn give rise to potential applications such as peak load shaping, fraud detection, decentralised energy generation and better distribution and management by the network operator. All of these are important and enhance the operation of the energy market, Dantuma says.
“It is the government’s view that no one advantage justifies a full smart meter roll-out but that they are all needed together to do so. Conversely we believe that in our liberalised market, if we didn’t legislate, a smart metering roll-out would reach no more than about 30% penetration and then all of its benefits would not be realised.”
A key aspect of the proposed roll-out is that there should be interoperability and compatibility between systems. To this end a single technical standard is under development through the Netherlands Standardisation Institute (Nederlands Normalisatie Instituut), which Dantuma says is expected to be completed by the end of April. One of the key issues which has dominated the debate in that forum is the preferred communication protocol for the various interfaces of the meter.
The attention of market parties has been focused on how (open) access to the meter could be guaranteed, and what level of metering data would be generated by the meter. Dantuma says the costing of a smart meter roll-out across The Netherlands is estimated at between €1.1 and €1.5 billion, with a return of €800 million to €1.2 billion. However it should be possible to fund the project from the current meter tariff, which should remain unchanged or even drop. “To date the meter charge has not been regulated and has increased by up to 100% since 2001.
The Dutch Competition Authority has stated that it could not believe there is a relation between the increased tariffs and actual costs.” Accordingly, Dantuma says, the proposal is that while the meter tariff should be cost reflective, its ceiling should be set at the 2005 rate plus the subsequent CPI. “This cost will now become regulated, while the data collection costs, which will be set by the supplier, will be unregulated.” From an energy saving perspective Dantuma says the government is taking a conservative approach with a projected 2% saving per annum.
However, evidence shows that real savings can be between 5 and 20%, he says. “Therefore we expect that this 2% will increase over time, when smart metering gains more interest, and is coupled with other energy saving options. “But a lot depends on the customers and how willing they are to change their attitudes to energy usage.”
In terms of the proposed regulations energy consumption data will be provided to customers at least six times per year, Dantuma says – this being believed to be frequent enough for customers to be able to undertake their own energy management. It is important that commercial parties are absolutely free to do more and to differentiate themselves from competitors in terms of the aggregation and frequency of data and added value services (bechmarks, savings advice).
“We think the data must be provided in graphical form and also that there must be some data for comparison purposes, such as the usage over a similar period of say a year ago. We also think that it would be helpful if the data is provided in both kilowatthours as well as in euros, so that it can be understood by the customers who don’t have a technical background. “But we are leaving the fine detail of that to the suppliers, who better understand their customers.”Dantuma says that the proposed law seeks to achieve complete smart meter roll-out within six years from its promulgation, which is expected in early 2008.
However, he comments that there are already a number of pilot projects under way, with perhaps around 100,000 smart meters in use in The Netherlands.“Figures are scarce because this tends to be commercially sensitive data,” he says, adding that the largest known roll-out so far has been by Oxxio – a supplier owned by the UK’s Centrica – known to have some 80,000 smart meters in use by the start of 2007. Continuon is planning to install some 50,000 meters this year.
“This number might have been more if the government hadn’t intervened but by mandating that a standardisation process be started and by placing the primary responsibility with the network operator, massive roll-out cannot start earlier than 2008.” Dantuma says that he personally finds the smart metering concept very interesting, because he sees it as a convergence between the old energy sector and the telecoms sector.
“It is a fact that smart metering will add a communications channel to every home and is breaking down the traditional monopolistic energy market and improving service delivery.” However, while The Netherlands is fairly advanced with its smart metering roll-out among European countries, it is not setting itself up as a role model for such roll-outs, he says.
“Everyone is looking at everyone else and we are, for example, looking at Vattenfall’s roll-out in Sweden as well as Enel’s in Italy. There is a lot of dependency on the various parts of the project to ensure that the various benefits actually emerge.”