October 2, 2017

Smart metering – what should you know about it?

Carl Lidholm

Head of Strategy and New Business, Energy Utilities, Tieto

The Nordic countries are introducing the second generation of smart meters. The rest of Europe is embarking on a first-generation rollout. What should we know and learn about smart metering?

The move to smart metering meant a big change for the end-consumers. Instead of estimated invoicing, they were now billed for actual consumption. They were also exposed to the actual highs and lows of their consumption instead of pattern-based, “normalised” consumption curves, resulting in having to face their real electricity costs.

Smart, actual metering showed increased consumption at most delivery points. Old meters were simply too slow to register sudden peaks or troughs, so it emerged that distributors and retailers had been giving electricity away for years.

The result, as you might expect, was a huge outcry. Consumers flooded their electricty companies with customer service calls, complaints, demands for meter testing – in other words, a massive peak in errands.

After some six to twelve months later, though, the firehose of calls dried up. The consumers had adjusted to the new way of exact invoicing.

With the second generation of smart meters, we are looking at measuring hourly values instead of monthly values. Hourly spot prices have even larger fluctuation than monthly ones, so should we again be prepared for an onslaught of angry customers?

Or perhaps the customers have already accepted that the electricity market is behaving without consumer focus and that the electricity bill is something you learn to live with, further alienating the customer from the focal point?

Smart homes, buildings or cities – regardless of scale, the smart meter will never be the focus. The homes, buildings and cities will always operate based on real-time data from sensors, solar panels, storage facilities and automation. The homeowner gets no value from knowing 60 minutes after the fact what the impact of his turning on or off the light was.

Second-generation smart meters are expensive. A lot more expensive than sensors. The actual business case for a distribution company might, therefore, not come from more accurate metering, remote disconnection or monitoring, but peak elimination. Today’s grids are focused on managing peak loads just-in-time. If we want grid reliability, we should look at two things:

  • transparency in peak load cost (either through hourly or effect tariffs), combined with
  • how local electricity storage facilities can be used to mitigate peaks (and at what price)

In future, the grid might well become a complementary power supply instead of its status today as the main provider.

If you don’t pay serious attention to the booming private solar generation capacity, increasing private energy storage capacity and sensor development, the smart meter runs the risk of being relegated to a part of the “old infrastructure” that only enables legacy business models supporting regulatory reporting from distributor to retailer or market hub. New, real-time energy service providers will have a field day sweeping in and controlling the consumer’s smart home. The classic distributor and retailer will be further alienated from the consumer – and slowly fade away.

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