Smart metering profits utilities consumers and governments alike and, as a result, its implementation is a central theme in many governments’ energy conservation policies. Consequently, utilities are now faced with overhauling existing systems and migrating to smart metering.
Smart metering is about having more information. Smart meters transmit real or near real-time readings to the utility via a two-way communication channel. This provides better monitoring of energy usage and allows utilities to more effectively manage their power loads. For the consumer, that real-time consumption data enables them to manage their energy use more efficiently and to react to tariff changes more easily. Meanwhile, governments benefit from the lower energy consumption through the reduced carbon emissions and less need to build more power stations.
As the benefits of smart metering accrue across the entire value chain, the legislation mandating it has been introduced in a number of countries. In addition, guidelines such as the EU’s Energy Services Directive in 2006 have also encouraged uptake at a pan-European level.
While 6% of households in Europe and North America currently have a smart meter, Datamonitor forecasts that this will rise to 41% in Europe and 89% in North America by 2012. Slower penetration in Europe is the result of concerns over the more competitive market effectively ‘stranding’ assets when customers want to switch provider – in turn making utilities less inclined to install them in the first place. In North America, by contrast, customer turnover is less of an issue, and many utilities have already started a program of replacing existing meters with smart meters.
One crucial benefit of smart metering is the element of demand response
Utilities considering the migration to smart metering will typically weigh the cost of implementing the smart metering infrastructure against the benefits that it would receive – typically by way of cost savings. Operational benefits, such as reduced manpower for taking meter readings in the field, and a reduction in call center costs via more accurate bills, are immediately apparent and easily quantifiable. However, there are also important non-operational benefits that need to be taken into consideration.
One of the key benefits of smart metering is the ability to offer demand response programs. In times of high demand, such as on a hot summer day when many air conditioning units are running, utilities do not have sufficient supply to meet demand, so additional power has to be imported at great cost to the utility. To reduce the need for this imported power and, in turn, to cut these additional costs, smart meters can communicate to customers a higher tariff and provide an incentive for them to reduce their consumption during this peak period. Such programs are being widely implemented in California, where periodic blackouts are the most common alternative.
Smart metering driving and being driven by technology innovations
While simple quarterly or monthly meter readings are collected from traditional meters, smart meters produce a wealth of data, including information on time of use, tariffs, tampering and outage detection, among others. Consequently, software innovations, such as the development of meter data management (MDM) suites, have taken place to address this issue. These systems process the vast volumes of data received, and deliver this data to the relevant department that will use it.
However, technology innovations, such as the continued development of broadband/IP communication, Wi-Fi and WiMAX, are also helping to drive the uptake of smart metering. At present, the volume of meter data that needs to be transmitted from smart meters to the utility is placing an increasingly heavy burden on traditional 2G mobile networks. Consequently, larger bandwidth options are needed. Broadband has been a key facilitator of smart metering as a lot of the infrastructure already exists. However, new communication technologies, such as Wi-Fi, can also have a key role to play in densely populated areas such as towns and cities.
Due to the benefits that smart metering provides across the value chain, the technology is here to stay and is going to grow rapidly. As a result, utilities need to understand how to approach the daunting task of overhauling existing systems. There will certainly be a key role for technology vendors to demonstrate how they can facilitate smart metering and deliver the benefits that the system provides.
