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A smart grid vision where everyone wins

How an interoperable, infrastructure approach benefits utilities and consumers alike

A smart grid is best built with an eye towards technologies, standards and services of the future. In order to ensure utilities and consumers both win in the smart grid game, it’s essential that all players in the ecosystem consider the various moving parts involved as energy networks across the globe evolve. An interoperable infrastructure approach will lead to innovations and achievements at break neck speed, while limited, closed approaches will ultimately kill innovation and benefit very few. With these principles in mind, here, we take a look at many aspects of the smart grid today, from higher level benefits for all parties involved down to the inter-connecting details of metering, home area networking, Web, power line and RF technologies that are making the smart grid possible. We hope this article serves as a source for all leaders making major smart grid decisions that will serve many generations of people come after us.

It’s not just about smart meters

Smart metering is an essential part and foundation of the smart grid itself – offering increased functionality for smart grid applications, built-in two-way communications to take advantage of that functionality, and support for new customer focused applications. The critical thing about defining smart metering is that it’s not just about the meter. It is really about enabling the smart grid, which is an energy infrastructure that spans from generations through distribution to include thousands of power-based devices and systems that consume energy.

Therefore, we must look at smart meters as part of a “system” that delivers dramatic improvements in utility operations, reliability, and customer service capabilities by offering detailed usage information, demand metering, detailed power quality data, outage information, integrated disconnect switches, integrated customer premise interfaces and flexible billing options. Smart metering systems merely serve as the key information-gathering source and foundation for a smart grid that helps utilities’ better manage their operations, and customers better manage their energy consumption; it’s a win-win situation.

Smart meters are part of the solution to address one of the utility industry’s biggest challenges; how to manage energy resources in the best way possible. They provide information and control energy in order to serve all stakeholders, although for different reasons.

Smart grid stakeholders – benefits to all

Consumers, distribution companies, and retailers all benefit from smart metering. A smart grid builds upon the information provided by the smart metering system (located at the low voltage network) to an information and control system to address the stability of entire energy networks.

A smart grid can improve management of the transmission and distribution assets as well as their generation portfolio in order to keep pace with their customers’ increasing peak electricity demands. For the supplier and retailer, it makes possible and accelerates the adoption of new services to enable them to create unique market propositions, and differentiate their offerings in increasingly competitive energy markets. All of these great benefits to utilities also mean, of course, that the consumer wins.

There are many benefits associated with the smart grid and they should be viewed collectively and really as an aggregate of benefits to all parties. It is extremely difficult to build a compelling business case around just one set of benefits to a specific stakeholder. Of course, the consumer, and in general the society, will benefit from smart meters and the smart grid, since they provide a way to achieve a decrease in energy usage by raising consumer awareness of the cost and impact of electronic devices in our homes and offices, and the real “cost” of electricity. The most obvious direct benefit to consumers will be in the form of lower energy bills.

Energy empowerment, demand response and services beyond

Demand side management, or demand response, is becoming instrumental in managing the growing demand for energy, especially as it is combined with new and innovative pricing plans and consumer facing services, e.g., energy use portals. The combination of heightened awareness, an ability to track and manage energy use, and incentives will give consumers a sense of “energy empowerment” that they have never before experienced, and this will be huge.

For retailers, the marketer, it provides opportunities to add value beyond energy to a client. For instance, they can offer new products and services such as providing an in-home display, tariff schedules more focused to specific consumer groups, services such as energy advice offerings, a service to provide remote control of air conditioning or heating; and a web portal providing all kind of information about the energy usage with useful comparisons and advice.

By using smart meters, the Distribution Network Owner (DNO) will have ability to get more information from the low voltage network. For example, through information like phase detection the DNO will be able to extend lifetime of a substation; and by watching voltage, certain patterns the DNO can detect fraud and recover income. The best of the smart meters, those that provide grid intelligence like power quality data, power factor, Total Harmonic Distortion (THD), frequencies and other measurements, will give DNOs better insight into the grid.

The true smart grid creates an energy network that will detect and address emerging problems in the system before they negatively affect service. It will be able to respond to local and system-wide inputs, have much more information about broader system problems, and most importantly, be able to react to or resolve problems the moment they occur.

Coming full circle on the grid – work still to be done on the home-front

In order to best take advantage of all of the information and functionality of the smart grid, devices inside the customer premise must also be incorporated into the system in order to help create an energy-aware environment. Automatic demand response and the ability for a building to automatically shed energy loads in response to real-time supply/pricing conditions on the grid even within the commercial sector is still in its infancy.

However energy-aware products, particularly in the home will be the market driver for the Home Area Network (HAN). Once consumers have the ability to benefit in highly visible and tangible (e.g., monthly savings) ways from managing their energy use, they will naturally seek out products that help them increase their savings or make saving easier. This will also influence decision making across all consumer goods that use energy or impact one’s personal environment (home, car, etc.).

As an example, electric vehicles (EVs) will need to communicate with the grid to understand when to charge at 100% and when to shift to trickle charge if the grid is under strain. The communications required for that is likely to need to interface with other smart HAN devices so that they too can tap into the same information and shift their consumption. So already, just with EVs or demand response functionality and their associated communications needs, there is a requirement for a HAN. It’s a small step for a consumer but one that will allow them to really take advantage of the smart grid network.

The case for smart grid interoperability

In order to support the various networks and interfaces within the smart grid, one of the most important and basic requirements that is needed is interoperability. This is not only to support ©2010 Echelon Corporation

today’s services and applications but also to support the provision of new services and/or meet new market demands in the future without replacing the core infrastructure and associated equipment.

Interoperability is too often used as an excuse to push a particular technology, regardless of its actual suitability for the application. Such agendas manifest themselves as a “choose one standard” technology approach; while in today’s and tomorrow’s world we know that technologies will continue to evolve. Therefore, instead of requiring a single standard, interoperability requires an open infrastructure, one that many companies have adopted and built custom solutions on top of. These solutions may be proprietary to each vendor, but since they’re built upon a common, open infrastructure they can be mixed and matched, offering the utility competition, innovation, and choice.

Therefore to truly support interoperability, the smart grid system needs to be open at various key interfaces within the infrastructure; the head-end, the communications network and at the HAN or customer premise. To fully realize the benefits of a smart metering system, it must be able to exchange data between disparate utility systems. These systems often use a variety of data exchange formats and mechanisms that have historically prevented the systems from effectively communicating with each other. To address this, the Internet community has developed Web services (SOAP/XML), a standards-based way for applications to integrate with each other. Web services use ubiquitous protocols and the web infrastructure that exists in every organization, so they require little, if any, additional technology or training investment. The inherent interoperability that comes with using vendor-, platform-, and language-independent Web services technologies is vital in obtaining the maximum benefits from advanced metering systems for the least amount of integration costs.

The Netherlands – an interoperable case example

One of the best examples of this type of interoperability is to follow the NTA 8150 standard type of model, which defines interoperability at the web services, enterprise level and is already proving itself in The Netherlands. The NTA 8150 standard, an ESNA initiative, defines an API to a “virtual device or meter” that enables utilities to maintain and leverage their large investment in IT systems and applications and allows them the option to work with a variety of underlying metering systems.

This approach allows utilities to take advantage of the largest competitive market possible and also enables them to take advantage of new technologies as they emerge from any potential vendor. An additional benefit of standardizing at the enterprise level is that this will leverage and optimize the implementation of multiple smart grid applications rather than focus on a single application, such as metering. Put another way, it is a systems approach.

Limits on the grid are a death to innovation

By contrast, the implementation of a specific metering interoperability standard limits innovation and promotes the smart grid as a point solution rather than as an enterprise infrastructure for an entire corporate solution. Defining interoperability only at the meter with a single technical standard will only raise costs for utilities and decrease the benefits to their consumers. The logic for this is simple, setting a hardware standard locks the meter in time, ending innovation and technical progress, and decreasing the number of meter suppliers. In addition, like most such efforts, the vendors will create “open closed” products – ones that meet the letter of the law, but not the spirit. This has repeatedly occurred with these types of standards across multiple industries. These are just a few of the additional reasons that an approach similar the NTA 8150 model is preferred.

Another key interface within the smart grid that needs to be open is at the communications network. The WAN is designed to reliably and cost-effectively transport data utilizing two-way communications between meters and other devices in the field and the utility. Rather than focus ©2010 Echelon Corporation

on the data application layer, it is essential that the communications ‘plumbing’ be built on proven IP networking technologies. Only in this way can utilities leverage the investment being made in new networking technologies such as BPL, WiMax, GPRS, and UMTS. This also gives utilities the flexibility to mix and match public and proprietary networking infrastructure to avoid vendor lock-in, reduce system cost, and guarantee flexibly, scalability, and security over the life of the system.

And finally, the third key interface is at the meter level. Smart metering systems are an investment in communications infrastructure as much as metering infrastructure. To fully benefit the utility and to support demand management, distributed generation, and other programs that may emerge over time, the infrastructure must be able to integrate devices other than electric meters into the system, including gas and water meters, EVs, streetlights, thermostats, and direct load control devices.

Communications standards to consider on the grid

Many smart metering systems support two-way communications, including messaging and control to HAN devices. However, most of these solutions are locked into a single HAN technology. To ensure reliable communications, multiple HAN technologies must be supported. This would let utilities deploy a variety of technologies and protocols to communicate to the vast amount of in-home devices without worrying about compatibility issues, technology limitations and technology obsolescence.

The most logical approach for enabling multiple HAN technologies is to move the HAN radio (such as Zigbee radio) outside of the meter. This solves a major problem — radios don’t always communicate reliably from the meter location to devices inside the home — as well as lowers the lifecycle cost of the HAN solution.

The market for smart in-home devices is in its infancy, and RF control technologies — both the physical radio implementations and the software protocols on top of them — are extremely immature. Just as the cellular industry has moved from GSM to GPRS to EDGE to UMTS and the WiFi market has moved from 802.11A to 802.11G to 802.11N, utilities can expect to see dramatic changes in RF control technologies. Therefore, putting HAN radio technologies inside a meter will almost certainly shorten the technically useful life of the product.

The most logical HAN approach is to use a smart metering solution that provides a flexible and secure bi-directional interface into and beyond the meter that can be used over time with whatever in-home technology is appropriate. By moving the radio outside of the meter, utilities will be able to upgrade home communications infrastructure without having to replace the metering infrastructure.

Bridging power line and RF

One way to facilitate multiple HAN technologies is to use meters with built-in power line networking communications to interact with in-home devices. Once inside the home, other devices could be connected to the network and interact with the AMI system. For example, an in-home gateway could bridge the AMI solution’s communications from the power line to a variety of RF technologies. Alternatively, the meter can have an external interface that allows external communication cards or modules to added and exchanged during the lifetime of the meter.

A number of organizations, including the Digital Home Alliance (http://www.digitalhome.com) and the ZigBee Alliance (http://www.zigbee.org), are working on standards and interoperability issues to facilitate HAN and intelligent in-home devices. Members of these Alliance are incorporating energy awareness into their products, as well as making them compatible with multiple HAN technologies. As these products emerge and consumers begin incorporating them into their home area networks, utilities will have a new type of customer to work with — ones who are willing and able to contribute to the smart grid and the environment. ©2010 Echelon Corporation

The Digital Home Alliance approach enables new devices from multiple manufacturers to be added anywhere within the electricity network to provide competitive, value-added services at minimal cost. This extends the HAN to a variety of devices, including those manufactured by members of the Digital Home Alliance. For instance, products such as intelligent networked thermostats, boilers, appliances, air handlers, lights, and load control modules based on Echelon’s LonWorks technology are already available worldwide from thousands of manufacturers. More devices that will enable a variety of HAN technologies, including power line (such as LonWorks) and RF (such as Zigbee, Z-Wave, WiFi, or 6LoWPAN), will continue to be developed by many companies and added to their HAN product portfolios.

HAN technologies provide utilities and their customers with effective tools to manage peak electricity demand, which lets customers shift their energy use (and demand) from peak periods to off-peak periods. Customers with smart meters that use in-home displays to monitor electricity use and pricing can more intelligently manage their usage. Utilities can also implement new pricing schemes that adjust the price of electricity based on consumption patterns. Utilities can use these tools to curb consumption during peak periods when electricity is most expensive, shifting consumption to those times when it’s less costly. Consumers involved in these programs can either rely on in-home displays to track their energy use and manually change their consumption behavior, or use in-home devices that react automatically to the smart grid and time-of-use tariff in order to more effectively manage energy use.

As utilities face increasing pressure to reduce their costs and lower their environmental impact—

by reducing emissions of greenhouse gases, for example—they must fundamentally shift their attitude toward power generation and resource planning. The smart grid and smart metering technologies will facilitate this strategic shift. More importantly, the smart grid and smart metering technologies will make power delivery more efficient, reliable, and safe, and will help customers better control their energy use.

An advanced metering infrastructure approach will allow utilities to deploy a solution that lets them extend the smart grid and communications infrastructure to intelligent devices inside customers’ homes. The ideal smart metering solution will let utilities and their customers implement and access a truly intelligent smart grid — one that benefits both parties — through a variety of HAN and other technologies.

Larry Colton

Engineering and Marketing Executive NES

Mail: lcolton@echelon.com

Smart Grid 2.0 – Beyond Meters and onto Intelligent Energy Management

The world’s first smart grid installation Back in 2001, Enel—Italy’s dominant utility—started a five-year program to install smart meters across its customer base of 30 million homes and businesses. The goal was to improve efficiency, create higher margins, reduce power theft, and help customers reduce their energy bills. Enel created its smart grid using Echelon’s power line communications technology and data concentrators.

Enel Project – at a glance:

• Deployed 2001-2005
• 30 million meters
• Installation rate 700,000 meters/month for 3 years
• Installed price: € 2.2 billion
• ROI: € 500 million/year in operational savings, approximately 4-year system payback

Enel’s smart grid project includes multi-tiered tariffs for TOU pricing, integrated pre-pay, integrated meter disconnects in every residential meter, support for in-home displays, support for water and gas metering, theft detection, power quality measurements, and metering at the distribution transformer (theft detection, phase balancing).

Smart Grid 2.0 – What’s Next?
Almost 10 years later, we’ve now moved beyond two-way communications and remote meter reading towards the smart grid 2.0. The smart grid 2.0 puts intelligence and communications in devices throughout the grid from distribution equipment (meters, transformers, capacitor banks, etc.) to commercial electrical devices (chillers, boilers, air handlers, lighting, etc.) and home appliances like electric water heaters, air conditioners, and rooftop solar arrays.

These “smart” devices can now become a part of the grid, able to interact in real-time to changing conditions on the grid. The smart grid 2.0 uses the grid network and the devices connected to it as a communicating, intelligent system for the delivery of additional services and increased operation efficiency, such as demand response programs.

Another significant benefit of the smart grid 2.0 is asset management. Because of this network infrastructure approach to the smart grid, utilities can see all equipment and how the power lines interconnect that equipment to monitor the health of the systems in real time.

Conservation as an Alternative Energy Source
Electrical generating capacity from fossil fuel sources may become capped – either economically, legislatively, or due to environmental concerns, making energy conservation and renewable resources essential elements of today’s energy market.

U.S. utilities experience peak demand just 2% of the year, but to serve customers on such days, utilities incur 15% of the total costs for the year. If the peak electricity loads on these days could be better anticipated and lowered, utilities would experience fewer black-outs and brown-outs and could significantly reduce costs. Electric utilities, being regulated, are allowed to charge for their operating expenses plus a return on their investment. The ratepayers thus fund the utility’s expenses and profits. Lowering the operating expenses by curtailing peak demand will result in lower costs to the ratepayers.

First it is necessary to look at the highest energy users: Commercial buildings account for 72% of overall electricity consumption in the U.S., and offices, retail, hospital, and grocery stores use 75% of the total lighting energy. Cities also have large electricity demands, specifically for streetlights, which use 40% of the average city’s electricity budget.

Aggregators and utilities can shave peak demand with automated demand response programs. The smart grid 2.0 enables demand response programs which significantly reduce the strain on the grid at times of peak use. These energy savings could provide enough power to fuel electric or hybrid vehicles and reduce the need for additional coal-powered energy plants. Currently only 14% of the commercial U.S. electricity market is enrolled in demand response programs, leaving an 86% potential market, a huge commercial opportunity for demand response providers.

Business Drivers
Economic forces are aligning toward the development and deployment of the smart grid. Recent energy legislation, governmental policy and regulation, the U.S. stimulus package, increased investment in green tech and alternative energy, and increased public awareness regarding efficient energy use are all contributing to the growing smart grid market.

A recent poll of North American utilities shows that 70% regard smart grid projects as a strong or highest priority to their overall business. Combined stimulus package funding and incentives to improve the grid are leading to rapid growth in the energy market.

Achieving Smart Grid 2.0 Benefits
The benefits of the smart grid 2.0 include higher economic productivity, decreased pollution and lower CO2 emissions from conservation, electric vehicles, and renewable electricity sources. In order to procure and deploy systems that meet a true smart grid 2.0 definition, several requirements must be met.

First, power line communications are necessary from the meter to the distribution transformer in order to know the network topology and identify failures. Knowing the topology allows intelligent management of EV chargers, distributed generation, distributed storage and protects distribution equipment life. Secondly, sensing and control at the distribution transformer are needed to take timely action on any failures even before they occur. And lastly, utilities need to avoid systems that are meter-centric and fail to encompass the notion of the grid as a network. These meter-centric systems, useful only for enforcing new pricing models on the consumer, will be outdated in 10 years or less, leaving many utilities with “stranded assets”, an asset that becomes obsolete prior to being fully depreciated.

Robert Dolin,
CTO Echelon Corporation
Mail: bobd@echelon.com

Robert's presentation to his paper can be downloaded from here

EVB Energy Solutions: SMART METER OPERATOR

Roadblocks on the road to smart metering

Utilities face the dilemma that network operators, in their function as meter-operator, need to investment in Smart Meters, although the main beneficiaries will be for the energy suppliers. The introduction of this future-proof Smart Metering solution also means that a review of almost all internal processes is needed. To pay off a part of the investment to gain efficiency is a must.

To maximize the efficiency benefit in the areas of new products and optimised procurement, independent parallel process should be avoided. This means that the complete process structure in the company should be modified.

The rollout, in a short timeframe, of an advanced metering infrastructure (AMI), with several thousand meters requires specially qualified staff and means a significant initial investment. In addition, the selection of the technology is difficult, because the available systems on the market are difficult to compare. This applies particularly to the additional costs related to the different systems, because most manufactures have no, or very little experience with fault detection in mass roll out and full scale operation. Without this information it is almost impossible to plan smart metering in an economical context.

The smart meter operator concept

With the Smart Meter Operator (SMO) concept EVB Energy Solutions offers a solution to overcome the identified roadblocks. For a fixed annual fee EVB will procure install the appropriate equipment and establish a communication network, able to collect comprehensive data. After the successful implementation of the AMI rollout the grid operator as well as its customers; the energy suppliers, will get access to the data they need via the standardised, open and license-free Meterus interface. With the meters used in this concept it is already possible to create invoices as required under § 40 II EnWG in even shorter timeframes and exactly on the required day. For at least electrical energy it is also possible to generate tariffs referring to § 40 III EnWG.

The electricity meters, used in this concept, have four registers, plus the remotely update function needed to change tariffs or the tariff calendar.

To meet future requirements with regard to the end-customer information, the meters are equipped with an interface that allows to collect meter data, for example to visualise the consumption and tariffs on a home-display or to use these data for the control of home-appliances. In the development of these meters, besides economic and technical aspects also severe data protection requirements were taken into account. To operate the proposed smart metering infrastructure personal information  is not necessary, therefore EVB Energy Solutions only will store Meter ID’s and meter-reading with timestamps. Only in the upstream ICT systems from grid operator or energy supplier the metering data will be linked with personal data of the end-user. An authorisation management system controls the access to the data to prevent unauthorised retrieval.

Future-proof Smart Metering for 36 Euro annual

In addition to a SMO fee of 36 Euro per meter per annum over eight year contract, the EVB Energy Solutions also provides the SMO with other types of energy, like gas, water and heat. The annual fee will be split-up into two parts; part one is for the grid operator and the remaining part for the energy suppliers who will benefit most of these metering services.

The fee includes, besides the procurement of the metering equipment and rollout, the communication and entire operation of the AMI system over the whole contract period. During the contract period EVB Energy Solutions will be responsible for the seamless operation, repair and maintenance are included in the annual contribution.   

In these SMO projects EVB Energy Solutions will mainly use equipments form the companies Diehl Metering and Echelon. Both companies produce for many years, smart meters and metering equipment, they have extensive experience in the structure and operation of Advanced metering Infrastructures measuring through international projects.

This SMO concept primarily focuses at vertically integrated utilities. These are most likely the first to take full advantage of the economic potential for example in combination with regional power production facilities.

For more information please contact Sina Luckhardt

Smart Grid: A Trillion Dollars, but what are the long-term benefits?

There are many social and customer benefits associated with the smart grid including lower costs, improved customer service, reduced emissions, decreased outage time and increased reliability, support for electric vehicles, ability to facilitate distribution generation and new energy technologies, including renewable, intermittent and distributed sources. But, Rome was not built in a day. We need time and support for the technology and associated services to be deployed and the corresponding adoption window for consumers and energy service providers to leverage these new opportunities and deliver tangible and measurable benefit.

Being impatient and expecting habits we have developed over hundreds of years to change in a moment is a mistake – we need patience, yet the urgency to invest and hold the industry and each other accountable to usher in a new era of energy awareness and efficiency.? ?Even today, Smart grids have helped to lower operating costs, for example by eliminating utility visits to customer premises for services like turn on/turn off, trouble shooting and off cycle meter reads. This helps to reduce and manage not only utility costs but also customer costs.

For instance, in Enel’s project in Italy, they are delivering over $750M per year of benefits on an investment of $3B – offering energy awareness and efficiency for Italians, having with the benefit of reduced costs for years to come. Besides new technologies that enable efficiencies, we also have service benefits that deliver new opportunities for services that save consumers money today. From simple applications enabled by new tariffs that incent customers to use energy in off peak times to reduce overall load. Or, more advanced applications like networked in-home displays where customers can set simple demand response preferences to dynamically adjust energy consumption – we are at the beginning of a new era of opportunity of awareness and efficiency. By decreasing electric demand and usage, generation can also be reduced which improves environmental conditions by decreasing pollutants. While it may not seem like a lot, if we multiply the benefits over millions of customer, the results are extraordinary and very encouraging.

Here are some other relevant examples. E.ON has experienced a significant reduction in customer service calls associated with both meter-reading and invoice-related issues. This has let service representative’s focus on other tasks and has improved call centre efficiency. Vattenfall, another large European utility, now uses the load-limiting function associated with the Echelon NES meter’s integrated disconnect switch to better manage customers and their associated contract size restrictions. Vattenfall also uses outage information and power-quality data to manage its distribution network and proactively identify issues or problems.? ?Besides services benefits, solutions like Echelon’s NES also provide advanced monitoring opportunities and power quality data that enable energy service providers to detect outages before they happen, saving money, time and improving the overall service experiences for the customer.

Where there is an outage, the new systems help provide accurate representations of the grid compared with agreed data in antiquated IT systems, so the Mean Time to Repair (MTTR) is much faster. In the near future, Smart Grids provide the necessary infrastructure and management needed to support electric vehicles and their challenging charging requirements. The current grid cannot support the influx of electric cars, but a smart gird enabled by Echelon will be able energy service providers to manage the charging intervals, therefore reducing peak load and minimizing the need to invest in new power plants, hence saving the taxpayer money and protecting the environment.

There are many opportunities that provide short and long term benefits, but we must be patient, yet dedicated to the future we know we can achieve. In just the last 5 years which are just seconds in energy time, we have made so much progress. This progress can be measured in the simple awareness of users who are just using less to massive returns through grid modernization that has lead to the high efficiency and applications that will enable a new energy future. Rome was not built in a day, but throughout its construction it delivered unprecedented benefits to its citizens that have stood as the beacon pro progress for modern society for thousands of years. The key is being bold, yet patient and holding all members of the new grid accountable for the benefits that we all know are ahead.

Michael Anderson, Echelon - VP Smart Grid Sales

Refinancing smart metering by process efficiency and product innovation

Smart: How metering will pay-off

Smart metering is a major topic in Germany: From the first of January 2010 there is a legal obligation to install Smart Meters in new and renovated buildings. Next to this obligation every consumer should be able to obtain Power Depending and Demand Response tariffs before the end of 2010. Especially public owned utilities, like the German "Stadtwerken” and other small and medium sized utilities have strong reservations. For instance on questions like “How much is the financial investment and in which way can they be paid-off?”

EVB Energy Solutions has initiated three research projects on this subject and they all come to the conclusion that the financial potentials are in more efficient processes and innovative products!

The first report called: “Herausforderung aus Markt und Regulierung – Handlungsoptionen für durchgängige Prozesse", in English; “Opportunities in a liberated Market and Regulation – a need for seamless processes”, describes the long-term development of the Smart Meter market and shows that utilities are obliged, if they will survive, to develop their own unique strategy concerning Smart Meters. In future a sustainable, reliable and economically feasible electricity supply can only be possible when energy demand and volatile energy generation are in balance. Smart Metering will be the core-element to achieve this balance due to its possibilities to delay energy demand and its capability to support the increase of energy efficiency.

The second report; "Smart Metering – Erfolgreich sein durch Prozesseffizienz und Produktinnovation", in English; “Smart metering – being successful by implementing process efficiency and product innovation” as well as the third research report; „Umsetzbare Smart Metering-Produkte – Eine Handreichung für Vertriebe", in English; “Smart Metering products in practical use – A user guide for the sales force”, demonstrate how Smart Metering can be exploit in practical and economical feasible ways. They show the usage of already available intelligent metering products and systems ready for the implementation in the first phase of the Smart Meter market rollout in Germany. Both reports strongly underline the conclusion that Smart Metering technology is just part of the total solution.

Efficient processes: Result of economic Smart Metering

In future it will be impossible, to execute simple procedures like; supplier change, customers changing dwellings, tariff changes, in an economic acceptable way with today’s meters. Just an example: Today one supplier-change costs the “old” supplier between 150 and 200 Euro. No energy supplier can financially support these changes, when consumers massively will start the move to other suppliers, as it is predicted in the outlook of the liberated energy market. This one and many other processes, who need contribution of almost all departments of the energy supplying company or network operating company, urge for automatic processes, without any manual intervention and without disturbing the other ones. The report proves that Smart Metering is THE economically feasible option, because it simply increases process efficiency.

Meter reading: The biggest potential in cost reduction

What are the concrete potentials in cost reduction in these efficient processes? In the second report an estimation of cost saving has been made, based on data made available by the German regulator (Bundesnetzagentur) and based on the average operational cost. In table 1 the processes are listed with their bandwidth in cost saving potential. Number one in the ranking is the meter-reading process, here the utility can achieve a cost saving between 1,20 Euro and 12 Euro per annum and meter. Number two is transport management, followed by off-switching and monitoring vacancy of dwellings. Managing these processes automatically will generate savings up to 75%.

To determine and maintain utility’s potentials
For the determination of individual cost saving potentials the report proposes utilities, depending on the level of available data and capacity, to analyse their operational cost and their current processes either by following an interactive process cost calculation or by analysing substantial budget-lines in relevant processes. In practice hardly any utility uses process cost calculation, therefore the report concentrates on those processes that will have significant cost saving potentials. See table 1. As an alternative the current process cost can be calculated by adding the budget-lines “Personnel”, “IT” and “Miscellaneous operational cost”. For a realistic cost-benefit assessment when Smart Metering has been implemented all cost saving potentials need to be analysed, independently from the argumentation the utility used to arrive to this decision.

• “Young & Single",

• "Double Income, no Kids” (Dinkies),

• “Modern Lifestyle Families”,

• “Receptive Empty Nesters”

• “Sustainability Minded”.

The smallest target group mentioned here are the “Dinkies”, with a share 1 or 2 % of the total German population. The second-biggest target group, with a share of 5 to 7% are the “Modern Lifestyle Families”, followed by the “Receptive Empty Nesters” with 4%. The biggest target group, with a share of 8 to 10% of the German population are the “Sustainability Minded” people.

A small part of the representatives from the main target groups will actively address their utility to get informed about their Smart Metering offer. People of this rather small pro-active group you also will meet on other subjects if they have the feeling that they can influence the decision-making process or when they like to contribute in the first steps of the concrete realisation. The majority of the customers in these target groups however need to be actively informed about the new applications and products.

Customer added value predetermines product innovation

The first step in product development will be the exploitation of the technical Smart Meter possibilities by creating a matrix with all possible functional elements. This matrix can be used, to develop new suitable tariffs and products. These tariff and product elements will be linked with the expectations of the different target groups, see table 2. All these elements can be combined in such a way, like elements of a construction box, to new tariff and product specifications matching the expectation of one of the specified target groups.

The report estimates that for such a product the customer is willing to pay a fee between 30 and 50 Euro per annum apart from the initial payment. The cost of this offer, estimated at 35 Euro per annum per user, can be covered by a 30 Euro annual service, a slightly higher basic fee or consumption tariff combined wit an initial payment for 50 Euro. Additional income generated by other services offered by the supplier and also handled by the same web-portal compete the coverage of this “multi-supplier” monitoring.

For the utilities the highest potentials to earn money with Smart Metering products are, apart from the dynamic tariffs, Home automation services and Smart Grid applications. The keyword here is Multi-Utility. In near future the report foresees more demand for products and services for the following applications:

• Heating

• Solarsystems; thermal and photovoltaic

• Alarmsystems; fire, intrusion, technical

• Homemanagement

• Communication and Infotainment

• Energy-generation and storage

Another profitable business, partnership agreements with appliance-manufacturers in the development and sales of new products, will fit in the approach; maintaining lifestyle with less conventional energy consumption. Conservative calculations show that such partnerships may generate an additional turnover of around 10 Euro annually per customer. Especially community owned utilities should investigate how to make available there knowledge in the different business fields for a product development partnership and how they can combine this knowledge with their own added value offers in Smart Metering respectively Home-automation products. This “total approach” is a very promising business proposition for them, due to their unique position in most communities. These utilities have long-term cooperation relationships with social housing companies and local house-owner associations and above all they supply already all energy sources including water and heat in their area.

 

EVB Energy Solutions has initiated the research and production of these 3 “Smart Metering” reports executed by the Beratungsgesellschaft LBD, Berlin. These 3 reports, in German language, with more detailed information can be ordered via Sina Luckhardt (s.luckhardt@evb.net) EVB Energy Solution for 600 Euro each.




ESNA's first webinar:
"Benefits of Using NES4 - Making the Smart Grid possible"

On December the 18th ESNA distributed its first webinar of what is intend to be the start of a long range of public presentations concerning the features of the NES AMM architecture, infrastructure and its related added value applications for AMM and Smart Grid applications, offered by our members. We found Damian Inglin, product manager NES System software at Echelon willing to present this first webinar. In his presentation; “Benefits of Using NES 4 – Making the Smart Grid possible” he gave a detailed view in the new features of AMI system software.

NES 4 Damian's presentation is now available