Study on smart meters from the angles of the consumer protection and the public service

112 Pages·2010·1.46 MB·English

by  Geert Deconinck

Study on smart meters
from the angles of the consumer protection and
the public service obligations
Ref: FPS Energy 2009/S2/E2/COMPTEURS_INTELLIGENTS

27 October 2010
G. Deconinck, B. Delvaux, K. De Craemer, Z. Qiu, R. Belmans
K.U.Leuven – ESAT – ELECTA
Kasteelpark Arenberg 10 bus 2445
3001 Leuven-Heverlee
Belgium
Table of Contents
Table of Contents ..................................................................................................... 2
Table of figures......................................................................................................... 3
Table of tables .......................................................................................................... 3
1 Introduction .......................................................................................................... 4
2 Technological evolutions ....................................................................................... 8
2.1 Advanced and smart metering ................................................................................ 8
2.2 Smart metering in Europe ..................................................................................... 16
3 Analysis of norms and standardisation initiatives ................................................. 45
3.1 Standardisation mandate M/441 ........................................................................... 45
3.2 Measuring Instruments Directive ........................................................................... 47
3.3 Other standardisation initiatives ............................................................................ 50
4 Legal framework and analysis .............................................................................. 57
4.1 Public service obligations and consumer protection in European energy law ........ 57
4.2 Implementation of intelligent metering systems and smart grids in Belgium .......... 68
5 Discussion ........................................................................................................... 81
5.1 On the dependability and security attributes .......................................................... 81
5.2 On the functionality of smart meters and the communication architecture ............. 85
5.3 Smart metering as a mechanism to a more energy-efficient society ...................... 86
5.4 Current status of directives ................................................................................... 91
6 Cost / benefit analysis ......................................................................................... 93
6.1 Elements on the cost side ..................................................................................... 93
6.2 Elements on the benefit side ................................................................................. 95
6.3 Other cost/benefits analyses in Europe ................................................................. 96
7 Summary and conclusions .................................................................................. 107
8 Approach and acknowledgements ..................................................................... 111

Major versions
20 May 2010: report v3 for discussion at internal workshop on 18 Jun 2010.
19 Jul 2010: report v4 for discussion at FPS on 23 Aug 2010.
26 Aug 2010: report v5 for discussion at public workshop on 17 Sep 2010.
14 Oct 2010: report v6: semi-final version.
27 Oct. 2010: report v7: final version.
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Table of figures
Figure 1: Telegestore setup.............................................................................. 18
Figure 2: metering module including communication ....................................... 18
Figure 3: Vattenfall case in Sweden ................................................................. 20
Figure 4: Finnish rollout planning ..................................................................... 22
Figure 5: expected metering penetration in Finland ......................................... 22
Figure 6: Spanish customer division ................................................................. 25
Figure 7: smart metering rollout plan in Portugal .............................................. 26
Figure 8: Portuguese smart metering technical reference architecture ............ 27
Figure 9: Norwegian wireless smart meter access ........................................... 28
Figure 10: UK minimum smart meter requirements .......................................... 30
Figure 11: relationship in Germany between energy market players ................ 35
Figure 12: Irish time periods for time-of-use tariffs ........................................... 37
Figure 13: web interface (Ireland) ..................................................................... 38
Figure 14: ESB consumer in-home display unit................................................ 38
Figure 15: ERGEG status smart metering in Europe ........................................ 43
Figure 16: relevant standards in smart grids and smart homes ........................ 55
Figure 17: IEC TR 62357 Seamless Integration Reference Architecture (SIA) 56
Figure 18: architecture from NTA8310 ............................................................. 85
Figure 19: Contribution of all cost/benefit items to total NPV [fig 4.1 of KEMA
study] .............................................................................................................. 102
Figure 20: Allocation of all cost/benefit items to different actors [fig 4.2 of KEMA
study] .............................................................................................................. 102
Figure 21: Sensitivity analysis of parameter changes of cost/benefit items to
overall NPV result [fig 4.4 of KEMA study] ..................................................... 103
Figure 22: NPV from DSO perspective in France [slide 13 of ERGEG
presentation] ................................................................................................... 104
Figure 23: benefits for generators (top) and suppliers (bottom) in France [slide
16 of ERGEG presentation] ............................................................................ 105

Table of tables

Table 1: linking applications to additional functionalities .................................. 12
Table 2: overview of smart metering in Europe ................................................ 44
Table 3: potential energy savings from smart metering .................................... 90
Table 4: Major costs and benefits considered in the KEMA study for Flanders 99

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1 Introduction
This study concerns a critical analysis of advanced metering systems for electricity and
gas, from the angles of consumer protection and public service obligations.
This scope relies on two major concepts that are both elaborated further in this
document.
 Advanced metering deals with energy metering devices that are remotely
accessible and/or controllable. They are often called smart meters, though the
level of smartness of the meter is sometimes debatable. Smart meters are
being installed for different reasons, ranging from a replacement of the periodic
manual meter readings to fully controllable grid elements in a smart grid context
where many dispersed renewable electricity resources are combined with
centralised power plants.
 Public service obligations guarantee, via regulatory standards or otherwise,
levels of protecting consumers that are not maintained by market mechanisms
only. Examples include avoiding customer discrimination, guaranteeing privacy,
ensuring freedom-of-choice for customers, etc.
This document focuses on relevant technological evolutions and standardisation
initiatives, as well as a legal analysis, all focused on the Belgian situation in a
European context.
The major involved actors for smart metering include the following players.
 End-users, at whose premises the smart meter will be installed.
 Distribution system operators, who are responsible for managing the low
voltage electrical distribution grid and/or low pressure gas distribution network.
 Energy suppliers (for electricity or gas) with whom the end-users have a
contract for energy supply.
 Metering companies that responsible for collecting energy measurements from
the end-users.
 Telecommunication providers, via the communication network of whom the
smart meters communicate with each others or with database.
 Energy service providers that (will) provide new energy-related services to end-
users or other market players. Aggregators are an example of this category.
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 Producers that e.g. generate electricity and balancing responsible parties.
 Regulators that set out rules and guidelines.
 Public authorities that set out policies and rules.
From these actors, only the telecommunication providers and energy service providers
are different in a smart metering context, than without smart meters. The other actors
exist also in the context of classic meters. Some actors are taking up different roles
since the energy market has been liberalised.
It is clear that many of the functionalities and associated responsibilities (e.g. for data
collection and validation) for smart meters will not be different from the existing
analogue meters. However, smart meters provide additional opportunities for using the
digital data that comes directly from the measuring devices (e.g. for monitoring
purposes in smart grid applications) as well as threats (e.g. disclosing information to
third parties that may use it commercially or maliciously), that are to be examined
further. Replacing analogue meters by smart meters has, amongst others, the following
implications.
 Smart meters allow functionality that was not possible with analogue meters.
Examples include remote meter reading, or remote switching of suppliers, or
continuously informing the consumer of its energy consumption via different
channels.
 It allows functionality that may not be desired. Examples include the possibility
of supplier to disconnect non-paying customers.
 It also implies a change in mentality for the consumers – they have to be open
for the new functionality, some people are conservative or averse of a digital
society. The abilities to remotely increase the credit in a prepaid meter –without
having to go to a social service- may also be considered positively by some
citizens.
 It introduces new vulnerabilities the digital information that has to be transmitted
can be eavesdropped or modified if not adequately protected, the
communication infrastructure can fail.
Additionally, a number of problems will have to be solved if the billing is based on
monthly meter readings, or if the energy consumption is not only displayed in energy
units (kWh for electricity) or volume units (m³ for gas), but also in monetary units (€).
For the former, this may lead to much more expensive energy bills in winter than in
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summer, or even negative bills if the consumer has a PV-installation that produces
more than consumed in some months. For the latter, one can think of possibility to
show or not the 100kWh of „free‟ electricity that is granted per person per year in some
cases. These aspects are however not strictly related to the smart meter, i.e. they
would also occur if one switches to monthly readings of an analogue meter, or if other
monitoring devices are attached locally.
It is assumed that the smart meters will at least have the functionality of analogue
meters, i.e. measure the energy consumption accurately enough according to the
norms, retaining that information locally and showing the energy consumption to the
user.
In what follows meters for electricity and gas are considered. It is however clear that
much of the metering digitization is driven by electricity meters, also because this
allows easier energy supply to the meter itself, than for gas meters, which need to be
connected to a power source (e.g. battery). Additionally, there are safety issues related
to remote (re)connection of gas installations.
This report elaborates some of these elements in order to provide input for discussion
and to assess the potential impact of smart meters on the public service obligation and
the protection of the consumer.
In this context, this report will help providing an assessment as indicated by the
European Directives 2009/72/EC and 2009/73/EC.
Dir. 2009/72/EC: “Member States shall ensure the implementation of intelligent
metering systems that shall assist the active participation of consumers in the electricity
supply market. The implementation of those metering systems may be subject to an
economic assessment of all the long-term costs and benefits to the market and the
individual consumer or which form of intelligent metering is economically reasonable
and cost-effective and which timeframe is feasible for their distribution. Such
assessment shall take place by 3 September 2012. Subject to that assessment,
Member States or any competent authority they designate shall prepare a timetable
with a target of up to 10 years for the implementation of intelligent metering systems.
Where roll-out of smart meters is assessed positively, at least 80 % of consumers shall
be equipped with intelligent metering systems by 2020. The Member States, or any
competent authority they designate, shall ensure the interoperability of those metering
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systems to be implemented within their territories and shall have due regard to the use
of appropriate standards and best practice and the importance of the development of
the internal market in electricity.”
Dir. 2009/73/EC: “Member States shall ensure the implementation of intelligent
metering systems that shall assist the active participation of consumers in the gas
supply market. The implementation of those metering systems may be subject to an
economic assessment of all the long-term costs and benefits to the market and the
individual consumer or which form of intelligent metering is economically reasonable
and cost-effective and which timeframe is feasible for their distribution. Such
assessment shall take place by 3 September 2012. Subject to that assessment,
Member States or any competent authority they designate, shall prepare a timetable for
the implementation of intelligent metering systems. The Member States or any
competent authority they designate, shall ensure the interoperability of those metering
systems to be implemented within their territories and shall have due regard to the use
of appropriate standards and best practice and the importance of the development of
the internal market in gas.”
The document is structured as follows. Section 2 starts with a technological
background on smart metering and relevant experiences in Europe. Section 3 brings in
the context of relevant norms and standards. Section 4 elaborates the legal framework.
Section 5 discusses these elements to the relevance for public service obligations and
consumer protection. Section 6 provides an overview of cost/benefit approaches, while
section 7 summarizes the conclusions.
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2 Technological evolutions
The most basic function of a smart meter is to measure how much energy (electricity,
gas) is consumed, and communicate with other devices via certain communication
technology. The customer then can identify the billing at near real-time. More advanced
features of smart meters are power outage notification, and power quality monitoring.
The communication is a key distinction which differentiates the smart meters currently
available on the market. Each meter must be able to reliably and securely
communicate the information collected to some central location. Used communication
technologies include licensed radio, unlicensed radio, power line communication and
wired (cable) communications.
According to the European Smart Metering Alliance (ESMA)1, smart meters have the
following features:
 Automatic processing, transfer, management and utilization of metering data
 Automatic management of meters
 Two-way data communication with meters
 Provides meaningful and timely consumption information to the relevant parties
and their systems, including the energy consumer
 Supports services that improve the energy efficiency of the energy consumption
and the energy system (generation, transmission, distribution and especially
end-use)
2.1 Advanced and smart metering
Advanced metering can be implemented with different levels of intelligence associated
to the meter. Typically three types can be distinguished, in order of increasing
interaction level and feature contents.
 AMR (automated meter reading) implies the remote reading of the
measurement registers of a (electricity, gas, water, …) meter without physical
access to the meter. It can be implemented via a temporary RF (radio) link to
the meter from a car passing by in the street while interrogating the meters, or

1 Josco C.P. Kester, María José González Burgos, John Parsons. Smart Metering Guide
Energy Saving and the Customer, Edition 2010. 16 November 2009, available from
http://www.esma-home.eu/.
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as an (always connected) communication link to the meter from the data
collecting devices. However, AMR is a one-way system, just collecting data
from the meters.
 AMM (automatic meter management) extends AMR with the ability to manage
meters remotely, through the AMI (advanced metering infrastructure). It allows
bidirectional data communication. For instance, it allows for disconnection of
customers, for dimming their usage (e.g. down to a socially acceptable 6A or
10A for non-paying customers) or for reconnection of customers (except for gas
because of safety issues).
 Smart metering extends AMM with additional control abilities. For instance, it
allows to shut down several customers simultaneously on short notice – in order
to balance the grid in case of an incident –, or for demand side management –
for usage flattening or load shifting –, or for integration in home automation
systems – for automatic response to varying prices in real time pricing or time-
of-use pricing scenarios –, etc. Smart metering refers services that measure,
collect and analyse energy usage, and interact with advanced devices through
various two-way data communication. This infrastructure includes hardware,
software, communications, consumer energy displays and controllers, customer
associated systems, meter data management software, supplier and network
distribution business systems, etc. It broadens the scope of AMM beyond just
meter readings with additional features enabled by two-direction communication
between customers, supplier functions and multiple service providers, offering
potential benefits at many different stages of the electricity supply chain. As
such, smart meters are an indispensable enabler in a context of smart grids
which deploy advanced information and communication technology to control
the electrical grid.
Hence, according to these specifications, the current deployments of advanced meters
in Europe typically are more concerned with deploying an advanced metering
infrastructure than with installing controllable smart meters of the latter kind.
It is important to understand the fundamental differences between advanced and smart
meters, and be aware that if the deployment is limited to advanced meters, some of the
promises held by smart meters (via their controllability) will not be reached.
However, current practices call the second and third category above „smart meters‟.
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2.1.1 Additional functionalities
A useful description of the different functionalities for intelligent meters has been
provided by the Smart Metering – Coordination Group in the context of the M/441
mandate (see also section 3.1 )2. Additionally it enumerates six groups of additional
functionalities that are useful for smart meters. These functionalities are additional with
respect to the metrological functions currently performed by conventional meters /
metering systems. Such additional functionalities may be integral to the meter or
included within connected devices.
 F1: Remote reading of metrological register(s) and provision to designated
market organization(s).
 F2: Two-way communication between the metering system and designated
market organization(s).
 F3: To support advanced tariffing and payment systems.
 F4: To allow remote disablement and enablement of supply and flow/power
limitation.
 F5: Communicating with (and where appropriate directly controlling) individual
devices within the home/building.
 F6: To provide information via web portal/gateway to an in-home/building
display or auxiliary equipment.
These are broad categories, defined top-down from the perspective of applications to
be executed on the smart meters. They are described in more detail in table 4 of the
SM-CG report. It is important to understand their scope, as cited below:
 Not all functionalities will necessarily feature in all applications / smart metering
systems (electricity / gas / heat / water). The applications will differ in the extent
to which the various functionalities are applicable or appropriate and how each
functionality might be used.
 Not all functionalities will necessarily feature in all Member States. Even within
a specific application (electricity / gas / heat / water), the Member State will
have to consider those functionalities against the need and the robustness of

2 SMART METERS CO-ORDINATION GROUP, FINAL REPORT Version 0.7 – 2009-12-10, 52
pages. Available from http://www.nbn.be/NL/SM_CG_FinalReport_2009_12_10.pdf
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