In the UK and across Europe, smart metering is mandated. Both this technology and its governance are advanced well beyond the rest of the world. Meanwhile, other parts of the globe are exploring the potential of smart metering. Let’s dive into the concept as well as the pros and cons of applying it in the US, Australia, Middle East, and Asia.
What is Smart Metering?
Smart meters have existed since the 1970s, but are only now seeing widespread interest and adoption. These meters attach to residential and commercial buildings, connect to a smart energy grid, and monitor and display gas and electricity usage in real time. In contrast to traditional meters that only track total consumption, they can indicate how much energy is being used at a particular time and on a particular day.
Benefits of Utilities 2.0
For consumers, smart meters put an end to estimated bills, while helping them take better control of their usage. Smart meters allow consumers to adjust their energy consumption to take advantage of varying energy prices throughout the day. As a result, they can save money on energy bills by shifting their energy consumption—such as running a dryer or dishwasher—to lower price periods. This is extremely valuable considering the International Energy Agency expects global energy demand to increase 37% by 2040.
At the same time, these meters communicate with the energy supplier as an Internet of Things (IoT) device. In turn, utilities can better manage energy flow, and eliminate the need for physical visits to read meters. With real-time insight into power usage and demand, utilities can more strategically decide when and where to replace or upgrade infrastructure. Plus, they can get more predictive about demand, enabling them to better distribute the load in neighborhoods or on streets to reduce network strain. In fact, they can apply preventive measures before issues occur and customers complain.
The projected savings alone should raise some eyebrows in regions that haven’t yet adopted smart metering. In fact, utility companies are projected to save $157 billion by 2035 through the use of this straightforward technology. Moreover, utilities can offer new services based on their insight into consumption and ability to control energy and services via the IoT.
How Many Consumers are Leveraging Smart Metering?
According to Navigant Research, the smart electric meter market has largely gained traction in North America, Europe, and isolated areas of Asia Pacific. BI Intelligence estimates that the global installed base of smart meters will rise from 450 million in 2015 to 930 million in 2020. Here is a sampling of installations around the world:
- In the US, there were almost 65 million smart meters installed, the majority in residences. According to an IEI Report published in October of 2016, installations will reach 90 million by 2020.
- The EU expects to roll out nearly 200 million smart meters for electricity and 45 million for gas by 2020.
- As of early 2017, only five million of Britain's 26 million homes had a first generation smart meter installed, despite the fact that the British government has mandated that digitally connected smart meters be in all British homes by 2020.
- In the Middle East, 86% of homes and businesses are expected to have smart meters by 2022. Various smart meter projects are underway in the Middle East. In Lebanon, the state-owned utility, Electricité Du Liban (EDL) plans to convert 1.2 million electric meters to smart meters. Iran is underway with a limited smart meter trial and plans to ultimately install 33 million smart meters. Between now and 2024, Egypt expects to convert up to 4 million electric meters each year to smart meters for a total of 30 million meters. Other Middle Eastern countries with smart meter projects or plans include Pakistan, Kuwait, Saudi Arabia, and Iraq.
- In Japan, ten major utilities have committed to widespread smart meter rollouts between 2016 and 2024 of 78 million smart meters across residential and low-use customers.
- In Victoria, Australia, smart meter installation has been mandated. As of early 2017, 89% of residential and small business customers had them.
Hurdles to Adoption of a Digitized Energy System
While smart meter deployments and projects are already underway, utilities and governments must address numerous issues and factors to make these work reliably on a large scale. Governments are responsible for overseeing the following:
- Establish and operate a smart grid network that collects and transmits data from smart meters.
- Governance of the smart grid network, including detailing the rights and obligations of utilities as relates to the use of the network and data.
- Issue licenses to utilities participating in the smart grid network.
- Determine whether smart meter adoption should be mandatory or optional.
- Create technical standards for smart metering equipment, and ensure meters are accurately reading energy consumption.
At the same time, utilities must address the following on their ends:
- Develop and submit modernization plans and roadmaps outlining planned capital investments.
- Adopt time-varying rates to give customers price signals to reduce their energy usage.
- Skill up to install and maintain smart meters; collect, read, analyze and respond to the data.
- Develop grid-level applications and services that take advantage of insight into demand and consumption.
- Address data privacy and cyber crime concerns by determining data access, security, and privacy guidelines and measures.
- Devise a plan to ensure continuity of service as consumers and businesses switch to smart metering and the smart grid network.
- Address how to handle more challenging properties (such as high rises).
- Convince consumers to adopt a new product and incur additional fees (e.g., installation, meter reading, surcharge to support implementation, etc.)
- Support prepayment meters and customers.
While smart metering promises great benefits for both consumers and utilities, the key is the smart grid, communications systems, and data management capabilities at the core of the initiatives. With this infrastructure—and the supporting elements in place—utilities can pursue new market opportunities and provide better customer service.
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