The Emerging Smart Metering Landscape

Metering technology has remained largely unchanged since it was originally introduced. With greater environmental awareness and more demand for energy services, smart metering offers a potential solution to suppliers willing to introduce it.

Report Highlights
The level of Smart Metering introduction is highly variable across Europe, with little relation to the level of liberalization of markets.

""Legislator push"" - that is government mandates - to introduce Smart Metering have been a key driver for the introduction of this technology in many countries, such as Sweden, and in the future, the Republic of Ireland, though in Italy demand management was a key factor.

Customers with non-standard demands, or moving existing standard customers off current times of peak demand can generate significant savings for Suppliers, savings which could potentially be passed on to the benefit of customers.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Historically, utilities have been interested only in the volume of consumption of a customer over an extended period of time 2
The methods used to meter electricity and gas customers remain largely unchanged since the first meters were introduced 2
The form of metering applied to a customer is generally split depending on volume of consumption 3
Volume allocation systems rely on profiling of grouped customers to calculate settlement during a particular period 4
Suppliers face many problems in consistently obtaining readings and poor data quality can lead to difficulties 5
Smart metering opportunities exist in different aspects of the supply chain 6
Increasing the frequency of readings will allow greater accuracy in the allocation of consumption 6
Where a commodity is traded wholesale at variable prices throughout the day, increased granularity will allow greater price reflectivity 7
A beneficial consequence of greater tariff flexibility is peak shedding 8
Smart metering is not restricted to end consumers, and can be installed in the distribution network 9
Larger capacity sites with daily readings can still benefit from the economies of scale of smart metering 10
The adoption of smart metering is driven by different factors in different markets 11
Legislation and market forces are two key drivers for smart metering implementation 11
Microgeneration and corresponding feed-in-tariffs require greater meter complexity 12
Consumers can be made more aware of their demand, and so can aim to minimize their consumption during times of peak demand 13
AMI will remove, automate or simplify aspects of traditional meter management 14
The liberalization of markets creates a paradox: there is a greater potential benefit, but also a greater potential impediment to adoption 15
The level of adoption of AMR varies throughout Europe, though most countries now have an intention to implement 15
European power markets show varying degrees of liberalization, with most markets having an element of regulation 17
European gas markets are marginally more liberalized than the power markets, yet are still often regulated 18
As markets become increasingly liberalized, they become increasingly cost reflective 19
The financial and administrative burden of AMI is difficult to allocate in a competitive market 20
Regulator or Legislator involvement may be necessary to resolve the question of who pays for AMI 21
APPENDIX 22
Glossary 22
Ask the analyst 22
asken@datamonitor.com. 22
Datamonitor consulting 22
Disclaimer 22
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Figure 1: Nearly three quarters of the electricity meters in Europe are found in the top six countries. 2
Figure 2: As demand increases, it becomes more important to understand when demand occurs. 3
Figure 3: Profiling averages the consumption of similar sites so that use at a given time of day can be calculated. 4
Figure 4: An inaccurate reading can take two further readings to be resolved. 5
Figure 5: Where more frequent readings can be obtained, the improved granularity increases the accuracy of the profiling system. 6
Figure 6: A rational market uses the cheapest possible combination of providers of commodity to make up the required demand. 7
Figure 7: Being able to show a reduction in peak demand may offer significant reduction in cost to the Supplier 8
Figure 8: Unbundled Supplier Hub system 9
Figure 9: Greater visibility of energy use allows customers to manage their consumption better. 10
Figure 10: Unbundled Supplier Hub with customers generating. 12
Figure 11: Wholesale costs vary over the day, but correspond strongly to total demand. 13
Figure 12: Unbundled Supplier hub with AMI operator. 14
Figure 13: Electricity: European markets vary in their current degree of adoption of smart metering 15
Figure 14: Power markets in Europe by regulation 17
Figure 15: European gas markets differ strongly in degree of liberalisation 18
Figure 16: Liberalized markets pass through costs and benefits more effectively than closed markets 19
Figure 17: Regulators and Legislator relationships 21
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