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Smart meters can relieve electricity grids and reduce distribution grid expansion: study

Published 15 July 2014

Intelligent meters and metering systems, so-called smart meters, can take pressure off the German electricity grid and substantially reduce the necessary expansion of the distribution grid until 2030.

However, this requires significant investments, especially by grid operators. The costs associated with the equipment of one million metering points ranges between € 467 and 837 million. This is the result of a study conducted by the Deutsche Energie-Agentur (dena) - the German Energy Agency - which analyses the benefits and regulatory framework applicable to smart meters from the perspective of the grid operators.

"There are a number of ways in which smart meters can make a contribution to the success of the energy turnaround," says Stephan Kohler, dena's Chief Executive. "In particular, they facilitate the reorganisation of grid operations, optimum harmonisation between electricity generation and consumption and hence better integration of renewable energies into the electricity system. Thanks to the dena Smart Meter Study, more accurate estimates of the costs and benefits facing grid operators can now be made."

The study was broken down into three appraisals. The cost appraisal investigates the investment required for a successful introduction of smart meters along the entire value-added chain for various grid operator types. The grid appraisal evaluates the benefits of smart meters inasmuch as they render further grid expansion and conversion unnecessary, and the regulatory appraisal analyses the organisation of the regulatory framework.

The study is based on the cost-benefit analysis for smart meters and metering systems which was prepared on behalf of the Federal Ministry of Economics in 2013. This analysis recommends the installation of smart meters and metering systems at over 50 million metering points in Germany. Distribution grid operators are required to make advance payments for these acquisitions.
Creating the necessary framework conditions

"As a result of our current regulations, the return on investment generated by grid operators will be delayed by up to ten years," says Stephan Kohler. "If we want to prevent grid operators from encountering liquidity bottlenecks, politicians must adjust the legal framework."

The dena study therefore recommends further development of the so-called incentive regulations. According to these regulations, the Federal Network Agency specifies the fees with the help of which distribution grid operators will also have to refinance the introduction of smart meters. The incentive regulations are to ensure a prompt return on annual investments and costs which will go up over the years.
Developing a legal basis for the beneficial use of smart meters

According to the dena study, the introduction of smart meters can reduce the investment required for grid expansion purposes by 36 percent until 2030. However, this can only be achieved if the following requirements are met: Firstly, consumers must be actively involved through saving electricity thanks to smart meters and using certain appliances when grid operation makes this use expedient. Secondly, grid operators must have the option of controlling feed-in from decentralised generation systems and the connection of electricity-consuming systems (loads). A suitable legal basis is required to help smart meters develop their full potential.

Numerous power generation systems within the German distribution grids already feature control options that may contribute to a reduction of the grid expansion requirement. The extent to which smart meters provide added value to existing control options and may be financially attractive to other market players remains to be investigated and weighed against the associated costs.
Setting comprehensive targets and allowing technical leeway

The costs associated with the introduction of smart meters can be reduced if grid operators are free to use the most suitable technical solution for their specific grid area. To ensure that the introduction of smart meters is successful and economical, the legislator should set targets, for instance regarding the number of meters that should be installed in a certain period. However, with regard to the technical implementation, the legislator should grant sufficient leeway for grid operators to implement the best economical solution.

dena Smart Meter Study

The detailed analyses and recommendations are available in the summary of the study entitled "Implementation of Smart Meters in Germany: Analysis of Rollout Scenarios and their Regulatory Implications".

dena initiated and headed the study with the assistance of the following project partners: AllgäuNetz GmbH & Co. KG, Die Netzwerkpartner n. e. V., DREWAG NETZ GmbH, E.DIS AG, EWE NETZ GmbH, Mitteldeutsche Netzgesellschaft Strom mbH, münsterNETZ GmbH, Netze BW GmbH, RWE Metering GmbH, Stromnetz Berlin GmbH and Thüga Aktiengesellschaft.



Source: Company Press Release