The document summarizes a study on the costs and benefits of implementing smart metering for households in the Netherlands. The study found that smart metering would have a positive net present value of over 1 billion euros, bringing cost savings through more efficient outage handling, fraud detection, and reduced calls and meter readings, while enabling consumer energy savings and more competitive energy prices. However, the benefits for individual households would be small. Market players were generally favorable towards large-scale rollout, but had differing views on issues like open versus closed meter markets. The ministry was preparing an agreement on a transition plan to implement smart meters.

1. Smart Metering for Households:
Cost and Benefits for the Netherlands
Hans-Paul Siderius
SenterNovem, The Netherlands
1

2. Overview of presentation
• Policy background: Energy Services Directive article 13
• SenterNovem study on costs and benefits smart metering:
Standardization
–
Cost Benefit analysis
–
Market Consultation
–
• Conclusion and discussion, including:
Some developments in the Dutch energy market
–
relevant for metering.
IEE project ESMA.
–

3. Policy background
• Energy Services Directive (2006/32/EC), article 13(1):
• Member States shall ensure that, in so far it is
• technically possible,
• financially reasonable and
• proportionate in relation to the potential energy savings
• final customers … are provided with competitively priced
• individual meters that accurately reflect the final
customer’s
• actual energy consumption and that provide information on
• actual time of use.

4. Goal and set-up of SenterNovem study
Cost benefit analysis of large scale introduction of
smart
metering for residential customers in the Netherlands.
• 3 parts:
• Study on standardisation smart metering (by NEN)
• Cost benefit analysis of large scale introduction smart
metering (by KEMA)
• Consultation market players (by SenterNovem)

5. What is a smart meter?
woning
display
display
trim consumption
loggen
logging 1234
1234
1234 1234
verwerken
calculation
5678 5678
measurement 5678 5678
aansturen
control
switch on/off
modem
modem
Electricity Gas

6. Specifications smart meter
• Counter (kWh)
• Logging consumption and return delivery (PV!) per period
• Outages
• Internal clock
• 2 way communications
Automatic meter reading (standard format)
–
Switch on – switch off possibility on distance
–
• Standard output for data

7. Standardisation: conclusions
• Standardisation is essential, but NOT the only condition
for large scale introduction of smart metering
• Good support by market players
• Incentive necessary from government as regulator:
Definition of functionality smart meters
(market will introduce standardisation)

8. Cost benefit analys: base case and target case
Base case
Nulsituatie
handmatige
handheld
handheld
verwerking
handmatige
processing
processing
verwerking
Database:
standaard
conventional
meter -netoperator
meter
-supplier
Target case
woning
display
display
kWh,m3, €
kWh, m3, €
netoperator
Interface,
Interface,
smart gateway
Database
measuring
measuring supplier
meter
protocol
protocol
…

9. Cost benefit analysis: result + 1,2 billion EUR
Efficientere storingsafhandeling door slimme meter E
Snellere storingsmelding door slimme meter E
Effectievere aanpak wanbetalers door slimme meter G
Effectievere aanpak wanbetalers door slimme meter E
Snellere detectie van fraude E-meters (stroomdiefstal)
Verschuiving elektriciteitsverbruik door vraagresponse
Makkelijker switchen leidt tot meer concurrentie en prijsdaling G
Makkelijker switchen leidt tot meer concurrentie en prijsdaling E
Maandelijkse facturering energieverbruik door leverancier
Efficiënt verloop switchproces door betere meterstanden G
Efficiënt verloop switchproces door betere meterstanden E
Vermindering klachten G via call center
Vermindering klachten E via call center
Besparing kosten jaarlijkse bepaling meterstanden
Besparing kosten fysiek meteropnemen E+G
Zuiniger gedrag bewoners t.a.v. gasverbruik
Zuiniger gedrag bewoners t.a.v. elektriciteitsverbruik
Inrichting infra t.b.v. terugkoppeling meetdata naar verbruikers
Inrichten datacentra voor meetdata
Inrichten data-infrastructuur via ADSL of kabel
Inrichten data-infrastructuur via GSM/GPRS
-60 -50 -40 -30 -20 -10 0 100 200 300 400 500 600 700 800 900 100
Inrichten data-infrastructuur via Power Line Communications (PLC)
0 0 0 0 0 0 0
Aanschaf en installatie slimme gasmeters
MEURO

10. Cost benefit analysis: + 1,2 billion EUR
most important costs MEUR
Purchase and installation smart meters (E+G) 798
Monthly billing energy consumption by supplier 437
Organization the data-infrastructure via PLC/internet/GSM 354
most important benefits MEUR
Easier switching more price-competition
reduction E+G price 1.353
Less complaining via call center 927

11. Cost benefit analysis: Who pays, who benefits
4.500
4.000 costs
3.500 benefits
3.000
2.500
MEUR
2.000
1.500
1.000
500
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12. Cost benefit analysis: Sensitivity analysis
Transition time (10 years) NPV (in M€)
20 years 1.000
5 years 1.400
Meter (100% gas + electricity)
Only 100% electricity meters 400
5% electricity - and gas meters 50
Reduction energy price (E -0,0025; G -0,0050)
E -0,0010 EUR/kWh; G -0,0020 EUR/m3 414
E -0,0040 EUR/kWh; G -0,0080 EUR/m3 2.037
Data infrastructure (40%PLC, 40% internet, 20%GSM)
100% PLC 1.500
100% internet 1.600
100% GSM 0

13. Cost benefit analysis: conclusions
• Net present value is positive, but:
social cost/benefit analysis is not equal to a cost/
benefit analysis performed by an individual company
Split incentives
Benefit for each individual household small
• Discussion about benefits for households
Expected reduction of energy prices?
Expected energy savings by feedback?

14. Market consultation: conclusions
• Market favourable on large scale introduction of smart metering
ESD can be an impulse
–
Definition of minimum requirements smart meters
–
• Shared starting points
Energy company needs accurate data and on time
–
Energy company prefers independency of net operator
–
• Conflicting starting points
Open meter market
–
Closed meter market
–

15. Conclusions and discussion
• Smart metering for households has a positive cost-benefit
balance.
• The market is favourable of large scale introduction.
• Discussion on:
Metering market
–
Feedback benefits for households
–

16. Development of meter market in NL (1)
• Smart metering as ‘standard infrastructure’
Standardisation of reading smart meters
–
Net operator responsible for hardware
–
Supplier responsible for data
–
Regulation of process of transition
–
• Energy supplier – market
Services (e.g. feedback) based on smart meter
–
data should be market driven
Possibility for add-on modules to smart meter
–
Supplier determines priority
–

17. Development of meter market in NL (2)
• Agreement on large scale implementation of smart meters
in households is prepared by ministry of Economic Affairs
and sector (expected 1 September 2006):
Transition time
–
Responsibilities in transition period
–
Priorities
–

18. ESMA: European Smart Meter Alliance
• IEE Save project on smart metering:
• SenterNovem responsible for study on energy savings realised
by different forms of feedback to consumers, especially:
Long term development of savings
–
Savings related to different forms of feedback
–
• Interest in field trials with smart metering and feedback to
obtain data!