No Nationwide Roll-Out of Smart Meters Recommended According to Cost-Benefit Analysis

The German Federal Ministry of Economics (BMWi) has published a study analyzing the costs and benefits of a full roll-out of smart meters in Germany. It concludes that it is not advisable and not in the interest of German consumers to implement the EU targets which would require that at least 80 % of consumers shall be equipped with intelligent meter­ing systems by 2020.

Pursuant to No. 2 of Annex I to EU Directive 2009\72\EC of 13 July 2009 concerning common rules for the internal market in electricity,  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. This shall take place by 3 September 2012.

The study, prepared by Ernst & Young on behalf of the ministry, was published on 30 July 2013. It shall serve as such an economic assessment.

The study also makes recommendations for options to implement the newly introduced Section 21c para. 5 German Energy Act which authorizes the German legislator to develop a different standard of smart meters for small customers. Such customers are not subject to the mandatory installation of smart meters pursuant to Section 21c para. 1 German Energy Act.

The study comes to the conclusion that smart meters in particular for small consumers are not cost-efficient, as the potential savings would be well below actual costs of smart meters and their operation. Therefore, it would not be reasonable to impose the 80 % target on German utilities and consumers.

Rather, the study advocates a roll-out which takes into account the particular challenges of the German “Energiewende” by focusing on the interoperability of smart meters and renewable energy generation facilities and decentralized concepts. It outlines and further analyses options for such an alternative roll-out which, for most customers, makes use of the usual replacement cycles of meters. It sets forth requirements for an expedite installation of smart meters where this is more efficient, e.g. if used in combination with decentralized renewable energy supply solutions, which also can be subject to intelligent feed-in and demand side management concepts. Thereby the costs of implementing smart meters can be reduced substantially compared to the inflexible 80% target, while achieving greater immediate benefits for the stability of the German grid and efficient energy consumption. On this basis, it can be expected that Germany already in 2024 will exceed the EU targets while having larger benefits from the outset.

The study further stresses the aspects of data security and data protection as crucial for a broad support for smart meters in Germany. Technically this is provided for by the standards developed by the Federal Agency of Safety in Information Technologies together with the industry. They shall be implemented in consultation with the Federal Counsel for Data Protection and Freedom of Information.

The German Ministry of Economics announced that it will evaluate and prepare a proposal for the implementation of the recommendations made in the study, including proposals for their financing.

The Federation of the German Energy and Water Industry (BDEW) welcomed the results of the study and the pragmatic approach taken by the Ministry, as this confirms positions supported by the association for quite a while.

Sources: BMWi, BDEW; Ernst & Young Study

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