Committee Hearing on Proposed Bill on the Digitisation of the Energy Turnaround

On 13 April, the Committee on Economic Affairs and Energy of the German Bundestag held a public hearing on the Act on the Digitisation of the Energy Turnaround. A key component of this bill is the Metering Point Operating Act (Messstellenbetriebsgesetz – MsbG). Despite agreement in many areas, the experts also remained critical on various aspects of the bill.

1. Background

The Act on the Digitisation of the Energy Turnaround (Gesetz zur Digitalisierung der Energiewende) shall contain a framework for the electricity sector to become one of the first fully digitised sectors in Germany’s economy. However, the name “Act on the Digitisation of the Energy Turnaround ” is overly broad and therefore somewhat misleading, as the bill only covers certain aspects of energy sector digitisation.  It mainly deals with the installation and operation of  smart metering systems (intelligente Messsysteme) in the distribution grid. More specifically, it aims to put in place certain technical preconditions and data protection rules, mainly contained in a new Metering Point Operating Act (Messstellenbetriebsgesetz – MsbG).

a) Need for Regulation

In an electricity system characterised by volatile electricity production it is increasingly necessary to connect networks, production and consumption efficiently and intelligently. There is a growing need for a demand and consumption oriented link between production and consumption. Information and communication technology plays a central role in this, to allow monitoring and optimisation of connected energy system components. The aim is to ensure energy supply based on an efficient and reliable system operation.

So far, German household consumers mainly use electromechanical electricity meters. Traditional meters only provide a very limited amount of transparency and cannot transfer electronic data or offer a possibility for an automatic controlling and switching of devices. By contrast, smart meters consist of a digital meter and a communication unit, the smart meter gateway. It shall allow data protection and data security compliant integration of smart meters into a smart network.

As Germany is traditionally rather concerned with data protection issues, a key requirement for the new Metering Point Operating Act is to ensure as sufficiently high level of data protection and data security. The current German Energy Industry Act (in Section 21g EnWG) already contains certain requirements for energy sector specific data protection, authorising the German Government to issue additional requirements. The new Act on the Digitisation of the Energy Turnaround shall comprehensively revise the legislative framework in this area.

b) Technical Requirements to Ensure Data Protection and Data Security

The MsbG shall make protection profiles and technical guidelines for smart meters binding to ensure data protection, data security and interoperability of systems. These rules have been drawn up by the Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik – BSI) together with industry representatives, the Federal Data Protection Commissioner (Bundesbeauftragten für den Datenschutz und die Informationsfreiheit), the Federal Network Agency (Bundesnetzagentur – BNetzA) and the National Metrology Institute (Physikalisch-Technische-Bundesanstalt – PTB). For further information regarding the protection profiles and technical guidelines see here.

c) Harmonizing Costs and Benefits

Plain cost regulation with price caps shall ensure that costs do not exceed expected benefits. There shall not be a roll out of smart meters at any price. An earlier cost-benefit analysis had proposed a benefit-orientated roll-out. By implementing this, the bill shall ensures that benefits to the electricity consumer outweigh the costs. There shall be a statutory requirement to deploy smart meters where there is a corresponding benefit in terms of energy efficiency, the system or the network.

d) Permitted Data Transfers

The bill also contains detailed provisions on who shall be allowed to have access to which data at which time. This shall ensure high degree of data protection.

2. Committee Hearing

Last weeks Committee hearing again highlighted several areas of concern.

a) Transmission System Operators

Boris Schucht, CEO of 50Hertz, presented the TSO’s point of view, along with a joint statement of the transmission system operators (TSO’s). The TSOs welcomed the bill and the proposed provisions on the roll out of smart meters, the communication concept and distribution of roles of the different market participants. An important area of dispute between the TSOs and DSOS is whether the TSOs directly get metering data, or only later after the data has been verified and aggregated by the DSOs. The TSOs are in favour of the so-called star-shaped communication concept with direct data transmission to the TSOS, as it provides required data to market participants directly (including the TSOs), so they are able to fulfil their tasks. Having direct transmission from the smart metering gateway as a central data-hub would be economical and would provide a high degree of data security. It is therefore useful to provide data for accounting grid billing that result from smart meters – as it is intended in the Act –   directly to the TSO’s. The elimination of pre-aggregation by DSOs shall lead to a considerable reduction of IT costs and allow to increase process flexibility.

b) Federal Association of the Energy and Water Industry

Martin Weyand, Federal Association of the Energy and Water Industry (Bundesverband der Energie- und Wasserwirtschaft e.V. – BDEW) criticizes the Act regarding financing, responsibilities of network operators, customer acceptance, technology and market processes. He pointed out that the intended price caps for metering point operations are insufficient to cover expenses caused by installation and operation of smart meters in the long term. He rejected the intended transfer of data from smart meters directly to TSO’s, as it would lead to a duplication of processes. With regard to customer acceptance, he criticized the lack of free choice for end customers.

c) Federal Commissioner for Data Protection and Freedom of Information

Peter Büttgen presented the position of the Federal Commissioner for Data Protection and Freedom of Information (Bundesbeauftragte  für den Datenschutz und die Informationsfreiheit). He supported the Government’s star-shaped concept. A data-hub performed by distribution system operators would not be in line with the indented protection concept. Due to the proposed star-shaped concept market participants would only get personalized data that is required for purposes prescribed by law. Only a star-shaped and purpose-adapting communication would guarantee that no market participant receives more data than required to perform his tasks.

d) German Renewable Energy Federation

Holger Loew, German Renewable Energy Federation. (Bundesverband Erneuerbare Energie – BEE) criticized a lack of analysis regarding requirements for digital communication. Due to the digitisation of the energy industry, energy supply becomes more depending on communication, resulting in a need for a holistic analysis of communication needs. He also criticized adverse economical effects of smart meter for small actors. He pointed out that the use of smart meters causes additional costs which are not sufficiently related to their added value. Smaller plants e.g. heat pumps or photovoltaic plants, would have to pay smart meter costs amounting to EUR 1,600 during the lifetime of a smart meter. This would have a negative impact on refinancing opportunities and therefore on investment decisions.

e) German Electrical and Electronic Manufacturers’ Association

Dr. Peter Heuell presented the position of the German Electrical and Electronic Manufacturers’ Association (Zentralverband Elektrotechnik und Elektroindustrie – ZVEI). ZVEI appreciated that smart meter installation shall be based on a cost-benefits analysis. Final consumers shall benefit from the Act as they will benefit from lower electricity exchange prices. There is a need for planning and investment security concerning the smart meter roll out which would be jeopardised by an opt-out-possibility. To maintain the ambitious price caps it would be indispensable to have a high number of mandatory installation cases with a resulting high initial volume. The indented two-stage roll out would therefore be inefficient.

f) Association of German Cities

Tim Bagner, Association of German Cities (Deutscher Städtetag), criticized the proposed changes on the collection of consumption data. He pointed out that the existing system can  be further developed to also handle the additional data from smart meters. He saw no need for a new system involving the TSOs. The gradual smart meter rollout will have to consider commercial aspects as private households should not be charged with disproportionate costs. With regard to data security and data protection the bill contained an adequate level of protection. He pointed out that the smart meter rollout will only the first step towards intelligent networking of the energy industry infrastructure. It will be necessary to set framework conditions to advance the modernization of network infrastructure towards smart grids.

g) Federation of German Consumer Organisations

Johanna Kardel, Federation of German Consumer Organisations, (Verbraucherzentrale Bundesverband – VZBV), saw the Act as an unjustified intervention into consumer sovereignty, as it would set the basis for a full-rollout of smart meter. The decision whether to install a smart meter or not should be made by each private consumer and should not be mandatory. Consequently, there should be an opt-in possibility for households with a consumption under 6,000 kWh and an opt-out possibility for households above 6,000 kWh. She criticized that the cost-benefit-analysis was not able to properly calculate the benefit for household consumers and the energy transition precisely. The installation of hardware save neither electricity nor money. Moreover, better information and recommended actions could lead to measurable changes in consumption patterns.

h) Federal Office for Information Security

Bernd Kowalski, Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik – BSI), pointed out that the bill created key requirements for the expansion of an intelligent infrastructure. It contained a concept of protection profiles and technical guidelines for a secure digitisation of the energy turnaround. He considered it to be a successful example for privacy and security by design. Data sovereignty remained with the customer, with data only being provided to contracting partners for a specific purpose. He rejected the proposed changes to concentrate smart metering data at the DSO levels as it would not be compatible with the necessary data protection concept.

3. Next Steps

The Committee on Economic Affairs and Energy will now prepare a report and may propose changes to the bill before the final 2nd and 3rd reading of the bill in the Bundestag.

No official date has been set for the final 2nd and 3rd hearing in the Bundestag yet. On the government’s list of important energy turnaround projects, the Act on the Digitisation of the Energy Turnaround is scheduled to be completed by August 2016.

Source: BMWi

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