German Smart Metering Roll-Out: Digitisation of the Energy Turnaround Act Promulgated

The new Digitisation of the Energy Turnaround Act (Gesetz zur Digitalisierung der Energiewende) has been published in today’s  Federal Law Gazette. It will therefore enter into force tomorrow, 2 September 2016.

1. Background

On 8 July 2016, the new “Digitisation of the Energy Turnaround Act” had cleared the final legislative hurdle in the German Federal Council (Bundesrat). The new law shall finally get the long-awaited smart meter roll-out going and connected infrastructure in Germany, defining future roles and tasks for all market participants. Despite its ambitious name, the new law mainly covers smart metering, not everything connected with digitisation in the energy sector.

The new Act is originally based on the Third Internal Market Package, introduced by the EU as far back as 2009. The Directives of this Package require all EU member states to equip at least 80% of consumers with intelligent metering systems by 2020, subject to a positive national commercial assessment of the roll-out. Contrary to other areas of energy policy (particularly for renewable energy), the German government has been wary of the costs associated with this task. It took a long time until a first legislative proposal was on the table, and an even longer time to agree on the new – but still limited – German smart metering regime.

2. Key Objective

The key objective of the new law is to facilitate the implementation of smart meters and so-called ‘Smart Meter Gateways’. In that respect, Germany will finally implement EU Directives 2009/72/EG and 2009/73/EG. The new law also introduces specific and detailed requirements, both for the design of the smart meter devices and for the transmission of data. The overall goal is to open up the German energy market to digitisation, while ensuring a high standard regarding data protection and ICT security.

3. New Roles, New Regulations

The central part of the reform is the newly-implemented Smart Meters Operation Act (Messstellenbetriebsgesetz). In 77 sections, the new Act sets out new rules on the marketing and use of ‘Smart Meters’ and ‘Smart Meter Gateways’.

In that respect, the Smart Meters Operation Act introduces new regulated market roles, particularly the role of the ‘Meter Operator’, who is in charge of – and responsible for – the implementation, operation and maintenance of smart meters, and who has specific legal obligations in that role.

According to the new law, the responsibility connected with the roll out of the ‘Meter Operator’ initially rests on the energy supply grid operator (Energieversorgungsnetzbetreiber). Using a special public procurement procedure, they can however transfer this position to a third party service provider.

The Smart Meters Operation Act defines extensive technical requirements for the technologies involved, particularly regarding the reliability and security of energy measurement and the transmission of data. Compliance with the new rules is controlled and supervised by both the Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik) and the Federal Network Agency (Bundesnetzagentur).

4. Next Steps

Entry into force on 2 September does not mean that smart meters will arrive over night. The new Act contains a staggered roll-out plan for the installation of smart meters. The roll-out will begin in 2017, and shall continue until 2032. The process comprises different roll-out periods for different types of end consumers and plant operators, depending on the amount of energy consumption that they use, or feed in. For some types of consumers and operators, the roll-out will have to be finished before the end of 2024.

The Smart Meters Operation Act in principle requires operators to equip consumers above 6,000 kWh yearly consumption, and plant operators with an installed capacity of more than 7 kW, with smart meters. Below, this is optional. The introduction of smart meters is tied to compliance with a staggered price cap for annual costs.

In any event, the roll-out will not begin before the manufacturers of the necessary devices can provide them. This requires a certification by the Federal Office for Information Security.

5. To Dos

Meter operators, suppliers and service providers need to refine their business models to make the most of the new legal regime. The government did not see itself in a position to say how often meter operators will use the option to equip consumers up to 6,000 kW/h with new meters, in light of the new price caps.

Since the entire field is strongly regulated, ensuring compliance with the legal regime is key for all market participants.

a)  Energy Supply Grid Operators

The operators of energy supply grids have to make an important decision early, probably at a very early stage of the implementation process: they must decide if, and to what extent, they want to use third party suppliers as part of their own smart metering infrastructure. The new law allows such an outsourcing of responsibilities and defines corresponding market roles, e.g. the role of the smart meter gateway administrator’ or of the smart meter operator.

If the grid operator decides to install a third party as operator for the smart meters, this will be subject to public procurement rules.

b) Service Providers and Manufacturers

Enterprises that want to offer supporting services have a rather short period left to implement the new legal requirements. This applies particularly to enterprises designing, manufacturing and marketing the hardware devices which shall be used as smart meters or smart meter gateways.

c) Telecommunications Service Providers

For telecommunications service providers planning to offer connectivity services for smart meters and smart grids, the key point is that the new law is technologically neutral. This means that, in principle, all types of communication technologies can be used to provide connectivity for the new smart meter infrastructure.

However, connectivity services still have to comply with rather strict legal conditions, e.g. regarding their reliability and performance and transmission security. The Federal Office for Information Security provides an overview of its current technical requirements on its website.

Sources: Federal Law Gazette, Bird & Bird

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