emerging technology trends smart gridssmart meters v1.1

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Emerging technology trends andinnovation processes for the lowcarbon economy –

Smart local grids - Smart metersContract 071303/2012/639744/SER/CLIMA.C1

Report for DG CLIMA

Ricardo-AEA/R/ED58425/Smart grids – Smartmeters

Issue Number Version 1.1Date 19/12/2013


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Emerging technology trends and innovation processes for the low carbon economy – Smart local grids - Smart meters

i Ref: Ricardo-AEA/R/ED58425/Smart grids – Smart meters/Issue Number Version1.1

Customer: Contact:

DG CLIMA James TweedRicardo-AEA LtdGemini Building, Harwell, Didcot, OX11 0QR

t: +44 (0)1235 75 3007

e: [email protected]

Ricardo-AEA is certificated to ISO9001 and ISO14001

Customer reference:

071303/2012/639744/SER/CLIMA.C1

Confidentiality, copyright & reproduction:

This report is the Copyright of DG CLIMAand has been prepared by Ricardo-AEA Ltdunder contract to DG CLIMA dated21/12/2012. The contents of this report maynot be reproduced in whole or in part, norpassed to any organisation or person without

the specific prior written permission of DGCLIMA. Ricardo-AEA Ltd accepts no liabilitywhatsoever to any third party for any loss ordamage arising from any interpretation oruse of the information contained in thisreport, or reliance on any views expressedtherein.

Author:

Eugenia Bonifazi, Lisa Cowey, Alexandra Humphris-Bach, Luca Petrarulo, Jan Rosenow and Oliver

Edberg.Approved By:

James Tweed

Date:

19 December 2013

Signed:

Ricardo-AEA reference:Ref: ED58425/Smart grids – Smart meters-Issue Number Version 1.1


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ii Ref: Ricardo-AEA/R/ED58425/Smart grids – Smart meters/Issue Number Version1.1

Table of contents

Acronyms .............................................................................................................................iii

1 Introduction ................................................................................................................ 1 1.1 Objective of the project ...................................................................................... 1 1.2 This report .......................................................................................................... 2

2 Case study – Smart local grids – Smart meters ....................................................... 3 2.1 Background to the smart local grids and the smart meter sector ........................ 3 2.2 Definition of the sector ....................................................................................... 4 2.3 Background to the Case Study ........................................................................... 5 2.4 Overview of this SIS ........................................................................................... 7 2.5 Overview of IPR in this sector ...........................................................................11 2.6 Key Actors.........................................................................................................13 2.7 Networks ...........................................................................................................18 2.8 Institutions .........................................................................................................23 2.9 Drivers/ inducing mechanisms/ accelerating factors ..........................................32 2.10 Barriers / Blocking mechanisms/ inhibitors ........................................................34 2.11 Recommendations ............................................................................................35

3 Summary of innovation system and concluding remarks ......................................37

4 Bibliography ..............................................................................................................40

Appendix 1: Research Centres for smart meters research


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Acronyms

General acronyms

COP18 18th meeting of the Community of Parties to the UNFCCC. (UN Climate ChangeConference, Doha, 2012)

DG CLIMA European Commission Directorate General on Climate Action

EEN Enterprise Europe Network

EPO European Patent Office

GIS Global Innovation System

ICT Information and communications technology

IEA International Energy Agency

IP Intellectual property

IPC International Patent Classification

IPR Intellectual property rights

IRC Innovation Relay Centres

NIS National Innovation System

OECD Organization for Economic Cooperation and Development

PCT Patent Cooperation Treaty

PRO Public Research Organisation

R&D Research and development

ROI Return on investment

ROW Rest of the world

SMEs Small and medium enterprises

SIS Sectoral Innovation System

TIS Technology Innovation System

UNEP United Nations Environment Programme

UNFCCC United Nations Framework Convention on Climate Change

CTCN Climate Technology Centre and Network

TEC Technical Executive Committee

USPTO US Patent and Trademark Office

WIPO World Intellectual Property Organisation

WTO World Trade Organisation

Acronyms specific to this case study

AMI Advanced Metering Instrumentation

ANSI American National Standards Institute


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CBL Customer base load

CEN European Committee for Standardisation

CENELEC European Committee for Electrotechnical Standardisation

CHP Combined heat and power

CPP Critical peak pricing

DSM Demand side management

ERA-NET European scheme to support cooperation and coordination of research activities atnational and regional level.

ETSI European Telecommunications Standards Institute

GHG Greenhouse gases

HV High voltage

ICT Information and communications technologies

IHD In-home displaysIP Internet protocol

LV Low voltage

MV Medium voltage

NER300 European funding programme for innovative low carbon technologies

PTR Peak time rebates

PV Photovoltaic

RTD Real time display

RTP Real time pricingTOU Time of use

VPP Variable peak pricing


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1 Ref: Ricardo-AEA/R/ED58425/Smart grids – Smart meters/Issue Number Version1.1

1 Introduction

The European Commission Directorate General on Climate Action (DG CLIMA) hascommissioned Ricardo-AEA to undertake a study on ‘Emerging technology trends andinnovation processes for the low carbon economy’.

The objectives for the work are given in section 1.1 below.

A significant part of the current work is based on cases studies of innovation systems for anumber of low carbon technologies:

Efficient lighting systems, concentrating on light emitting diodes Smart local grids – three aspects

o Decentralised energy storage, concentrating on flow batterieso Smart meterso Independent energy communities

Aspects of electric two-wheelers, with one focus on battery systems.

This report presents the case study on smart meters. This is one of three related studies thatconsider innovation systems relating to smart local grids where local implies a scale betweenindividual households and national (or international) grids.

1.1 Objective of the project

As in the Terms of Reference for the project, the work should assess the transnational

interdependencies between innovation and market take-up policies for low carbontechnologies. Building on this basis, the objective is to outline existing innovation systems forselected technologies and to recommend practical measures for accelerating thetechnological progress through bi- and multilateral cooperation with the aim to accelerate thetransition towards a low carbon economy.

The specific objectives are:

Building on existing literature, studies and interviews, the innovation systems of lowcarbon technologies should be analysed. The aim is to determine the geographicaland sectorial interdependencies in the development and industrial-scale deploymentof low carbon technologies. At least four selected innovation systems should bedescribed. The examples should come from four different low carbon technologysectors, for example renewable energy, construction material, road transport vehiclesand mobile communication equipment. The differences and commonalities should beexemplified.

Preparing practical recommendation for policy makers to design enablingenvironments for innovation and deployment of low carbon technologies. Building onbest practise, literature review and interviews with stakeholders, proposals should bemade for European and international initiatives – taking into account the geographicaland sectorial interdependencies. A shortlist of potential technologies with potential forpooling international support should be included.

Facilitate an exchange of information between the European Commission, UnitedNations Framework Convention on Climate Change (UNFCCC), Member States,

research and industry stakeholders to stimulate a dialogue about immediate stepsand post-2020 strategies among on climate action and innovation policy.


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1.2 This report

This is a draft of a case study on a Sectoral Innovation System for smart meters as anelement required for smart local grids.

This is based on the template for a Sectoral Innovation System developed in the interim

report1 (Section 3 of the Interim Report) which in turn drew on a summary of prior work oninnovation systems (Section 2 of the Interim Report).

1 Emerging technology trends and innovation processes for the low carbon economy – Interim report. Issue 1.0, June 2013, Ricardo-AEA. Available at: http://www.lowcarboninnovation.eu/knowledge-bank/

http://www.lowcarboninnovation.eu/knowledge-bank/http://www.lowcarboninnovation.eu/knowledge-bank/http://www.lowcarboninnovation.eu/knowledge-bank/http://www.lowcarboninnovation.eu/knowledge-bank/


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2 Case study – Smart local grids –

Smart meters

2.1 Background to the smart local grids and the smartmeter sector

2.1.1 Smart local grids

The traditional model of large centralised power plants supplying electricity to consumers ischanging to one where increasing amounts of distributed generation are present. Renewabletechnologies, in particular wind and solar photovoltaic (PV) are two such technologies that

change the balance of where electricity is being generated, often this takes place on thedistribution grid which has to be sufficiently robust to handle intermittent generation. Parallelto this electricity demand is changing with increasing electrical loads such as heat pumpsand electric vehicles being two such technological examples. These both have anintermittent electricity requirement which has the potential to complement intermittentgeneration. This changing energy landscape requires different solutions driven by traditionalutility companies or local communities who now find themselves engaged directly inelectricity generation. The enabling technology is the driver here as this has been identifiedas offering network operators and electricity customers’ benefits.

To explore this changing landscape we have selected three separate case studies that formpart of this landscape.

Energy (electricity) storage: this is not a new technology area as pumped hydro hasbeen available for over 100 years. Indeed worldwide pumped hydro is significantlydeployed with 127GW of capacity, as a technology it represents over 99% of installedenergy storage capacity (Electric Power Research Institute, 2010). The problem withpumped hydro is as with conventional hydro limited locations exist for furtherexpansion. However, a new subset of technologies such as small to medium scalebatteries offers local level potential for services such as grid stability and storingexcess intermittent generation.

Smart meters: as the demand side picture changes to include technologies such aselectric vehicles in conjunction with generation being more variable, solutions to alterthe demand profile of consumers has greater value. Smart meters is one suchenabling technology of a smart grid that has the potential to encourage consumers toalter their demand behaviour based upon short term electricity prices. Hereconsumers could be provided electricity price variations on an hourly or an almostreal time basis through Advanced Metering Instrumentation (AMI).

Energy independent villages: many remote communities in Europe (particularlyislands) and in developing countries have relied on expensive generation such asdiesel generators to supply electricity. The decreasing cost of wind and solaralongside advances in local grid management through technologies such as energystorage and smart meters offers potential for community ownership of energygeneration. In developing countries the potential exists to even avoid expensive gridconnection costs.

The following sections explore the case study for smart meters.


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2.1.2 Background to smart meters

Prior to the 1980s electric power was almost completely produced at large, centralised powerplants from which it was transmitted to the consumers. The increasing concerns associatedwith climate change during the past twenty years has led to policies promoting low carbonenergy generation, in particular renewable energy. Thus, a constantly increasing number of

solar parks, wind turbines and combined heat and power (CHP) plants have been installedacross Europe and worldwide. These smaller and decentralised renewable power plants arenow challenging the concept of an electricity grid as it is known today.

A ‘smart grid’ is an electrical grid able to control and manage demand and production flowsof electricity. It uses information and communication technology to gather information suchas behaviour of supplier and consumer in order to improve efficiency and sustainability of theproduction and distribution of electricity. A smart grid is particularly important when theelectricity is generated by intermittent sources such as solar, wind and hydro power.

Essential components of a smart grid are Advanced Metering Infrastructures (AMI),commonly called ‘smart meters’. A smart meter is an electrical device that digitally recordselectricity and gas consumption and sends the information back to the utility for monitoringpurposes. At the same time, a smart meter can also receive information from a centralsystem allowing a two-way communication. Similarly, smart generation meters can monitorthe power generation of a power plant and send this information to the local utility. In thisway, a central system can analyse the information in real time and acts so that the generatedpower is distributed to the areas where there is demand. In addition, smart meters cancontrol the household electricity consumption and, if needed, switch off one load for a certainamount of time to avoid unwanted spikes in the electricity demand profile.

2.2 Definition of the sector

The smart grid sector consists of a variety of technologies used together with the scope to

improve the management of energy distribution. Within the concept of low carbontechnology, electricity grids are being modernised which is driving the need for smart meters.

‘ A modernised electricity grid is able to generate the majority of the electricity demand byrenewable sources and, at the same time, monitor production and demand to improve andoptimise the efficiency of the distribution system’

Smart meters sit predominantly within the ‘demand’ aspect of the above definition as theycan facilitate demand side management approaches.

The main difference between a grid and a smart grid is given by the data flow andinformation management which is the core concept of a smart grid. This data interaction inwhich the level of information flows is much higher than in traditional grids can only be made

possible by implementing digital processing and communications to the power grid. Part ofthe data interaction in a smart grid can be undertaken by smart meters. The functionalities ofsmart meters can refer to direct communication of electrical demand and supply, real timeinformation of fault detection and the ability to submit signals through the grid for consumersto alter their electrical consumption.

Those involved in this sector include (Table 1):

Table 1: Part ic ipants involved in th e smart grid s ector

Participant Comment

Research and development Applied research projects underway todetermine practical functionality (i.e.ERA-

NET).Multiple demonstration projects in Europe andRoW. Larger scale demonstration projects


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Participant Comment

receiving funding include NER300 projects onDistributed Renewable Management of whichsmart meters are an important part.

Smart meter manufacturers Wide range of manufacturers i.e. Itron (USA),Telegestore (Italy), Toshiba (Japan). Appearsto be an open market.

Energy utility companies A key actor in driving forward smart griddeployment are utility companies/networkoperators. ENEL (Italy), Georgia Power Co(USA), ERDF (France) amongst others.

Introduction of variable tariffs for example lowweekend tariffs, i.e. USA.

ICT infrastructure Communication companies often arising outof telecommunications sector. This relates tothe transmission of signals to and from thesmart meter over cellular networks or long-range radio.

Governments Development of national roll-out plans forsmart meters

Common standards for Advanced MeteringInstrumentation (AMI)

Consumers Informed by communication messages andoverall success of demonstrationprogrammes. How easy and beneficial aresmart meters to the consumer?

Business models include

Mandatory roll-out: Government or utility companies decide that all consumers shouldhave smart meters. They are then supplied and installed free of charge , in the UK’sexample financed by the UK Government.

Voluntary roll-out: Consumers can choose whether to have a smart meter installed ornot. Brazil for example has a limited roll-out approach to remote areas of the grid, tonew buildings from 2014 and for customers who request a smart meter (Greentech

Media, 2012).

2.3 Background to the Case Study

This case study presents an innovation system applicable to smart grids looking in particularto the electricity distribution aspect. In order to draw out the main features of the system, thiscase study focuses on aspects that are related to the innovation and deployment of smartmeters.

Smart meters are a developed technology, but they have not reached mass deployment yet.On the other hand, some European countries have recently started to install smart meters ona national level and European standards for this technology now exist. A list of the countries

with a large implementation of smart meters is given in Table 2.


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Table 2: Implem entat ion of sm art meter technolog y in the world

Country Technology implementation status

Italy Enel Spa, the main utility company in Italy has undertaken the world’slargest smart meter deployment with almost 30 million units installedbetween 2000 and 2005 (Enel, 2011).

TheNetherlands

In 2007, the Dutch government introduced a plan to install a smart meter ineach household by 2013. Due to privacy concerns the plan has beendelayed and since 2009 smart meters are not compulsory anymore (NRC,2009).

UnitedKingdom

The UK undertaking a large rollout and 53 million smart electric and gasmeter will be installed from the coming years until 2020.

France In France, ERDF will install 7 million meters from 2013 to 2014 andadditional 28 million meters from 2015 to 2018 (ATC, 2011).

Spain Spain is one of the few countries with regulations related to smart meters

implementation. Every distributor is obliged to install smart meters for allcustomers by the 31st December 2018. In total, approximately 27 millionsmart meters will be installed.

USA The USA is also active in smart meter implementation with different projectshappening across the countries. From 2009 to March 2011, the group of 51utilities grew their smart meter base from 4.0 million to 7.3 million. On theother hand, smart meters have been banned from some regions withnegative health and privacy reasons cited.

Even though the generically smart grids tend to be thought of as a concept applying to a

large geographical region i.e. nationwide, in order to control generation and demand indifferent locations at the same time, exceptions exist. These exceptions are the ‘microgrids’,i.e. integrated networks of power delivery systems consisting of a power generating system,storage systems, power electronics and load. They help to improve power quality, reliability,reduce carbon dioxide emissions and provide economic benefits to consumers and gridoperators. A list of microgrids projects is given in Table 3:

Table 3: Europ ean micro grids pro jects

Project type Description

Distributed Renewable Management(smart grid) in rural environment withpredominant solar generation: 20 MW

on Low Voltage (LV) network + 50 MWon Medium Voltage (MV) network.

Nice Grid is a pilot project of smart solar district. Theambition of Nice Grid is to study the whole Smart Gridconcept, especially the smooth integration of Distributed

Energy Resources (DER) into the local LV grid: renewablegeneration with rooftop solar, electricity storage and loadcurtailment with smart home equipment.

Distributed Renewable Management(smart grid) in rural environment withpredominant solar generation: 20 MWon Low Voltage (LV) network + 50 MWon Medium Voltage (MV) network.

The key idea of EcoGrid EU is to introduce market-basedmechanisms close to the operation phase that will releasebalancing capacity, particularly from flexible consumption.The demonstration will take place on the Danish islandBornholm with more than 50 % electricity consumption fromrenewable energy production.


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Project type Description

Distributed Renewable Management(smart grid) in rural environment withpredominant wind generation: 20 MWon Low Voltage (LV) network + 50 MW

on Medium Voltage (MV) network.

Reken (Germany) has been chosen for different reasons. Amongst others there is already almost a balance betweeninstalled generation power (predominantly PV and wind) andmax load. Furthermore there is a massive increase of

decentralised generation expected for the upcoming years.The main objective is to demonstrate that autonomous multi-agent systems can become an industrial solution to manageMedium Voltage (MV) networks.

Distributed Renewable Management(smart grid) in rural environment withpredominant wind generation: 20 MWon Low Voltage (LV) network + 50 MWon Medium Voltage (MV) network.

A five year research and development project at theUniversity of Strathclyde – to find new ‘smarter’ ways toconnect greater numbers of renewable generators to theexisting Orkney electricity grid. In November 2009, two newwind generators were connected to the electricity grid. Another wind farm followed in 2010 – and today there are afurther five new renewable generators connected to Orkney’ssmart grid based on Smarter Grid Solutions’ technology.

Renewable energy management andoptimisation for small and mediumscale Distributed Generators in urbanenvironment: 20 MW on LV network +50 MW on MV network

Emilia Romagna, Italy. The demonstration, addressingMedium Voltage (MV) network, aims at realizing anadvanced control system communicating with all the networkrelevant nodes (MV generators, HV/MV and MV/LVsubstations, and a storage facility), through an ‘always on’,Internet protocol (IP) standard-based communicationsolution.

Renewable energy management andoptimisation for small and mediumscale Distributed Generators in urbanenvironment: 20 MW on LV network +50 MW on MV network

A live smart grid project of 25 households in the Hoogkerkdistrict in the northern Netherlands enables residents toshare electricity without sacrificing comfort. The homes areconnected with each other as part of the trial project andequipped with micro combined heat and power systems,

hybrid heat pumps, smart meters photovoltaic panels,electric vehicle charging stations and smart homeappliances.

2.4 Overview of this SIS

The Sectoral Innovation System (SIS) applicable to smart meters is based on a templatederived in the Interim Report for this project. The main sections of the SIS are listed below.Where possible, the report describes the situation for smart meters. There are however someareas where the relevant scope is smart grids as, for instance, some networks and policiesapply to smart grids of which smart meters are an element.


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Table 4: Overview of smart m eters Sectoral Innovat ion System

Section DescriptionSmart local grids

Smart local grids Smart meters

Overview of IPR in thesector

From the patent record it can be seen that innovation in the smartmeter sector has increased significantly over the past 30 years.The number of patent applications under the European PatentOffice (EPO) increased markedly from 2001 until 2009, which

could be seen as an indication that innovation in this field is stillhappening. The sector is continuing to innovate and rights aremainly held in Europe, the USA and Japan but innovation activityis now starting to increase in other parts of the world.

Section 2.5

Key actors There are a number of key actors in the smart meters sector withestablished smart meter manufacturers coming from USA,Europe and Japan. ICT infrastructure suppliers within which sittelecommunication companies are also key players in the sectoras they provide the crucial connectivity functions that allow smartmeters to operate. Utility companies also are proactive drivers ofsmart meters as they see clear financial benefits to theiroperations, therefore good relationships have been establishedbetween utility companies and smart meter manufacturers.

Section 2.6

Networks (of actors) The major smart meter manufacturers are located in several partsof the world and sell globally. Thus these manufacturers eachhave their own national as well as global network includingsuppliers, research suppliers, and customers.

In addition, a number of international and European industrynetworks have been identified in relation to smart meters.Furthermore, examples of national networks have also beenincluded for Spain, Germany, France, the UK, Austria and Korea.

Sections 2.7 Sections 2.7 - Somenetworks are specific tosmart meters, thoughmany are generic tosmart grids.


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Institutions Institutions play a key role in shaping smart meter sector growth. An example is the EU Energy Efficiency Directive requirement for80% of customers to be served by smart meters. This is subjectto member states undertaking a cost benefit analysis of smartmetering. There are numerous examples of Governmentsoutlining the roll-out of wide-scale smart metering e.g. UK orrestricting smart metering such as Brazil. However, recent

developments indicate as consumers are becoming aware ofsmart metering plans that roll-out plans are being jeopardized byconsumer backlashes such as in Netherlands, New Zealand andGermany. The role of effectively engaging and communicatingwith the consumers should not be underestimated.

Section 2.8 Section 2.8

Drivers The main drivers of smart meters include

electricity shifting through dynamic pricing; accurate billing; load management; demand reduction; fraud reduction; and private sector market opportunities.

Section 2.9 - Thisincludes informationfrom stakeholderinterviews

Barriers The main barriers to the deployment of smart meters include:

cost of deployment;

consumer resistance; lack of legal and regulatory provisions; technological shortcomings; and differences in energy markets in low-income countries.

Section 2.10 - Thisincludes informationfrom stakeholderinterviews


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Recommendationsand summary

From the assessment of the innovation system we make fourrecommendations. Firstly the consumer resistance to smartmeters has to be overcome if successful roll-out is to take place.Consumers require better information on the benefits of smartmeters. Linked to this we believe that in many cases furtherevaluation is required to ensure that smart metering is costeffective. The involvement of Government to set a regulatory

framework for smart meters is essential to ensure that fullenvironmental and consumer benefits can be realised. As part ofthe consumer benefits we also recommend that dueconsideration is given to ensure that domestic consumers receivea reasonable deal when it comes to dynamic pricing and that itdoes not just push up the annual cost of electricity.

Section 2.11 and 3


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2.5 Overview of IPR in this sector

To gain knowledge of the IPR situation in the smart meter sector an analysis of the patentslinked to the relevant International Patent Classification (IPC) codes shown in Table 5would be helpful. However, due to a lack of available data on the Y02 code only the IPCcode H02J has been analysed for this report.

Table 5: IPC codes related to sm art meter technolog y

IPC Code Definition

H02J 3/00 Circuit arrangements for ac mains or ac distribution networks

H02J 13/00 Circuit arrangements for providing remote indication of network conditions,e.g. an instantaneous record of the open or closed condition of each circuit-breaker in the network; Circuit arrangements for providing remote control ofswitching means in a power distribution network, e.g. switching in and out ofcurrent consumers by using a pulse code signal carried by the network

Y04S 10/00 Systems supporting electrical power generation, transmission or distribution

Y04S 20/00 Systems supporting the management or operation of end-user stationaryapplications, including also the last stages of power distribution and thecontrol, monitoring or operating management systems at local level

Y02E 40/00 Technologies for an efficient electrical power generation, transmission ordistribution

From the patent record it can be seen that innovation in the smart meter sector hasincreased significantly over the past 30 years (Figure 1). The number of patent applications

under the European Patent Office (EPO) increased markedly from 2001 until 2009, whichcould be seen as an indication that innovation in this field is still happening. A similar trend isshown by the number of applications via the Patent Cooperation Treaty (PCT) which haveconstantly increased for the past ten years.

Figu re 1: PCT applic ations (gr een), EPO App lication s (blue), EPO grants (l igh t

blu e)and USPTO gran ts (red) for IPC code H02J between 1985 and 2008 (source:

Ricardo-AEA analysis based on OECD patent databases )

http://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htm


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It is notable that the total number of patents granted in this sector by the EPO and by theUnites State Patent Office (USPTO) show different trends. In Europe the number of grantedpatents has consistently decreased since 1999; this is in contrast to the number ofapplications received by the same patent office. In contrast, the number of patents granted inthe USA has continued to rise over this period.

Examining the applicant’s country of residence offers valuable information on the location ofthe associated R&D activity (Figure 2) and (Figure 3) show the countries share for theapplication and grants via the EPO respectively. The main three players are Europe, the USand Japan. The trend over the years, both for the numbers of applications and grants, hasnot particularly changed. The European share fluctuates but overall remains fairly constant,however, especially in the number of applications and in the recent years, the rest of theworld is gaining a higher share.

Taken together, these results suggest that the sector is continuing to innovate and that rightsare mainly held in Europe, the USA and Japan but that innovation activity is now starting toincrease in other parts of the world.

Figure 2: Appl icat ion rates und er EPO by appl icant 's co untry of residence for IPO

code H02J (source: Ricardo-AEA analysis based on OECD patent databases )

Figure 3: Grant rates und er EPO by appl icant 's co untry of residence for IPO code H02J

(source: Ricardo-AEA analysis based on OECD patent databases )

http://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htmhttp://www.oecd.org/sti/inno/oecdpatentdatabases.htm


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2.5.1 Comments on intellectual property

From the patent record it can be seen that innovation in the smart meter sector hasincreased significantly over the past 30 years. The number of patent applications under theEuropean Patent Office (EPO) increased markedly from 2001 to 2009, which could be seenas an indication that innovation in this field is still happening. The sector continues to

innovate and rights are mainly held in Europe, the USA and Japan but innovation activity isnow starting to increase in other parts of the world.

2.6 Key Actors

Some key companies manufacturing smart meters are introduced in this Section. Examplesof research organisations are given in Section 2.7 on networks.

2.6.1 Companies

Within the electricity business line, key smart meter manufacturers are Landis+Gyr(Toshiba) and Elster (Melrose PLC) and Itron. Other players include Sensus (The Resolute

Fund, L.P.) in the North America market, GE Energy (General Electric Company) in the North America and Asia Pacific markets, and Echelon in the Europe, Middle East and Africamarket. Each of these companies offer some form of advanced/smart meter technologies aswell as standard meters. Further detail on some of the key actors is provided below.

Landis+Gyr (Toshiba)

Landis+Gyr is the leader of the smart meter industry by market share. In 2011 Landis+Gyrwas acquired by the Toshiba Corporation (60%) and the Innovation Network Corporation ofJapan (INCJ) (40%). Now as an independent growth platform of Toshiba, Landis+Gyrdeploys its products and services for utilities and energy providers across five continents.Various utilities have worked with Landis+Gyr in meeting their consumers' demand forenergy management tools by rolling out smart meters.

ITRON

Itron is a technology company and one of the leading global suppliers of a broad range ofstandard, advanced, and smart meters and meter communication systems, includingnetworks and communication modules, software, and services.

Itron’s patent applications cover a range of technologies, which relate to standard metering,advanced metering systems and technology, smart metering systems and technology, meterdata management software, and knowledge application solutions. The company also relieson a combination of copyrights and trade secrets to protect products and technologies.

According to the company patents and trademarks are important for the business operationsand in the aggregate constitute valuable assets, but no single patent or trademark, or groupof patents or trademarks, is critical to the success of the business. Itron states that it licensessome of its technology to other companies, some of which are direct competitors.

ELSTER (Melrose PLC)

Elster is a global company active in measuring and improving the flow of natural gas,electricity and water in more than 130 countries. Elster is one of the world’s largestinternational metering solution providers, supplying both traditional and Smart Meterequipment, including applications for residential, commercial, industrial, transmission anddistribution markets. The product range includes distribution and control monitoringequipment, advanced Smart Metering, demand response, networking and software solutions,together with several other communication products and services. Elster has key production

facilities located in Europe, North America and South America.


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2.6.2 Utility companies

It is notable that smart meter manufacturers in this sector mainly serve large utilities and donot sell directly to end users. Technology manufacturers have developed their products intandem with utility companies. Smart meter manufacturers are now positioning themselves tobe the selected technology provider. They serve large end markets and substantial

investments to date have allowed such companies to undertake significant research anddevelopment activities with utility companies to demonstrate their capabilities. For thisreason, we believe that technology transfer is mainly guided by utilities companies which arethe main players and decision makers in the smart meter sector. Innovation we believe isnow led by the smart meter companies themselves. Below we present a number of utilitiesthat are leading the European market including their approach to smart meter distribution andinnovation.

ENEL, Italy

Enel is a multinational group based in Italy, a leading integrated player in the power and gasmarkets of Europe and Latin America, operating in 40 countries across 4 continentsoverseeing power generation from 98 GW of net installed capacity and distributing electricity

and gas through a network spanning around 1.9 million km to serve 61 million customers.

Enel launched their innovation project on smart meters and smart grids ten years ago andhas completed a large infrastructure project in Italy. The Telegestore (remote managementsystem) is the innovative smart meter solution that Enel has deployed since 2001 in Italy forthe remote management of the new electronic meters. In addition, Enel is developing smartgrids initiatives in Europe and internationally.

Enel smart info is a smart device, fully integrated with the Telegestore which provides accessinformation to electricity consumption on customers‘ devices such as tablets, computers orsmartphones. Enel smart info is a key element for smart homes, where electronic meterinformation can be used to programme domestic appliances so that consumers have theability to alter their electricity use depending on short term price fluctuations. Currently smartinfo is being tested in the in the Molise region of Italy involving a few thousand homes

Energy@home is a joint project started in 2009 that involves Electrolux, Enel, IndesitCompany and Telecom created with the aim of developing a communications platform forsmart devices and domestic appliances. Smart devices are important as they provide anapplication for smart meters to alter the electrical demand of the property. In 2012 a non-profit association was founded with the aim of developing and promoting technologies andservices for energy efficiency in smart homes, based upon the interaction between userdevices and the energy infrastructure. This project provides an interesting example of crosscutting collaboration across utility companies and consumer goods companies.

Enel is planning to export its experience and knowledge gained with the Italian project to

Spain where, together with Endesa, it is installing 13 million smart meters.ERDF, France

In 2010, over 250,000 ‘Linky’ meters were installed by ERDF in rural areas (Indre-et-Loire)and in urban areas (in the greater Lyons area).The project was led by Atos Origin Integrationwith the collaboration of three manufacturers: Landis+Gyr, Itron and Iskraemeco. The testsperformed in the framework of the experiment were conducted in accordance with thespecifications imposed by the Commission de la Régulation de l’Energie. The results will beused to determine the modalities of financing and deployment of 35 million smart meters by2018 in France.


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2.6.3 Research and development

Research and development in this sector is mainly happening in developed countries, a listof projects and associations particularly involved in development and deployment is shown inSections 2.7.

EDSO (European Distribution System Operators) for Smart Grids is a non-profit associationthat brings together the largest European electricity distributors with the aim of researching,developing, and carrying out large-scale demonstration projects on Smart Grids. The mainobjectives are to allow the transmission and distribution of up to 35% of energy produced byrenewable sources, to integrate national networks into a pan-European network and tooptimize operative costs and investments to improve European networks.

Meters and More

Enel Distribuzione SpA and Endesa Distribución SA, implemented an international non-profitassociation ‘Meters and More’ based in Brussels under Belgian legislation. The associationoperates and promotes the new generation communication protocol Meters and More whichis open to third parties. Enel can share the experience gained with Telegestore the

Advanced Metering Infrastructure (AMI) solution that is in operation in Italy for over 40 millioncustomers. Since its creation in 2011, over 35 companies have joined the association. Theprotocol Meters and More is now implemented in the electronic meters which are currentlyinstalled in Spain by Endesa. The final aim of Meters and More is to implement the EUCommission Mandate 441 to provide a standard for European Smart Metering solutions.

Industry players, leading research institutes and universities can become members of Metersand More, to gain access and further develop the protocol, hence supporting thestandardisation of smart metering communication solutions across the continent.

2.6.4 Geographic distribution of main sector activities

Europe

It has been estimated that, in Europe, 70-80% of the households will be equipped with smartmeters by 2020 (OPEN Meter Consortium, 2012). Figure 4 shows the current smart meterdeployment in Europe and the 2020 forecast. As indicated in Table 2, Italy is the country withthe highest number of smart meters currently installed, Spain, France, Germany and UK areplanning a large rollout in the next few years.


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Figure 4: European Smart Metering Hotspots : meters instal led (blue), confirm ed plans

(yellow) and 2020 forecasts (red); num bers in th ousand s of smart meters. (SourceOPEN Meter Consortium, 2012)

USA

Smart meter implementation in the US started in 2009 (Zpryme Research & Consulting,2011) and from this year to March 2011 the number of smart meters installed among thegroup of 51 utilities grew by 81% reaching 7.3 million units. Residential smart meters accountfor 6.6 million while commercial and industrial meters account for 762,139. Among theutilities operating in the US, the top five by the number of smart meters installed are listed inTable 6:.

Table 6: US top u ti l i t ies by number of m eter instal led as of March 2011

Utility name Smart meters installed as of March 2011Georgia Power Co (Georgia) 1.7 million

PPL Electric (Pennsylvania) 1.4 million

Portland General Electric (Oregon) 0.8 million

Salt River Project (Arizona) 0.6 million

Wisconsin Power & Light (Wisconsin) 0.4 million


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2.6.5 Other actors

There are a number of different types of ‘other actors’ which impact on the development ofsmart grids and the innovation transfer of smart meter technologies, these include:

Government

To provide the enabling environment for smart meter technologies to be developed,regulated and to successfully penetrate the market. This can also be done by:

o national rollout programmes; ando development of common standards.

Examples of policies for this sector are given as formal institutions in Section 2.8.1.

Research institutes

To assist with the research and development of the technologies, overcoming anybarriers to the technology.Further examples to those given above are in Appendix 1.

Charters / trade associations

To support the companies producing or investing in research and development insmart grids/smart meters and provide opportunities for knowledge transfer betweencompanies to overcome performance barriers.

Some examples are given in Section 2.7.

Banks and financial institutes

To provide financial support to research, development, design and the initialproduction stages of high quality new technologies and enable companies to financesuch activities before the products reach the market.

International organisations

To provide global contact and knowledge sharing networks including guidance notes,research, meetings and events to transfer knowledge and innovation to companiesand organisations worldwide.

Some examples are given in Section 2.7.

2.6.6 Comments on actors and geographical spread

The geographical development of smart meters has been focussed on developed countrieswith particular countries in Europe such as Italy and Sweden being forerunners. Outside ofEurope parts of the USA have high levels of deployment whilst other parts of the USA havelittle or no activity.

The market is evolving rapidly with significant market developments taking place annually. At

a high level a more global expansion is now occurring with the exception of Africa where littleactivity is taking place. Current activity in developing countries is taking place in Latin America and South East Asia. Brazil and India are investigating smart meters andundertaking partial roll-outs. These both represent significant markets.

The key actors in terms of manufacturers are the leading US, Japanese and Europeancompanies, for example all of these market players are trying to develop a market in Brazil(Greentech Media, 2012). A similar situation is found in India where Itron (large US meteringcompany) has established a smart metering lab and knowledge centre in India (Itro, 2013). Itis noteworthy that the key actors from the Indian smart grids sector were all in attendance atthis opening.


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2.7 Networks

One of the key features facilitating diffusion of technology globally is the existence of international networks, into which national networks feedtheir knowledge and understanding. As this innovation chain is heavily driven by national Governments, some networks are more governmentfocussed, but also involve industry stakeholders. These have been separated out in the below table. The below tables show mainly smart gridfocussed networks or sub-groups of organisations rather than the larger more general energy related networks.

2.7.1 Trade associations and information exchange supporting smart local grids and smart meters

Network Name Coverage Website Self-description (based on website)

International Industry Networks

EDSO for SmartGrids

EU http://www.edsoforsmartgrids.eu/

EDSO is an interface between the Distribution System Operators and the EuropeanInstitutions, promoting the development of Smart Grid technology, new marketdesigns and regulation.

IEEE Smart Grids International http://smartgrid.ieee.org/ IEEE is a professional association for the advancement of technology. With more than400,000 members in more than 160 countries, IEEE is the world's largest technicalprofessional society. IEEE created the IEEE Xplore digital library, which includes journal articles covering the most current research and conference proceedings,including ‘IEEE Innovative Smart Grid Technologies 2010’ and the new ‘IEEE SmartGrid World Forum.’

National Industry Networks

FUTURED Spain http://www.futured.es/?lang=en

In Spain, the Spanish Technological Platform of Electrical Grids FUTURED wascreated for the purpose of integrating all of the agents involved in the electricity sectorto define and promote strategies at the national level to allow the consolidation of amuch more advanced network capable of responding to the challenges of the future.FUTURED was formed in October 2005 as a meeting point and a common forum fordialogue to allow greater mutual understanding among its member organizations andbodies, identify potential opportunities for collaboration, define a shared vision, and ifnecessary, defend a common position in relation with their target audiences (society,national and European administrations, etc.).

Grid WiseAlliance

US http://www.gridwise.org/ The GridWise Alliance, founded in 2003, states that it represents a broad range of theenergy supply chain from utilities to large tech companies to academia to venturecapitalists to emerging tech companies.

http://www.edsoforsmartgrids.eu/http://www.edsoforsmartgrids.eu/http://www.edsoforsmartgrids.eu/http://smartgrid.ieee.org/http://www.futured.es/?lang=enhttp://www.futured.es/?lang=enhttp://www.gridwise.org/http://www.gridwise.org/http://www.futured.es/?lang=enhttp://www.futured.es/?lang=enhttp://smartgrid.ieee.org/http://www.edsoforsmartgrids.eu/http://www.edsoforsmartgrids.eu/


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ElectricityNetworksStrategy Group

UK https://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-group

The Electricity Networks Strategy Group (ENSG) is a forum which brings together keystakeholders in electricity networks that work together to support government inmeeting the long-term energy challenges of tackling climate change and ensuringsecure, clean and affordable energy. These include network companies, generators,trade associations and devolved administrations.

Korea Smart GridInstitute

Korea http://www.smartgrid.or.kr/eng.htm

KSGI was launched in Aug. 2009 as the secretariat of Smart Grid Initiative andprojects in Korea. The Smart Grid Initiative mainly targets the modernization ofelectric power systems. The mandate of KSGI is to manage the government’s SmartGrid roadmap; operate a Smart Grid test-be; and extend other policy support forSmart Grid related issues.

2.7.2 Programmes and projects promoting and researching Smart local grids and smart meters


International and EU programmes

IEA Demand SideManagementProgramme

International http://www.ieadsm.org/Home.aspx

The IEA Demand-Side Management Programme is an international collaboration of14 countries working together to develop and promote opportunities for demand-sidemanagement (DSM). DSM offers solutions to problems such as load management,energy efficiency, strategic conservation and related activities. The work of theprogramme is organized through a series of Tasks and reported in a number ofpublications.

IRED EU http://www.ired-cluster.org/ ‘Integration of Renewable Energy Sources and Distributed Generation into theEuropean Electricity Grid’ is a large European Cluster of RTD projects funded by theEuropean Commission which represents over 100 stakeholders in the electricitynetworks sector.

Leonardo Energy International http://www.leonardo-energy.org/ The Leonardo Energy initiative (LE) unites professionals dedicated to electrical powerand sustainable energy. It is managed by the European Copper Institute, in closecooperation with various other partners. The principal aim of LE is to accelerate thetransition to a sustainable energy economy. LE provides free education, training, andthe comprehensive exchange of expertise. It is also active in various standardizationcommittees and provides regulatory advice.

https://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttp://www.smartgrid.or.kr/eng.htmhttp://www.smartgrid.or.kr/eng.htmhttp://www.ieadsm.org/Home.aspxhttp://www.ieadsm.org/Home.aspxhttp://www.ieadsm.org/Home.aspxhttp://www.ired-cluster.org/http://www.leonardo-energy.org/http://www.leonardo-energy.org/http://www.leonardo-energy.org/http://www.leonardo-energy.org/http://www.ired-cluster.org/http://www.ieadsm.org/Home.aspxhttp://www.ieadsm.org/Home.aspxhttp://www.smartgrid.or.kr/eng.htmhttp://www.smartgrid.or.kr/eng.htmhttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-grouphttps://www.gov.uk/government/policy-advisory-groups/electricity-networks-strategy-group


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SMARTGRIDS EU http://www.smartgrids.eu/ The European Technology Platform for Electricity Networks of the Future engageswith smart grids stakeholders (researchers, academia, civil societies, industry), EC-funded research projects and initiatives, related European Technology Platforms sand global grids organisations in a wide range of activities relevant to the R&D&I ofelectricity networks in Europe. National platforms and initiatives have been supportedin their activities at national level. The platforms of Austria and Spain for instance,have received support and have been in relationship with the ETP, through both thesynchronisation of the Secretariat’s activities and the participation of their members inthe ETP Steering Committee

SmartGrids ERA-

NET

EU http://www.eranet-

smartgrids.eu/

The SmartGrids ERA-NET comprises a consortium of partners representing several

European countries. Research and strategic gaps will be assessed and action will betaken across the network to deliver coordinated, joint calls for funding proposals.

National Programmes

E-Energy Germany http://www.e-energy.de/en/ A funding programme of the Federal Ministry of Economics and Technology (BMWi)in an inter-ministerial partnership with the Federal Ministry for the Environment,Nature Conservation and Nuclear Safety (BMU). The current objective is to create an‘Internet of Energy’. The BMWi has coined the phrase ‘E-Energy’ for this new field ofinnovation. As in the case of E-Commerce or E-Government, the term stands for thecomprehensive digital networking and optimization of the energy supply system,encompassing everything from generation and distribution right up to consumption.The project will ensure more effective utilization of the existing supply infrastructure,expand the use of renewable energy resources and reduce CO2 emissions.

http://www.smartgrids.eu/http://www.eranet-smartgrids.eu/http://www.eranet-smartgrids.eu/http://www.e-energy.de/en/http://www.e-energy.de/en/http://www.e-energy.de/en/http://www.eranet-smartgrids.eu/http://www.eranet-smartgrids.eu/http://www.smartgrids.eu/


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Smart GridInformationClearing House

US http://www.sgiclearinghouse.org/

This project is funded by the US DoE and managed by and run from the Virginia Tech Advanced Research Institute in Arlington, VA with assistance from the IEEE Power &Energy Society and EnerNex Corporation. The objective is to design, populate,manage and maintain a public Smart Grid Information Clearinghouse (SGIC) portal.Contents in the SGIC portal will include demonstration projects, use cases, standards,legislation, policy and regulation, lessons learned and best practices, and advancedtopics dealing with research and development. The SGIC database will highlight therapidly evolving opportunity to use electricity in an environmentally responsible way. Itis envisioned that the SGIC portal will be the essential gateway that connects thesmart grid community to the relevant sources of information that are currently

scattered and distributed on the worldwide web. The portal will also direct its users toother pertinent sources or databases for additional data, case studies, etc. It issupposed to serve as a decision support tool for both state and federal regulators intheir deliberations for rule-making and evaluating the impact of their investments inthe smart grid technologies and software.

Projects promoting smart grids/ smart meters

EuropeanInstitute forEnergy Research(EDF)

Germany, France http://www.eifer.uni-karlsruhe.de/

Considered as the first R&D international centre of the EDF Group, complementingthe assets of the EDF Research & Development with around 2,000 researchers, itsmission is to develop a strong connection with the German academic institutes,mainly with Karsruhe Institute of Technology (KIT), numbering 8,000 researchers and18,000 university students, and build a high level German and European partnershipnetwork. EIFER is a research institute, with more than 110 employees, developing amultidisciplinary know-how around the topics of ‘Sustainable Cities’ and ‘DistributedEnergy’, together with scientific and industrial partners, and contributing to severalnational and European public funded projects.

http://www.sgiclearinghouse.org/http://www.sgiclearinghouse.org/http://www.eifer.uni-karlsruhe.de/http://www.eifer.uni-karlsruhe.de/http://www.eifer.uni-karlsruhe.de/http://www.eifer.uni-karlsruhe.de/http://www.sgiclearinghouse.org/http://www.sgiclearinghouse.org/


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2.8 Institutions

Bergek et al. (2005) identify institutions as including culture, norms, regulations and routines.These can be formal such as rules and laws or informal based on values, norms androutines. Some prime formal and informal institutions for smart meters are given below. Itshould be noted that institutions may need to adjust to a new technology. Where there iscompetition in the market place, there may also be competition over institutions. It may alsobe that the absence of institutions is of interest as this may provide a disincentive todevelopment and deployment of technology.

2.8.1 Formal institutions related to smart meters

Smart meters are an integral part of smart grids systems and different promoting activitieshave been put in place in those countries that are pursuing the deployment of smart grids.These initiatives comprise a set of regulatory instruments to phase out traditional meters andmeasures aiming to stimulate the attractiveness of smart meters for energy users,particularly at the residential and small business level (see Figure 5).

Figure 5: Enabl ing po l icy framework fo r dif fusion o f SMs (created by Ricardo-AEA )

National governments and utility companies are the main actors in the diffusion of smartmeters, with the former usually paving the way for mass deployment of the technology by

developing national roll-out programmes and facilitating the production of common technicalstandards, and the latter carrying out the installation and other demand-oriented activities.

Although the focus of this case study is supposed to have a ‘local’ character, the number ofexamples of organised deployment of smart meters at local levels is very limited compared tothe uptake of national trials. Therefore, the section below will primarily treat nationalsupporting measures. Nevertheless, looking at the enabling framework for smart meters atnational level will offer a learning/practical view of technology diffusion for the local level too.

2.8.1.1 National roll-ou t pro grammes

As energy services are a very integral part of everyone’s life, smart meters are devices thatcan potentially benefit the whole of society in a number of ways. The US-based Institute for

Electric Efficiency (IEE) (Faruqui

et al., 2011) classifies the benefits of AMI using threecategories:


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Operational benefits: AMI allows energy companies to deliver a more reliableservice, rapid remote (dis)connection, remote meter reading, and outage detectionand recovery to their entire customer base at a lower overall cost.

Customer benefits: energy service users, by being directly engaged in energymanagement driven by information and/or price signals, can experience a reduction

of their electricity consumption or load shifting to off-peak periods with the consequentlowering of their energy bills or mitigation of cost increases. Societal benefits: these arise from demand response and direct load control, which

enable the reduction of peak purchases, thereby decreasing the pressure on energyprices, compensating the need for extra generation and transmission and distribution(T&D) capacity, and potentially lowering greenhouse gas (GHG) emissions via theintegration of renewable energy generation, smart charging of plug-in electricvehicles, and household usage reductions.

It is therefore understandable that several countries in the world have put in place plans for amass deployment of AMI, often at the national level. The following is a brief account of themain national roll-out programmes of smart meters.

European Union

The EU adopted a climate and energy package in 2009 setting three key objectives to bemet by the year 20202:

A 20% reduction in EU greenhouse gas emissions from 1990 levels; Raising the share of EU energy consumption produced from renewable resources to

20%; A 20% improvement in the EU's energy efficiency.

Local electricity supply management is expected to play an important role in meeting thesetargets. Technological energy management solutions, especially those like AMI that have thepotential to engage customers in energy management, are therefore supported by the

European Union in several ways. One of these is to develop an EU-wide programme fordeployment of smart meters by the year 2020.

An Energy Efficiency Directive (2012/27/EC)3 was adopted in 2012 with an implementationdeadline of June 2014. The Directive follows on from the provisions set in the Third EnergyPackage that entered into force in September 2009 (Directives 2009/72/EC and2009/73/EC)4. These two pieces of EU legislation represent the legal framework for the roll-out of smart meters over the EU territory. According to this, all Member States shouldundertake by September 2012 a cost-benefit analysis assessing the roll-out of electricity (andgas) AMI. Furthermore, should the outcome of the analysis be positive, EU countries shouldput in place measures for the installation of smart meters to at least 80% of their energycustomers by 2020.

The rate of compliance with this regulatory framework varies greatly among Member States,but overall there are consistent delays. For instance, as of July 2013, several Member Stateshave not yet submitted their cost-benefit analysis as indicated by the European Commissionitself 5. On the deployment side, based on the implementation that has already occurred andthe plans put forward so far, the pace of the national roll-out programmes will differsubstantially according to the national regulatory environment, and the socioeconomicsituation, as well as the buy-in of the energy suppliers to the benefits of smart meters. Figure6 provides a representation of the level of proactivity of each EU Member State to thedeployment of smart meters at the national level considering the implemented deployment,the confirmed plans, and the forecast deployment by 2020. The analysis was carried out by

2 http://ec.europa.eu/clima/policies/package/index_en.htm. 3 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:EN:PDF.4 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0055:0093:EN:PDF andhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0094:0136:en:PDF. 5 http://www.euractiv.com/special-report-building-way-cris/eu-smart-meter-roll-lags-ambitio-news-528914.

http://ec.europa.eu/clima/policies/package/index_en.htmhttp://ec.europa.eu/clima/policies/package/index_en.htmhttp://ec.europa.eu/clima/policies/package/index_en.htmhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0055:0093:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0055:0093:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0055:0093:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0094:0136:en:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0094:0136:en:PDFhttp://www.euractiv.com/special-report-building-way-cris/eu-smart-meter-roll-lags-ambitio-news-528914http://www.euractiv.com/special-report-building-way-cris/eu-smart-meter-roll-lags-ambitio-news-528914http://www.euractiv.com/special-report-building-way-cris/eu-smart-meter-roll-lags-ambitio-news-528914http://www.euractiv.com/special-report-building-way-cris/eu-smart-meter-roll-lags-ambitio-news-528914http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0094:0136:en:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0055:0093:EN:PDFhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:EN:PDFhttp://ec.europa.eu/clima/policies/package/index_en.htm


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the EU FP7 project OPEN Meter. The figure shows that the regulatory framework is definitelythe main success factor for the deployment of smart meters.

Figure 6: Proact iv i ty of EU countr ies to the deploym ent of smart metering sy stems as

of J anuary 2012 (OPEN Meter Conso rtium , 2012)

Other high income countries

The EU roll-out programme with its 210 million smart meter market (OPEN MeterConsortium, 2012) is probably the largest attempt at AMI deployment in the world, othercountries are moving in the same direction.

Australia has not mandated a nation-wide roll-out of AMI yet, despite the Commonwealthhaving previously committed to start installation since 20076. However, driven by a constant

6 http://archive.coag.gov.au/coag_meeting_outcomes/2006-02-10/index.cfm.

Box 1. The UK smart meters rol l -out programm e

The UK Government is requiring energy companies to install smart meters for theircustomers, and is setting out rules to ensure that they do this in a way that is in theinterests of consumers, including rules around:

data access

security

technical standards for the smart metering equipment

meeting the needs of vulnerable consumers

Smart meters will be rolled out as standard across the country by 2020. But there

will not be a legal obligation on individuals to have one.Energy companies will be required to install smart meters and take all reasonablesteps to reach everyone. Some energy companies have already started to installsmart meters but the official national smart meter roll-out will start in 2015.

http://archive.coag.gov.au/coag_meeting_outcomes/2006-02-10/index.cfmhttp://archive.coag.gov.au/coag_meeting_outcomes/2006-02-10/index.cfmhttp://archive.coag.gov.au/coag_meeting_outcomes/2006-02-10/index.cfmhttp://archive.coag.gov.au/coag_meeting_outcomes/2006-02-10/index.cfm


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increase of electricity peak consumption (3% a year in 2010) (WEC, 2010), the State ofVictoria has taken the initiative with a decision of the Essential Services Commission in 2004ruling for mandatory installation of interval meters for electricity customers starting in 2009and to be completed by 2013 (Essential Services Commission, 2004). In the State ofVictoria, electricity demand has a classic needle shape, which is caused by spikes in air

conditioning usage during a few particularly hot days a year. The consequence is that thecost of energy supply substantially increases during the demand peaks and there is crosssubsidy, that is customers who do not use air conditioning would pay for those who do(WEC, 2010). This, together with the potential inability to regularly supply those demandpeaks, were the drivers of the promoters of the mandatory roll-out programme.

While the previous examples involved a strong regulatory push from the government, in thecase of the USA the driving factors are market-based and utility-led. The US Governmentallocated $3.4 billion from the American Recovery and Reinvestment Act to subsidise theinstallation through energy utility companies of 15 million smart meters in 2013 (GreentechMedia, 2013). However, there are no mandatory deployment targets and what is pushing thediffusion of AMI is their potential economic benefits for utility companies. 36 million smartmeters have already been installed as of May 2012 and the IEE estimates that approximately65 million smart meters will be deployed by 2015, covering more than 50% of U.S.households (Edison Foundation/Institute for Energy Efficiency, 2012) (see Figure 7 andFigure 8).

Figu re 7: Smart Meter Installation s in the US: 2007-2015 (mil l io ns ) (Edison

Found ation/Inst i tute fo r Energy Eff ic iency, 2012)


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Figure 8: Expected Smart Meter Deployments by State by 2015 (Edison

Found ation/Inst i tute fo r Energy Eff ic iency, 2012)

Low income countries

A similar approach with no mandatory roll-out scheme at the federal level is being followedby Brazil. According to a regulation passed by the National Agency of Electrical Energy(ANEEL) in 2012, energy companies are required to offer their customers the possibility tohave smart meters installed by the end of 2013 (Metering.com, 2012). Two smart metertechnologies, one without and one with in-home displays (IHDs - see below), will be offeredto consumers, of which the former is free of charge, whereas for the ones with IHD acontribution is charged by the supplier. Nevertheless, it will be mandatory for new electricityaccounts to be equipped with AMI technology. It is foreseen that Brazilian suppliers will

install smart meters for an approximate value of $670 million of a year from 2014 (ibid).Notwithstanding the socio-economic and grid benefits of smart meters, it is believed that oneof the main drivers for Brazilian authorities to support the switch to AMI is to preventelectricity fraud and theft, a practice that is widespread in the country. This ‘reaches 20% andmore in some utilities, with a total value around R$5 billion (US$2.7 billion) per year ’ (WEC,2010).

Another developing player in the smart grid market is India. The Indian Government, forexample, is planning to have all electricity customers nationwide equipped with smart metersby the year 2027 with a gradual roll-out programme following the standard five-yeardevelopment planning process (Ministry of Power Government of India, 2013). This willrepresent a huge future market and key market players are already positioning themselves to

access this market.2.8.1.2 Common standards development

Another regulatory aspect that is linked to the successful roll-out of AMI regards thedevelopment of common standards to allow that:

data received by customers of different energy suppliers are compatible with theenergy infrastructure; and that

in case of switching to different energy providers, consumers’ smart meters will still beoperative.

In other words, common industry standards guarantee interoperability between the system

and the smart metering devices, thus removing one of the major barriers to greaterinvestment by utility companies in the deployment of AMI (OPEN Meter Consortium, 2012).


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European Union

Aware of the potential benefits of implementing common standards, the EuropeanCommission issued mandate M/447 to the European Standardization Organizations (CEN,CENELEC and ETSI)7 to design an open architecture for AMI, including communicationprotocols (OPEN Meter Consortium, 2012). A direct result of that mandate was the

development and funding through the 7th Framework Programme of the OPEN Meter projectwhich ran from 2009 to 2011. The project set up a working group of the main regionalstakeholders in smart metering with the objective to ‘specify a comprehensive set of openand public standards for AMI, supporting electricity, gas, water and heat metering, based onthe agreement of all the relevant stakeholders in this area, and taking into account the realconditions of the utility networks so as to allow for full implementation’ (OPEN MeterConsortium, 2009). The OPEN Meter project’s main result was the development, testing, andvalidation of three open standards with different sets of communication solutions which wereproposed to the EU standardization bodies for consideration and which are accessible to themarket.

Other high income countries

In the USA, a large number of smart metering devices use the standards series C12.18-22developed by the American National Standards Institute (ANSI). The standards describeprotocols for bidirectional communication of data between smart meters and end readingdevices like meter communication modules. The ANSI standards are not ‘open’ and thereforenot freely publicly available.

2.8.1.3 Dynam ic pric ing of electricity

Dynamic pricing of electricity refers to a type of contract by electricity providers in which theprice of electricity varies according to when it has been consumed. This type of practice, alsoknown as time-based pricing, is commonly associated with the installation of smart metersand the two, i.e. the tariff and the device, can be seen as supporting each othe r’s diffusion.Indeed, on the one hand only AMI allows capture of the daily trend in consumption which isthe basis of time-based pricing, whereas on the other hand the attractiveness of havingcheaper electricity could represent a concrete incentive for a customer to install a smartmeter.

The main rationale behind dynamic pricing is the attempt to reduce peak-loads by reflectingin the energy bill the time-dependent marginal costs to produce electricity and consequentlyincentivise consumption during low-peak periods. Reducing peak demand, in fact, alsoreduces the necessary capacity of supply to match it with overall benefits for suppliers,consumers, and the environment too.

Although the ways by which dynamic pricing is introduced may differ according to the specificconditions of the energy market, there are some general steps that may be followed (see

Figure 9). These are:1. Ensure that all the electricity supplied is metered and billed2. Introduce a two-part pricing whereby a fixed amount of energy is purchased

corresponding to the customer’s baseload (CBL) and differences of actual

consumption are either billed or credited at the market price3. Install AMI and introduce time-dependent pricing4. To limit the impact on low-income customers, the price difference between the

customer’s baseload and the actual charge could be mitigated by income subsidies5. Finally, the income subsidies are phased out, leaving the market with dynamic

pricing.

7 European Committee for Standardization (CEN), European Committee for Electrotechnical Standardization (CENELEC), EuropeanTelecommunications Standards Institute (ETSI).


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Figure 9: Phases for the introd uct ion of dyn amic pric in g (Charles River Asso ciates,

2005)

The methods used by utilities to vary prices are multiple. The most common are:

Time-of-use pricing (TOU pricing) whereby electricity prices for a specific timeperiod are pre-established and known by customers (e.g. peak period pricing willoccur during Mon – Fri from 7am to 11pm, while off-peak period pricing will occur forthe rest of the week time). Changes of prices may occur by informing customers inadvance, but usually this does not happen more than twice a year. In this way,consumers can adjust their consumption habits to meet cheaper periods.

Super peak TOU whereby in addition to peak and off-peak periods, a super peak/off-peak period is introduced respectively with higher/lower charges. An example ofsuper-peak TOU pricing could be: peak = Mon – Fri 2pm to 7pm during summermonths; off-peak = Mon – Fri 7am to 11pm, except on-peak times; super-off peak =Mon – Fri 11pm to 7am and weekends.8

Critical peak pricing (CPP) whereby TOU prices are in place except for certain peakdays, when prices may reflect the extra costs of generating electricity.

Real-time pricing (RTP, literally the ‘dynamic’ pricing) whereby electricity pricesmay change very frequently, as often as hourly. Indicative prices are provided tousers, though they will vary according to real utility’s generation cost on the market.

Seasonal rates whereby electricity prices are higher during one season (the one inwhich high peak-loads usually occur) and lower during another season.

Inclining block rates whereby the average price of electricity increases with the levelof consumption. The charges vary according to consumption blocks/ranges withdifferent corresponding prices. The electricity consumed will have a certain price untila benchmark is reached after which the price increases.

Variable peak pricing (VPP) whereby the peak/off-peak periods are pre-establishedand known like in TOU, but the price varies more dynamically according to marketprices, similarly to RTP.

Peak time rebates (PTR) whereby customers receive a price discount if they reducetheir average consumption during peak-load periods. This can be seen as a subsidysince the change in a more efficient behaviour is rewarded, while no extra charge ispaid by customers not changing their consuming behaviour.

Like the majority of new policies, the introduction of dynamic energy pricing would create‘winners’ and ‘losers’, that is depending on their consumption habits, some customers would

see their bill in

emerging technology trends smart gridssmart meters v1.1

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