TABLE OF CONTENTS

1. AUSTRIA............................................................................................................................................................... 4

1.1. Organisation of the deployment and regulation.................................................................................... 4

1.2. CBA local boundary conditions and scenarios....................................................................................... 4

1.3. Smart metering deployment rate............................................................................................................... 5

1.4. CBA outcome................................................................................................................................................. 6

1.5. Remarks.......................................................................................................................................................... 8

2. BELGIUM............................................................................................................................................................. 9

2.1. Flanders - Organisation of the deployment and regulation................................................................. 9

2.2. Flanders - CBA local boundary conditions and scenarios.................................................................... 9

2.3. Flanders - CBA outcome........................................................................................................................... 10

2.4. Brussels Capital - CBA local boundary conditions and scenarios..................................................... 12

2.5. Brussels Capital - CBA outcome.............................................................................................................. 14

2.6. Wallonia - CBA local boundary conditions and scenarios................................................................ 16

2.7. Wallonia - CBA outcome.......................................................................................................................... 17

3. CZECH REPUBLIC......................................................................................................................................... 20

3.1. Organisation of the deployment and regulation................................................................................. 20

3.2. CBA local boundary conditions and scenarios..................................................................................... 20

3.3. CBA outcome.............................................................................................................................................. 22

3.4. Critical variables – sensitivity analysis................................................................................................... 24

3.5. Remarks....................................................................................................................................................... 24

4. DENMARK......................................................................................................................................................... 26

4.1. Organisation of the deployment and regulation................................................................................. 26

4.2. CBA local boundary conditions and scenarios..................................................................................... 26

4.3. CBA outcome.............................................................................................................................................. 27

4.4. Critical variables – sensitivity analysis................................................................................................... 29

4.5. Qualitative assessments of non-monetary impacts and new enabled services.................................. 29

4.6. Remarks....................................................................................................................................................... 29

5. ESTONIA............................................................................................................................................................ 30

5.1. Organisation of the deployment and regulation................................................................................. 30

5.2. CBA local boundary conditions and scenarios..................................................................................... 30

5.3. Smart metering deployment rate............................................................................................................. 31

5.4. CBA outcome.............................................................................................................................................. 31

6. FINLAND............................................................................................................................................................ 33

6.1. Organisation of the deployment and regulation................................................................................. 33

6.2. CBA local boundary conditions and scenarios..................................................................................... 33

6.3. Smart metering deployment rate............................................................................................................. 34

6.4. CBA outcome.............................................................................................................................................. 34

6.5. Remarks....................................................................................................................................................... 35

7. FRANCE.............................................................................................................................................................. 37

7.1. Organisation of the deployment and regulation................................................................................. 37

7.2. CBA local boundary conditions and scenarios..................................................................................... 37

7.3. Smart metering deployment rate............................................................................................................. 38

7.4. CBA outcome.............................................................................................................................................. 39

7.5. Critical variables – sensitivity analysis................................................................................................... 39

7.6. Remarks....................................................................................................................................................... 40

8. GERMANY......................................................................................................................................................... 41

8.1. Organisation of the deployment and regulation................................................................................. 41

8.2. CBA local boundary conditions and scenarios..................................................................................... 41

8.3. Smart metering deployment rate............................................................................................................. 43

8.4. CBA outcome.............................................................................................................................................. 44

8.5. Critical variables – sensitivity analysis................................................................................................... 45

8.6. Remarks....................................................................................................................................................... 46

9. GREECE............................................................................................................................................................. 47

9.1. Organisation of the deployment and regulation................................................................................. 47

9.2. CBA local boundary conditions and scenarios..................................................................................... 47

9.3. Smart metering deployment rate............................................................................................................. 48

9.4. CBA outcome.............................................................................................................................................. 49

9.5. Critical variables – sensitivity analysis................................................................................................... 50

9.6. Qualitative assessments of non-monetary impacts and new enabled services.................................. 50

9.7. Remarks....................................................................................................................................................... 51

10. IRELAND............................................................................................................................................................ 52

10.1. Organisation of the deployment and regulation................................................................................. 52

10.2. CBA local boundary conditions and scenarios..................................................................................... 52

10.3. Smart metering deployment rate............................................................................................................. 54

10.4. CBA outcome.............................................................................................................................................. 54

10.5. Critical variables – sensitivity analysis................................................................................................... 55

10.6. Qualitative assessments of non-monetary impacts and new enabled services.................................. 56

10.7. Remarks....................................................................................................................................................... 56

11. ITALY.................................................................................................................................................................. 57

11.1. Organisation of the deployment and regulation................................................................................. 57

11.2. CBA local boundary conditions and scenarios..................................................................................... 57

11.3. CBA outcome.............................................................................................................................................. 58

11.4. Remarks....................................................................................................................................................... 59

12. LATVIA............................................................................................................................................................... 61

12.1. Organisation of the deployment and regulation................................................................................. 61

12.2. CBA local boundary conditions and scenarios..................................................................................... 61

12.3. CBA outcome.............................................................................................................................................. 62

12.4. Remarks....................................................................................................................................................... 64

13. LITHUANIA....................................................................................................................................................... 65

13.1. Organisation of the deployment and regulation................................................................................. 65

13.2. CBA local boundary conditions and scenarios..................................................................................... 65

13.3. CBA outcome.............................................................................................................................................. 66

14. LUXEMBOURG................................................................................................................................................ 69

14.1. Organisation of the deployment and regulation................................................................................. 69

14.2. CBA local boundary conditions and scenarios..................................................................................... 69

14.3. Electricity smart metering deployment rate.......................................................................................... 70

14.4. CBA outcome.............................................................................................................................................. 70

15. MALTA................................................................................................................................................................ 72

15.1. Organisation of the deployment and regulation................................................................................. 72

15.2. CBA local boundary conditions and scenarios..................................................................................... 72

15.3. Electricity smart metering deployment rate.......................................................................................... 73

15.4. CBA outcome.............................................................................................................................................. 73

16. THE NETHERLANDS..................................................................................................................................... 75

16.1. Organisation of the deployment and regulation................................................................................. 75

16.2. CBA local boundary conditions and scenarios..................................................................................... 76

16.3. CBA outcome.............................................................................................................................................. 77

16.4. Critical variables – sensitivity analysis................................................................................................... 79

16.5. Qualitative assessments of non-monetary impacts and new enabled services.................................. 79

16.6. Remarks....................................................................................................................................................... 79

17. POLAND.............................................................................................................................................................. 81

17.1. Organisation of the deployment and regulation................................................................................. 81

17.2. CBA local boundary conditions and scenarios..................................................................................... 81

17.3. Electricity smart metering deployment rate.......................................................................................... 82

17.4. CBA outcome.............................................................................................................................................. 82

17.5. Critical variables – sensitivity analysis................................................................................................... 84

17.6. Remarks....................................................................................................................................................... 84

18. PORTUGAL....................................................................................................................................................... 85

18.1. Organisation of the deployment and regulation................................................................................. 86

18.2. CBA local boundary conditions and scenarios..................................................................................... 86

18.3. Smart metering deployment rate............................................................................................................. 87

18.4. CBA outcome.............................................................................................................................................. 87

18.5. Critical variables – sensitivity analysis................................................................................................... 88

19. ROMANIA........................................................................................................................................................... 89

19.1. Organisation of the deployment and regulation................................................................................. 89

19.2. CBA local boundary conditions and scenarios..................................................................................... 89

19.3. Electricity smart metering deployment rate.......................................................................................... 91

19.4. CBA outcome.............................................................................................................................................. 91

19.5. Critical variables – sensitivity analysis................................................................................................... 92

19.6. Qualitative assessments of non-monetary impacts and new enabled services.................................. 92

19.7. Remarks....................................................................................................................................................... 93

20. SLOVAKIA......................................................................................................................................................... 94

20.1. Organisation of the deployment and regulation................................................................................. 94

20.2. CBA local boundary conditions and scenarios..................................................................................... 94

20.3. Electricity smart metering deployment rate.......................................................................................... 95

20.4. CBA outcome.............................................................................................................................................. 96

20.5. Sensitivity analysis..................................................................................................................................... 97

20.6. Remarks....................................................................................................................................................... 97

21. SLOVENIA......................................................................................................................................................... 98

21.1. Organisation of the deployment and regulation................................................................................. 98

21.2. CBA local boundary conditions and scenarios..................................................................................... 98

21.3. CBA outcome.............................................................................................................................................. 99

21.4. Remarks..................................................................................................................................................... 100

22. SPAIN................................................................................................................................................................. 101

22.1. Organisation of the deployment and regulation............................................................................... 101

22.2. CBA local boundary conditions and scenarios.................................................................................. 101

22.3. Smart metering deployment rate........................................................................................................... 102

22.4. CBA outcome............................................................................................................................................ 102

22.5. Remarks..................................................................................................................................................... 103

23. SWEDEN........................................................................................................................................................... 104

23.1. Organisation of the deployment and regulation............................................................................... 104

23.2. CBA local boundary conditions and scenarios.................................................................................. 104

23.3. Smart electricity deployment rate........................................................................................................ 105

23.4. CBA outcome............................................................................................................................................ 105

23.5. Remarks..................................................................................................................................................... 106

24. UK....................................................................................................................................................................... 107

24.1. UK – GB..................................................................................................................................................... 107

24.2. Organisation of the deployment and regulation............................................................................... 107

24.3. CBA local boundary conditions and scenarios.................................................................................. 108

24.4. Smart metering deployment rate........................................................................................................... 109

24.5. CBA outcome............................................................................................................................................ 109

24.6. Critical variables – sensitivity analysis................................................................................................ 111

24.7. Qualitative assessments of non-monetary impacts and new enabled services............................... 111

24.8. Data privacy and security....................................................................................................................... 111

24.9. Remarks..................................................................................................................................................... 112

24.10. UK-NI.......................................................................................................................................................... 112

24.11. Organisation of the deployment and regulation............................................................................... 113

24.12. CBA local boundary conditions and scenarios.................................................................................. 113

24.13. Smart metering deployment rate........................................................................................................... 114

24.14. CBA outcome............................................................................................................................................ 114

24.15. Critical variables – Sensitivity analysis................................................................................................ 117

24.16. Qualitative assessments of non-monetary impacts and new enabled services............................... 117

24.17. Remarks..................................................................................................................................................... 117

ABBREVIATIONS AND ACRONYMS.......................................................................................................................... 118

COUNTRY CODES............................................................................................................................................................ 119

LIST OF TABLES.............................................................................................................................................................. 120

TABLE OF FIGURES....................................................................................................................................................... 120

COUNTRY FICHES FOR ELECTRICITY SMART METERING

This Staff Working Document accompanies the Commission Report ‘Benchmarking smart metering deployment in the EU’ and presents, specifically for those Member States whose data were available by July 2013[1], a summary of key parameters of their economic assessment of long-term costs and benefits for the roll-out of electricity smart metering in their territory. An overview of the progress to date on the roll-out in Member States, and an analysis of the related costs and benefits across the EU, are included in the respective Staff Working Document also accompanying the Benchmarking Report.

1. AUSTRIA

The Austrian regulator (E-Control) commissioned a cost-benefit analysis for the roll-out of smart metering in 2010 which led to a positive result. To this end, the Ministry of Economy issued a ministerial Decree in 2012 for the electricity smart metering roll-out.

The CBA report analyses the long-term costs and benefits of introducing a joint roll-out of electricity and gas smart meters in Austria and presents its impact on the main stakeholders, such as consumers, suppliers, system operators and national economy in general. Despite the joint economic assessment of both electricity and gas, the CBA report includes separate values on costs and benefits related to electricity and gas smart metering. In addition, notwithstanding the existence of minimum functional requirements for gas smart meters, there is currently no final decision for the roll-out of gas smart metering.

1.1. Organisation of the deployment and regulation

Table 1‑A depicts the smart metering deployment set-up adopted in Austria.

Table 1‑A Smart metering deployment set-up and regulation in Austria

AUSTRIA

Metering activity || Regulated

Deployment strategy || Mandatory roll-out (by decree of the Ministry of Economics)

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || DSO

Financing || Metering fees and network tariffs

The smart metering deployment is defined as regulated, with minimum requirements for electricity smart metering set by the National Regulatory Authority E-Control. Distribution system operators (DSOs) will be the responsible party for implementation and ownership and the main link for third-party access to metering data. Most of the investment costs are covered by the so-called ‘metering tariff’ paid by the electricity customers and regulated by E-Control. Additional costs (e.g. ICT systems) will be covered by general network tariffs.

1.2. CBA local boundary conditions and scenarios

The economic evaluation includes the definition of four different scenarios for electricity and smart metering roll-out which vary according to implementation scale and time frame. These scenarios are:

· Scenario I – 95% of replacement of all electricity and gas meters to smart electricity and gas meters. Implementation time frame: 2011-2017.

· Scenario II – 95% of replacement of all electricity and gas meters to smart electricity and gas meters. Implementation time frame: smart electricity meters to be introduced in the period of 2011-2015 and smart gas meters within 2011-2017.

· Scenario III - 95% of replacement of all electricity and gas meters to smart electricity and gas meters. Implementation time frame: smart electricity meters to be introduced within a period of 2011-2017and smart gas meters to be introduced within 2011-2019.

· Scenario IV – 80% of replacement of all electricity and gas meters to smart electricity and gas meters. Implementation time frame: 2011-2020.

Scenario II presents the highest net present value (NPV) and envisages the fastest smart metering implementation along with the highest market penetration (95%).

Table 1‑B summarises the local conditions and implementation parameters (e.g. discount rate, roll-out time, smart metering functionalities, etc.) and the scenarios considered for the electricity smart metering roll-out.

Table 1‑B CBA boundary conditions and scenarios in Austria

CBA BOUNDARY CONDITIONS

Scenarios || Scenario I, II, III and IV

Metering points in the country || 5.7 mn.

Common Minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || Full compliance with the common minimum functionalities of EC Recommendation 2012/148/EU. Minimum required functionalities set by the Regulator (2011 Ordinance)

Implementation speed || 2012-2019

Penetration rate by 2020 || 95%

Discount rate || 4.2%

Smart metering lifetime || 15

CBA Horizon || 15

Communication technology || From the smart meter to the data concentrator – 70% PLC and 30% GPRS From the data concentrator to the Data Management System – 100% Fibre Optics

1.3. Smart metering deployment rate

Figure 1‑A illustrates the electricity smart metering deployment rate throughout the roll-out period. The starting year refers to the Ministerial decision; however, most of the effective roll-outs will start later.

Figure 1‑A Smart metering roll-out plan in Austria

1.4. CBA outcome

All four scenarios have a positive outcome. However, scenario II (smart meters' implementation speed up to 95%, with roll-out of electricity smart meters between 2011 and 2015) represents the highest net present value, indicating the preference to such an implementation plan over the rest of the scenarios considered.

Table 1‑C illustrates the CBA result referring to Scenario II and includes the range of main benefits and costs associated with electricity smart metering.

Table 1‑C Main results of CBA due to electricity smart metering roll-out in Austria

CBA OUTCOME || POSITIVE

Total Investment || € mn 3195

Total Benefit || € mn 3539

Cost/metering point (EC calculation) || €590

Benefit/metering point (EC calculation) || €654

Consumers' benefit (% of total benefits) || 78.5%

Main benefits (% of total benefits) || · Energy savings - 55% · Operational savings due to more efficient supplier switch procedure - 19% (indirect benefits to the consumers) · Reduction of DSO associated meter reading cost – 9%

Main costs (% of total costs) || OPEX - 30% CAPEX - 26% Indirect costs - supplier associated network balancing costs due to consumer behavioural change - 24%

Energy savings (% of total electricity consumption) || 3.5%

Peak load shifting (% of total consumption) || 2.5%

The main benefits are expected to be realised on the consumer side; in terms of energy savings they account to 55% of the total gross benefits due to electricity smart metering roll out (see Figure 1‑B) or to 70% from the total gross benefits attributed to the consumer only. The rest of the total benefits are shared among the DSO, suppliers and the society (through increased efficiency of the deployment set-up). The second highest benefit (19%) due to more efficient supplier switching procedures is also attributed to consumers. The higher share of benefits attributed to the DSO is coming from reduced meter reading cost (9%), whereas suppliers mainly benefit as a result of reduced balancing costs (due to peak shaving/ load shifting).

Most of the direct costs of electricity smart metering roll-out (CAPEX+OPEX) are attributed to the DSO, as depicted in Figure 1‑C, mainly smart metering investment, operational, maintenance, IT costs and indirect costs. The energy suppliers also need to adopt their corresponding IT systems, while at the same time it is expected that they will incur revenue reductions due to lower electricity sales (mainly due to changes in the consumer behaviour). However, energy suppliers may have the greatest potential to offset their costs by introducing new tariff models.

Figure 1‑B Share of main benefits associated with electricity smart metering roll-out in Austria

Figure 1‑C Share of main costs associated with electricity smart metering roll-out in Austria

1.5. Remarks

All four scenarios considered in the long-term assessment of smart metering implementation in Austria return an overall positive net effect. When the electricity and gas sectors are considered separately, the net effect is still positive for each of the scenarios, while consumers are expected to benefit the most.

In particular, consumers are likely to enjoy the highest amount of net benefits from smart metering implementation, through: i) reduced electricity bill as a result of energy savings (on average 3.5 %) and ii) lower network tariffs due to improved system operation efficiency. Both benefits will also lead to lower CO2 emissions.

2. BELGIUM

In Belgium the competence on energy policy is shared between the federal and the regional administrations. The central government deals with issues pertaining to electricity transmission and distribution networks from 70kV up, while the section of the network below this threshold is under the supervision of regional administrations. Accordingly, each of the three Belgian regions (Flanders, Wallonia and Brussels-Capital) has been in charge of their region-specific cost-benefit analysis (CBA) for the smart metering roll-out.

2.1. Flanders - Organisation of the deployment and regulation

The competent authority for the smart metering roll-out in Flanders is the regional energy regulator, VREG, while there are two operators: Eandis and Infrax carrying out the operational tasks for the distribution network operators in the region. Table 2‑A depicts the smart metering deployment set-up adopted in Belgium, Flanders region.

Table 2‑A Smart metering deployment set-up and regulation in Belgium - Flanders

BELGIUM - Flanders

Metering activity || Regulated

Deployment strategy || N/A (no roll-out yet)

Responsible party -implementation and ownership || DSOs

Responsible for third-party access to metering data || DSOs

Financing || Not decided yet

2.2. Flanders - CBA local boundary conditions and scenarios

Two different CBAs were realised on behalf of VREG from a private contractor: the first in 2008 and a second one in 2011. The main features of the CBA performed in 2011 for VREG are reported below. The CBA analysis is based on the following hypotheses:

· Simultaneous roll-out of electricity and gas smart metering;

· Penetration rate at the end of the hypothetical roll-out: 98% for electricity;

· Communication infrastructure as communicated by the DSOs (PLC, Multi Utility Controller (–MUC through GPRS and cable));

· Energy savings of 1% for electricity and 2 % for gas, without home display, and taking into account only the indirect feedback from consumers; and

· Roll-out plan completion within 5 years. Note that the CBA takes into consideration a period of 30 years, therefore it includes the costs for a second round of meters installation (each meter has an estimated lifetime of 15 years).

The aforementioned assumptions are all included in the first scenario adopted in the CBA, the so-called ‘Reference’ scenario. Alternative scenarios have been developed as well: ‘Spontaneous deployment’, considering a voluntary approach for rolling out and a final penetration rate of 80%; and ‘Segmented deployment’, with a deployment spanning over 15 years and rolling out by different customer segments, one at a time.

Table 2‑B summarises the local conditions and implementation parameters (e.g. discount rate, roll-out time, smart metering functionalities, etc.) and the scenarios considered for the smart metering roll-out.

Table 2‑B CBA boundary conditions and scenarios in Belgium - Flanders

CBA BOUNDARY CONDITIONS

Scenarios || Reference, Spontaneous deployment, Segmented deployment

Metering points in the country || 5.5 mn for both electricity and gas (3.45 mn for electricity only)

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || All recommended functionalities were considered

Implementation speed || 5 years, from 2015 to 2019 in the Reference scenario

Penetration rate by 2020 || Considered in CBA: 98%

Discount rate || 5.50%

Smart Metering lifetime || 15

CBA Horizon || 30 years, from 2015 to 2045

Communication technology || From the smart meter to the data concentrator: 80% PLC – with internet gateway (Eandis customers). The remaining 20% (Infrax customers) are equipped by MUC cable (60%) and MUC GPRS (40%) From the data concentrator to the DMS: Cable or GPRS

2.3. Flanders - CBA outcome

Among the three scenarios considered in the CBA, only the reference scenario results in a positive net present value (NPV) of €144 mn over 30 years, while the two alternative scenarios result respectively in a NPV of -€200 mn (spontaneous deployment 80%) and of -€265 mn (segmented deployment 15 years). The scenario with the highest NPV is based on a roll-out of smart meters up to 98% penetration rate, with a hypothetical roll-out between 2015 and 2020. However the result under the reference scenario is considered to be inconclusive as it does not yield a strong positive result.

Table 2‑C illustrates the CBA result, including the range of main benefits and costs associated with electricity smart metering.

Table 2‑C CBA outcome in Belgium - Flanders

CBA OUTCOME || Inconclusive

Total Investment || € mn 1932

Total Benefit || € mn 2076

Consumers' benefit (% of total benefits) || 59%

Main benefits (% of total benefits) || Energy savings by indirect feedback (19%) Reduced costs of physical meter reading (17%) Fraud detection (13%)

Main costs (% of total costs) || Provision and installation of smart meters (50%) Investment in data communication infrastructure (23%) Investment in data management services (14%)

Energy savings (% of total electricity consumption) || 1% with indirect feedback for electricity (2% for gas), 4% for electricity (3% for gas) with direct feedback (only for customers equipped with home displays, a hypothesis not included in the Reference scenario)

Peak load shifting (% of total electricity consumption) || 5%

Remarks || Simultaneous deployment of gas and electricity smart metering drives costs down (single technical intervention for installation)

One of the main benefits included in the CBA is energy savings originating from indirect feedback (no direct feedback is considered possible without the provision of home-displays to consumers). This accounts for about 19% of the total benefits (Figure 2‑A). Similar amounts of benefits arise from the avoided costs of manual meter reading (17% and from fraud detection 13%). The highest share of the total benefits, about 60%, accrues to consumers, with a significant share for DSOs as well.

The analysis performed identifies the following stakeholder groups: Consumers, DSOs, Energy supplier, Energy producers, TSOs, environment and society. Consumers will benefit most from the introduction of electricity and gas smart meters, thanks to a gain in energy efficiency of 1% in electricity consumption and 2% in gas consumption. Positive net effects also accrue to energy suppliers and to the environment and society.

Figure 2‑A Share of main benefits from electricity smart metering roll-out in Belgium – Flanders

The main cost items considered in the analysis are:

· Investment in setting up a data management system (14%);

· Investment in the necessary telecommunication system (23%); and

· Investment (including procurement and installation) in smart meters (50%).

Figure 2‑B Share of main costs from electricity smart metering roll-out in Belgium – Flanders

Almost 90% of the costs expected by a potential smart metering roll-out are attributed to DSOs, responsible for procurement and installation of the smart meters, telecommunication infrastructure (in PLC case, to be provided to about 80% of customers) and appropriate data management system. Half of these costs refer to the smart meters procurement and installation cost (Figure 2‑B).

2.4. Brussels Capital - CBA local boundary conditions and scenarios

The CBA for the region of Brussels capital considers four scenarios, in addition to a ‘Business as Usual’ situation: ‘Basic model (PLC)’, ‘moderate model (UMTS)’, ‘advanced model (smart grid)’ and ‘full model (WiMax)’.

Given the four different scenarios above, the following assumptions have been adopted in the CBA:

Simultaneous roll-out of electricity and gas smart metering systems; Implementation over 4 years, starting from 2015; Expected meter lifetime of 15 years; Time horizon considered in the CBA of 20 years; Discount rate of 6.5%; Number of metering points is increasing over the period considered; The expected energy efficiency gains are estimated at about 1.2% in electricity and the same in gas (basic scenario); Pre-paid meters are not considered in any scenario; Penetration rate at the end of the hypothetical roll-out is not specified (for calculation purposes, the Commission assumed a final penetration rate of 100%); Communication infrastructure is constituted by two systems: a data gathering system and a data management system; the latter communicates through PLC or mobile/radio networks (GRPS, UMTS, WiMAX, Wi-Fi, Mesh); and A specific set of functionalities has been identified[2].

The CBA conducted results in negative net present value (NPV) for all four considered scenarios: the ‘Basic’ has a NPV of -€142 mn, the ‘Moderate’ of -€158 mn, the ‘Advanced’ of -€79 mn and the ‘Full’ of -€142 mn, with an average investment per installation (which includes both electricity and gas smart metering) ranging from €267 to €472. Table 2‑D summarises the CBA boundary conditions and scenarios considered for the electricity smart metering roll-out.

Table 2‑D CBA boundary conditions and scenarios in Belgium – Region de Bruxelles Capitale

CBA BOUNDARY CONDITIONS

Scenarios || Basic, Moderate, Advanced, Full

Metering points in the country || 1 mn. for both electricity and gas (620.000 for electricity only)

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || The functionalities considered in the least negative scenario (Advanced scenario), comply with the recommended except for functionality (b) (real time readings to customers are not considered in the Advanced scenario)

Implementation speed || 4 years, from 2015 to 2018 in all scenarios

Penetration rate by 2020 || N/A

Discount rate || 6.50%

Smart Metering lifetime || 15

CBA Horizon || 20 years, from 2015 to 2030

Communication technology || Depending on scenario: PLC (Basic) UMTS (Moderate, Advanced) WiMAX (Full)

2.5. Brussels Capital - CBA outcome

As mentioned earlier, all four scenarios considered turn out negative. The scenario with the highest NPV is the ‘Advanced’ scenario, the outcome of which is summarised in Table 2‑E.

Table 2‑E CBA outcome (advanced scenario) in Belgium – Region de Bruxelles Capitale

CBA OUTCOME || Negative

Total Investment || € mn 460

Total Benefit || € mn 381

Consumers' benefit (% of total benefits) || 47%

Main benefits (% of total benefits) || Energy savings (46%) Reduced non-technical losses (22%) Field service management (16%)

Main costs (% of total costs) || Installation materials and field service (43%) Data transfer and communication (24%) Planned and unplanned maintenance (17%)

Energy savings (% of total electricity consumption) || 3.45% quoted for the advanced scenario. (Ranging from 1.2% of total electricity consumption (basic scenario) to 4.6% of total electricity consumption (full scenario)

Peak load shifting (% of total electricity consumption) || 0.47% of total benefits (not in electricity consumption)

Remarks || The inclusion of advanced features in the smart metering roll-out may imply a higher investment, but also higher benefits

The most significant benefit is energy savings accounting for 46% of total benefits in the advanced scenario, as depicted in Figure 2‑C. The second important benefit is the reduction of non-technical losses (fraud detection) which accounts for 22% of total benefits, and the third is the decrease in manual reading costs (16%). Consumers are expected to enjoy the highest benefit from the smart metering roll-out, according to the CBA performed.

Figure 2‑C Share of main benefits from electricity smart metering roll-out – Region de Bruxelles Capitale

The main cost items considered in the analysis, as also indicated in Figure 2‑D, are:

· Installation materials and service (43%);

· Data transfer and communication (24%); and

· Planned and unplanned maintenance (17%)

The relative high costs of installation material and service in the Region of Brussels Capital are mainly driven by the necessity to procure tri-phase meters at 230V without neutral[3] accounting for about 7% of the total number of meters estimated for year 2015[4]. Other costs are also considered in the respective CBA including costs for communication and public acceptance campaigns.

Figure 2‑D Share of main costs from electricity smart metering roll-out in Belgium – Region de Bruxelles Capitale

2.6. Wallonia - CBA local boundary conditions and scenarios

In the Wallonia Region the competent authority for assessing the deployment of smart metering system is the Commission Wallonne pour l'Energie – CWAPE. A dedicated CBA for the smart metering roll-out in Wallonia has been realised in 2012. This CBA also investigates what priority should be given to smart metering roll-out versus other investments useful for the deployment of smart grids (e.g. incentives to distributed generation, etc.). For the Wallonia Region, the CBA undertaken includes three relevant scenarios, of which only the last two are used in the analysis as the first is the reference scenario:

· ‘Reference Scenario’, which is not a ‘Business as Usual’ ('do nothing and nothing happens', 'frozen') scenario, but takes into consideration the additional interventions needed to ensure the achievement of Renewables targets according to the 20-20-20 strategy, including reinforcements of DSO networks.

· Scenario 1 ‘Full roll-out’, with 80% of consumers equipped with smart electricity and gas meters by 2020.

· Scenario 2 ‘Smart meter friendly’, which features a selective roll-out to specific segments: customers requesting explicitly smart metering and paying for the installation, new connections, replacements, and consumers with a bad payment record (installation of prepayment meters).

In order to carry out the analysis, the following assumptions have been adopted in the CBA:

· Simultaneous roll-out of electricity and gas smart metering;

· Implementation: over 5 years for the ‘Full roll-out scenario’, starting from 2015 and ending in 2019. For the ‘Smart Meter Friendly’ scenario, a total estimated penetration rate of 15% of total metering points is reached in 2020;

· Expected meter lifetime of 15 years, for communication modules of 7.5 years;

· Time horizon considered in the CBA is 30 years;

· Discount rate is 5.5% (WACC);

· The communication technology is a mix of PLC and GPRS;

· A general increase of 2.5% per annum in electricity demand is expected over the evaluation period, due to the spread of heat pumps, electric cars and air conditioning. Inflation effects are taken into account for each category of costs: material, manpower, energy, etc.; and

· 9 ‘applications’ are identified as sources of benefits, in order to carry out a coherent evaluation across all the three scenarios.

The results reported are the following: in the ‘Full roll-out’ the net present value (NPV) is negative (€185.9 mn), while in the ‘Smart Meter friendly’ scenario the NPV is positive (€504.9 mn), and in particular the analysis underlines that the ‘Smart Meter Friendly’ scenario brings less benefits of about 20% with reference to the ‘Full roll-out’ scenario, but implies also 75% less total costs. The table below summarises the CBA boundary conditions and scenarios considered for the electricity smart metering roll-out.

Table 2‑F CBA boundary conditions and scenarios in Belgium – Wallonia

CBA BOUNDARY CONDITIONS

Scenarios || Full roll-out Smart Meter Friendly

Metering points in the country || 2.6 mn for both electricity and gas (1.9 mn for electricity only) Full roll-out scenario: 80% of metering points equipped with smart meters by 2020 Smart Meter Friendly: 15% smart metering penetration rate by 2020

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || Taken into account as ‘applications’: management of active demand, energy savings, on/off functionality, fraud detection, payment management through pre-paid meters, remote switching, AMR, operational efficiency of the DSO network, AMR of decentralised generation. These applications considered in the CBA, are reported to include all the common minimum functionalities recommended in 2012/148/EU

Implementation speed || 5 years, from 2015 to 2019 in all scenarios

Penetration rate by 2020 || 80% in the Full roll-out scenario 15% in the Smart meter Friendly

Discount rate || 5.50% (WACC)

Smart Metering lifetime || 15 years (7.5 for communication module)

CBA Horizon || 30 years, from 2012 to 2041

Communication technology || From the smart meter to the data concentrator: 80% PLC and 20% MUC+GPRS From the data concentrator to the DMS: GPRS

2.7. Wallonia - CBA outcome

The table below reports results from the ‘Full roll-out’ scenario. This scenario is the one coherent with the target of 80% smart metering roll-out by 2020. On the basis of net present value results, the least negative scenario is the ‘Smart meter Friendly’. However, as the latter does not comply with the 80% target, the ‘Full roll-out’ can be used for benchmarking purposes with other Member States’ CBAs data. The results of the ‘Smart Meter Friendly’ scenario are therefore also indicated in the table below for comparison purposes. It is noted that the respective CBA assumes that there are no energy savings due to smart metering roll-out as this can be attained also by other means alone (like more efficient appliances or advanced home energy systems). However, bill savings due to more active demand side management and load shifting, were taken into account.

Table 2‑G CBA outcome in Belgium – Wallonia

|| Full Roll-out scenario || Smart Meter Friendly scenario

CBA OUTCOME || Negative || Positive

Total Investment || € mn 2232 || € mn 947

Total Benefit || € mn 2046 || € mn 1531

Consumers' benefit (% of total benefits) || 2.8% || Not available

Main benefits (% of total benefits) || a. Default management (49%) b. Remote ON/OFF control (15%) c. Demand side management (13%) d. Fraud detection (11%) || a. Default management (64%) b. Remote ON/OFF control (14%) c. Demand side management (11% d. Fraud detection (6%))

Main costs (% of total costs) || e. Installation (37%) f. Maintenance (23%) g. Equipment (16%) || e. Installation (35%) f. Maintenance (18% g. Equipment (15%)

Energy savings (% of total electricity consumption) || 0% || 0%

Peak load shifting (% of total electricity consumption) || 12% || Not available

Remarks || A selective roll-out might imply a lower total investment but also spreading of total costs over a fewer number of meters.

The main benefits, as indicated in Figure 2‑E, are related to:

Default management, intended as better management of bad payers through the introduction of pre-paid smart meters (49% of total benefits in the ‘Full roll-out’ scenario). This benefit accrues for 96% to the DSO and for 4% to the suppliers. Remote on/off control (15% of total benefits in the ‘Full roll-out’ scenario). This benefit accrues in total to the DSO. Demand-side management (13% of total benefits in the ‘Full roll-out scenario’). This benefit accrues for 22% to consumers, for 49% to the DSO and for 29% to the energy supplier.

Figure 2‑E Share of main benefits from electricity smart metering roll-out

In the analysis performed, under the ‘Full roll-out’ scenario consumers are the only stakeholders gaining from the roll-out thanks to demand management (€56 mn). On the other hand, within the ‘Smart meter friendly’ scenario, consumers have a negative net present value (-€295 mn), as they are expected to bear the costs of the smart metering installation. In the ‘Full roll-out’ scenario, the smart metering deployment also implies an increase of the RAB[5] for the DSO, meaning that a higher remuneration through the network tariff might be put in place. The total cost for the ‘Full roll-out’ is estimated at €2.2 bn. The main cost items considered in the analysis are shown in Figure 2‑F: Installation (37,3%), Maintenance (23%), and Equipment (15,7%). Notably, all major costs reported are related to the smart meters roll-out itself (76% in total).

Figure 2‑F Share of main costs from electricity smart metering roll-out

3. CZECH REPUBLIC

The Czech Republic performed in 2012 an economic assessment of long-term costs and benefits associated with electricity smart metering, with the aim to evaluate the framework for a cost-effective deployment of intelligent metering and the respective feasible timeframe.

Currently, customers who use electricity for space heating and water heating can make use of a double-tariff system interlinked with remote control of appliances by ‘district ripple load control’ (in Czech ‘HDO’). This system is used for direct remote control of groups of appliances according to the time schedules set, and reflecting the electricity network load conditions. The HDO system allows consumers to differentiate between the high and low electricity price level for the part of electricity load associated with space and water heating. In this way, the distribution system operators are able to optimise daily load profiles within a tariff framework approved by the Energy Regulatory Office.

The cost-benefit analysis (CBA) of electricity smart metering yields a negative net present value (NPV) considering the current conditions and price of available technology. The CBA assumes that nearly 70 % of the potential benefits are already achieved by the existing system that proved to be robust and secure, whereas distribution system operators and finally consumers might be burdened with the costs of rapid implementation of a new system.

3.1. Organisation of the deployment and regulation

Table 3‑A illustrates the metering deployment set-up to be adopted in the Czech Republic.

Table 3‑A Smart metering deployment set-up and regulation in Czech Republic

Czech Republic

Metering activity || Regulated

Deployment strategy || No roll-out yet

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || Central hub

Financing of the roll-out || NA

The Distribution system operator remains the owner and responsible party for smart meters implementation, whereas a central body (central hub) will be the eligible link for granting access to metering data.

3.2. CBA local boundary conditions and scenarios

The direct consumption control through the HDO system (district ripple load control) is based on contractual agreements between the electricity consumers and the DSO for part of their consumption related with space and water heating appliances subject to load shedding in periods of peak electricity load (high tariffs) and shifting to periods of lower electricity consumption (lower tariff), and in the case of an emergency situation.

According to the national CBA, the HDO system allows for easier control and thus more effective integration of decentralised energy sources (and to greater extent renewables) and gives an added value to the DSO due to an optimised distribution network operation (i.e. less technical losses).

The CBA considers the current conditions and addresses the HDO system through: i) further development and adaptation to smart metering system, or ii) complete replacement by smart metering technology. To this end, two scenarios have been used for the economic assessment:

‘Basic’ (BaU - business as usual) scenario ‘Blanket’ scenario

The basic scenario preserves the existing status, (i.e. the HDO system), for consumption and generation management, metering, data processing and billing. The blanket scenario features installation of smart metering at 100 % consumer points of delivery. The HDO system and its functionalities is still considered in the blanket scenario. As long as the smart metering does not completely substitute the current HDO functions, it is assumed that the HDO system will be operated concurrently with the smart metering system.

All results provided in the sections below relate to the blanket scenario which is compared to the basic scenario (BaU). Table 3‑B summarises the local conditions and implementation parameters (e.g. discount rate, roll-out time, smart metering functionalities, etc.) and the scenarios considered for the electricity smart metering roll-out.

Table 3‑B CBA boundary conditions and scenarios in Czech Republic

CBA BOUNDARY CONDITIONS

Scenarios || Basic scenario; Blanket scenario with penetration rate 100 % at completion of smart metering roll-out

Number of metering points in the Country || 5.7 mn.

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || All recommended functionalities considered

Implementation speed || 2020 – 2026 [6]

Penetration rate by 2020 || 1% final penetration rate as there is no plan to roll-out yet. 100 % penetration rate considered for the purposes of the CBA

Discount rate || 6.1 %

Smart Metering lifetime || 12 years

CBA horizon || 26 years

Communication technology || PLC communication infrastructure from the smart meter to the data concentrator:, GPRS (or any other applicable wireless technology) only where it is not possible to use PLC GPRS+fibre optics from the Data Concentrator to the Data Management System

3.3. CBA outcome

Table 3‑C illustrates the result of the economic assessment performed, including the range of main benefits and costs associated with electricity smart metering and referring to the blanket scenario. The figures on costs and benefits reported below present non-discounted values.

Table 3‑C CBA outcome in Czech Republic

CBA OUTCOME || NEGATIVE

Total Investment || € mn. 4367[7]

Total Benefit || € mn. 2735[8]

Cost/metering point (as communicated by the Member State) || €766

Benefit/metering point (as communicated by the Member State) || €499

Consumers' benefit (% of total benefits) || 21 % of external benefits[9] (€ mn. 16.7) 0.6 % of total benefit

Main benefits (% of total benefits)[10] || Reduced commercial losses (53%) Peak load transfer (42%) Deferred generation capacity investments (5%)

Main costs (% of total costs) || Procurement of smart meters (24%) ICT investments (10%) ICT operation cost – meter reading (9%)

Energy savings (% of total electricity consumption) || 0 %

Peak load shifting (% of total electricity consumption) || 1.2 % of household segment consumption

One of the main benefits expected to be realised as a result of smart metering deployment (and not currently fully exploited under the HDO system) is the reduction of commercial losses and peak load transfer, as shown in Figure 3‑A. Procurement and installation of smart meters along with ICT investments present the highest share of the cost burden associated with smart metering roll-out (Figure 3‑B).

Figure 3‑A Share of main benefits associated with electricity smart metering roll-out

Figure 3‑B Share of main costs from electricity smart metering roll-out

3.4. Critical variables – sensitivity analysis

The sensitivity analysis performed as part of the CBA showed that only the variation of absolute electricity savings could shift the net present value (NPV) value into positive[11]. However, as indicated in the CBA, the achievement of such savings under current conditions in the Czech Republic is not feasible. Additionally, combination of several parameters, such as the CAPEX of smart meters and their installation, CAPEX of the ICT infrastructure (including the DTS accessories), CAPEX of the DSO data centre and energy savings could lead to a net present value equal to zero.

3.5. Remarks

The national economic evaluation concludes that there is no business case for implementation of smart metering in the Czech Republic in the presence of the currently operating HDO system, under which most of the benefits expected from smart metering are argued as already achieved. Furthermore, the CBA states that, additional benefits can be attained by complementing the existing system with new, and wider offer of, tariff schemes without additional costs in technology, and in particular, through the introduction of price response mechanisms based on a voluntary change of consumer consumption patterns. Moreover, the local analysis concludes that if the social dimension of the smart metering becomes central to the roll-out, it would lead to higher consumer engagement and more favourable environment for a nation-wide smart metering deployment.

Therefore, the national CBA study proposes the following:

Smart metering implementation (Blanket scenario) should not commence before 2018; it is necessary to continue operation and technological development in the framework of pilot projects. Extend the ability of the current HDO system by adding tariffs without direct control of appliances, i.e. based on sending tariff signals to customers together with encouraging more customers to participate in HDO system using wider offer of tariff schemes. Continuously follow the technological development in the field of smart networks and metering; in particular from the viewpoint of parameters’ development and prices of key components, which are important for decision-making and thus commencing the smart metering preparation and realisation. Set national communication standards, standards of metering devices and major smart metering system elements, along with technical and legal norms to ensure the cyber-security of the system by 2017. Assess applicability and effectiveness of the smart metering by 2017. Based on the evaluation of the smart metering pilot projects and impact of possible extension of the current HDO system, elaborate the implementation plan of smart metering roll-out by 2018 as a part of a wider project of smart grids implementation in the Czech Republic.

4. DENMARK

An updated economic evaluation of long-term costs and benefits was finalised in 2013, covering 1.38 million metering points and resulting in a positive outcome. There are already 1.63 million metering points where a smart meter is installed following a voluntary roll-out led by the distribution system operators (DSOs).

A recently introduced law (June 2013) mandates the full smart metering roll-out. The detailed framework of the roll-out will be set by the Minister for Climate, Energy and Building[12]. The roll-out will be carried out by the DSOs from 2014 through to 2020.

4.1. Organisation of the deployment and regulation

The metering deployment set-up in Denmark is regulated with the DSO being the owner and responsible party for the smart metering implementation, as shown in Table 4‑A. The main link for granting access to metering data will be through central hub and the roll-out will be financed via network tariffs.

Table 4‑A Smart electricity metering deployment set-up and regulation in Denmark

DENMARK

Metering activity || Regulated

Deployment strategy || Mandatory roll-out

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || Central hub

Financing of the roll-out || Network tariffs

4.2. CBA local boundary conditions and scenarios

The economic analysis, carried out for the roll-out of electricity meters which are read remotely every hour (the associated billing is also provided on an hourly base), considered the following scenarios:

Complete roll out (3 scenarios): ‘Baseline’ scenario with complete roll out ‘Conservative’ scenario, characterised by: No energy or grid-loss savings; No shifts in consumption; No savings in reserves/regulating power; and Increased meter price ‘Progressive’ scenario, characterised by: More electric vehicles; and Increased service life of electricity meters ‘Selective’ roll out: To metering points with electric vehicles; and

o To metering points with heat pumps

Table 4‑B summarises the local conditions and implementation parameters (e.g. discount rate, roll-out time, smart metering functionalities, etc.) and the scenarios considered for the electricity smart metering roll-out.

Table 4‑B CBA boundary conditions in Denmark

CBA BOUNDARY CONDITIONS

Scenarios || Complete roll out: Baseline scenario with complete roll-out; Conservative scenario, Progressive scenario Selective roll-out

Number of metering points in the Country || 3.28 mn. (The CBA covers 1.38 mn; the rest are already fitted with a smart meter)

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || All meters installed after new regulation entered into force in 2011 comply with the minimum functionalities of the Commission Recommendation. Regarding functionality (b), previously installed meters still reflect electricity consumption readings, available to the consumers, on an hourly base. (The basis for the CBA was hourly billing, but the requirement for new meters will be 15 min readings).

Implementation speed || 2014-2020

Penetration rate by 2020 || 100%

Discount rate || 5%

Smart metering lifetime || 10 years

CBA horizon || 10 years

Communication technology || PLC, GPRS/GSM, WiFi and RF

4.3. CBA outcome

Table 4‑C illustrates the CBA result, including the range of main benefits and costs associated with electricity smart metering and considering the Baseline scenario with complete roll-out. Figures for ‘Cost per metering point’ and ‘Benefit per metering point’ have been calculated and communicated by the Member State, as the conducted CBA analyses only investments and benefits for a given year, and not for the whole roll-out period.

Table 4‑C CBA outcome in Denmark

CBA OUTCOME || POSITIVE

Total Investment || € mn. 310

Total Benefit || € mn. 322

Cost/metering point (as communicated by the Member State) || €225

Benefit/metering point (as communicated by the Member State) || €233

Consumers' benefit (% of total benefits) || Not available

Main benefits (% of total benefits) || Saved metering investment (29%) Increased competition (21%) Energy savings (16%)

Main costs (% of total costs) || CAPEX (67%) Tax distortion loss (8%) OPEX (4%)

Energy savings (% of total electricity consumption) || 2%

Peak load shifting (% of total electricity consumption) || 8.4%

Figure 4‑A and Figure 4‑B show the main benefits and costs, respectively, associated with electricity smart metering deployment.

Figure 4‑A Share of main benefits associated with electricity smart metering roll-out

Figure 4‑B Share of main costs associated with electricity smart metering roll-out

4.4. Critical variables – sensitivity analysis

The socio-economic value of the electricity smart metering roll-out appeared to be particularly sensitive to two parameters: the capital cost of the electricity meters and the penetration of consumers who will switch to hourly measured electricity consumption.

4.5. Qualitative assessments of non-monetary impacts and new enabled services

Despite the quantifiable benefits of smart metering systems deployment, the Danish CBA considers also the following non-monetary impacts:

Time-of-use network tariffs – in addition to the spot electricity prices differences, price differences for time-of-use grid tariffs could be included in the analysis; Security of the energy supply – due to price responsive electricity load; Network capacity deferral; Increased competition - hourly billing, based on a partial roll-out, will create a fragmented market that will be less transparent than a market with the matching frameworks since some geographical areas will have remotely-read meters and others will not. That would mean that the areas with remotely-read meters would have weaker competition than other areas. 4.6. Remarks

The results of the economic evaluation have shown a socio-economic benefit for getting the rest of the 1.38 million metering points hourly metered and for successfully implementing a billing system which makes it possible to invoice all customers on hourly consumption readings.

A separate analysis has been conducted for electric vehicles and heat pumps. The results indicate that hourly metering and billing for electric vehicles and heat pumps are socio-economically viable. The flexible demand will reduce price spikes, postpone grid investments and provide additional ancillary services, and therefore, offset the costs for electricity meters, enhanced billing and investments in automated control of electricity consumption.

5. ESTONIA

Estonia is proceeding with a nation-wide roll-out of electricity smart metering systems following the positive results of the economic evaluation of respective long-term costs and benefits.

5.1. Organisation of the deployment and regulation

The metering activity in Estonia, as in most Member States, is regulated (Table 5‑A). Under this set-up the DSO is the owner and responsible party for smart meters implementation. The responsibility of third-party access to metering data is granted to a central hub.

Table 5‑A Smart electricity metering deployment set-up and regulation in Estonia

ESTONIA

Metering activity || Regulated

Deployment strategy || Mandatory roll-out

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || Central hub

Financing of the roll-out || Network tariffs

5.2. CBA local boundary conditions and scenarios

Table 5‑B summarises the local conditions and implementation parameters (e.g. discount rate, roll-out time, smart metering functionalities, etc.) and the scenarios considered for the electricity smart metering roll-out.

Table 5‑B CBA boundary conditions in Estonia

CBA BOUNDARY CONDITIONS

Scenarios || Not available

Number of metering points in the Country || 709000

Common minimum functionalities (as proposed by the EC Recommendation 2012/148/EU) || Partly complying with the second functionality (functionality (b)): Meter readings are on an hourly base (instead of 15min) Compliance with the rest of the functionalities

Implementation speed || 2013-2017

Penetration rate by 2020 || 100%

Discount rate || 6.67%

Smart metering lifetime || 15 years

CBA horizon || NA

Communication technology || PLC – 90% GPRS – 10%

5.3. Smart metering deployment rate

Figure 5‑A illustrates the electricity smart metering deployment rate throughout the roll-out period.

Figure 5‑A Electricity smart metering roll-out plan in Estonia

5.4. CBA outcome

Table 5‑C illustrates the result of the economic evaluation, including the range of main benefits and costs associated with electricity smart metering.

Table 5‑C CBA outcome in Estonia

CBA OUTCOME || POSITIVE

Total Investment || € mn. 110

Total Benefit || € mn. 191

Cost/metering point (EC calculation) || €155

Benefit/metering point (EC calculation) || €269

Consumers' benefit (% of total benefit) || Not available

Main benefits (% of total benefit) || Network losses reduction Avoided investments Avoided meter operating costs (repair and maintenance costs of metering systems)

Main costs (% of total costs) || Operating costs Maintenance cost of central operating system Cost of tele-service

Energy savings (% of total electricity consumption) || Not available

Peak load shifting (% of total electricity consumption) || Not available

6. FINLAND

An economic analysis was carried out in 2008 focusing mainly on the potential of electricity demand elasticity rather than assessing the economic benefits and costs of smart metering roll-out. The industry had voluntarily started a widespread roll-out already in the early 2000’s. The Finnish government mandated a smart metering roll-out for 80% of meters until 2014, but nearly 97% penetration of smart-meters was expected by the end of 2013. However, after completion of the DSOs roll-out projects, the penetration will be close to 100 %.

6.1. Organisation of the deployment and regulation

The metering activity in Finland is regulated (Table 6‑A). Under this set-up, the distribution system operator (DSO) is the responsible party for smart metering implementation and for granting third-party access to metering data.

Table 6‑A Smart electricity metering deployment set-up and regulation in Finland

FINLAND

Metering activity || Regulated

Deployment strategy || Mandatory roll-out

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || DSO

Financing of the roll-out || Network tariffs

6.2. CBA local boundary conditions and scenarios

Table 6‑B illustrates the result of the economic evaluation, including the range of main benefits and costs associated with the electricity smart metering roll-out.

Table 6‑B CBA boundary conditions and scenarios in Finland

CBA BOUNDARY CONDITIONS

Scenarios || No scenario analysis.

Number of metering points in the Country || 3.3 mn.

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || Compliance with functionality (a); customers have the possibility to order (at an extra cost) metering equipment with separate output installation for real time readings. Partly complying with functionality (b), as electricity consumption data are communicated on an hourly base.

Implementation speed || 2009-2013

Penetration rate by 2020 || designed for 97% but actually reaching closer to 100 %

Discount rate || Not available

Smart metering lifetime || 15 – 25 years

CBA horizon || 15 years

Communication technology || PLC – 30 % GPRS – 60 % RF – 10 %

6.3. Smart metering deployment rate

Figure 6‑A illustrates the electricity smart metering deployment rate throughout the roll-out period. Penetration of 97% is expected by the end of 2013 as some of the DSOs had not yet finalised at the time of writing their roll-out project. By 2015, the smart metering penetration rate will be almost 100%.

Figure 6‑A Electricity smart metering roll-out plan in Finland

6.4. CBA outcome

The economic evaluation of long-term costs and benefits was carried out in 2008 and therefore the costs and benefits reported in Table 6‑C are based on that smart metering roll-out appraisal (performed in 2008). The evaluation was mainly focused on finding the prerequisites for demand side response and therefore a comprehensive analysis of benefits of smart meters was not carried out.

Table 6‑C CBA outcome in Finland

CBA OUTCOME || POSITIVE

Total Investment || € mn. 692

Total Benefit || Not available

Cost/metering point (EC calculation) || €210

Benefit/metering point (EC calculation) || Not available

Consumers' benefit (% of total benefits) || Not available

Main benefits (% of total benefits) || · Demand side management · DSO cost reduction (due to remote reading) · Electricity trade and new services

Main costs (% of total costs) || · Meters costs (40-55%) · Accessories for the meters (relays, switching gears, etc.) 5-25% · Installation and maintenance (10-25%) · Communications (5-40%)

Energy savings (% of total electricity consumption) || 1-2%

Peak load shifting (% of total electricity consumption) || 2%

6.5. Remarks

In addition to the DSOs, the retail market has also greatly benefitted from the new meters. Remote reading possibility eases the supplier switching procedures and gives consumers tools to better control their consumption. After the installation of smart meters the billing has been based on the actual hourly consumption. The customers can choose their tariff programme, while there are several suppliers offering tariffs based on hourly pricing. The same hourly measurement data is also used for the balance settlement. Finland is therefore one of the first to utilise this kind of accuracy in the electricity retail market, reducing the imbalance risks for the electricity retailers and enabling different pricing schemes to emerge. Also services based on the new meters are developing, and it is reported that there are already companies providing active demand side management of selected loads.

It is stipulated in the law that the consumption data is measured and stored on an hourly basis and that the meter should be read once a day. Most of the newest meters installed are capable of storing data also in 15 minutes intervals but the internal memory does not usually allow for such frequent readings. Changing this in retrospect would be costly as in effect the whole meter would have to be changed. All the meters should have an output terminal where the customer can connect a monitoring screen with instantaneous consumption readings. However, in the case of apartment blocks, technical difficulties and associated costs should be considered for the installation of monitoring screens inside each apartment, due to the fact that usually the meters are situated in the common switchgear room of the building.

In contrast to other countries, data security has not been a great concern of the general public. Even though the smart meters have been widely used for almost a decade in Finland, there have been no major incidences regarding data security.

Based on the Finish experience, various issues should be considered in order to run a smooth installation schedule and achieve customer acceptance. In this context, it is important to train electricians who carry out the actual installation of the meters so as to be ready to address any customer requests. Also, good communication during installation is essential for the acceptance of the roll-out by the consumers.

7. FRANCE

A financial Cost-Benefit Analysis (CBA) has been carried out based on the outcome of the pilot project Linky.[13] Two scenarios have been considered by the Regulator in its evaluation, in respect to electricity tariffs:

· Scenario 1: Annual average tariffs increase of 2.3% from 2010 to 2020 and 1.8% after 2020; and

· Scenario 2: Annual average tariffs increase of 5.75% from 2010 to 2020 and 1.8% after 2020

The CBA outcome was almost financially neutral for the first scenario and positive for the second. The economic evaluation of the project focused on costs and benefits of the distribution system operator (DSO). Following this assessment and based on the fact that smart metering will empower consumers and support grid stability, the regulator gave his recommendation to proceed with a national roll-out.

7.1. Organisation of the deployment and regulation

The metering activity in France is regulated and the DSO is the owner and responsible party for the meters installation (Table 7‑A). Also, the DSO is the eligible body for granting third-party access to metering data, however, strictly upon customers' agreement.

Table 7‑A Smart electricity metering deployment set-up and regulation in France

FRANCE

Metering activity || Regulated

Deployment strategy || Mandatory roll-out

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || DSO (according to French law, access to metering data for third parties must be agreed on by network users)

Financing of the roll-out || N/A

7.2. CBA local boundary conditions and scenarios

Table 7‑B summarises the local conditions and implementation parameters (e.g. discount rate, roll-out time, smart metering functionalities, etc.) and the scenarios considered for the electricity smart metering roll-out.

Table 7‑B CBA boundary conditions and scenarios in France

CBA BOUNDARY CONDITIONS

Scenarios || Scenario 1 and scenario 2

Number of metering points in the Country || 35 million

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || Compliance for all recommended functionalities reported by the Member State[14]

Implementation speed || 2014-2020

Penetration rate by 2020 || 95%

Discount rate || Not available

Smart metering lifetime || 20 years

CBA horizon || Not available

Communication technology || PLC

7.3. Smart metering deployment rate

Figure 7‑A illustrates the electricity smart metering deployment rate throughout the roll-out period.

Figure 7‑A Electricity smart metering roll-out plan in France

7.4. CBA outcome

Table 7‑C illustrates the result of the economic evaluation, including the range of main benefits and costs associated with electricity smart metering.

Table 7‑C CBA outcome in France

CBA OUTCOME || POSITIVE

Total Investment || € mn. 4500

Total Benefit (€ mn) || Not available – The value depends on the assumptions used, especially regarding the future development of services for data management, the sensitivity of consumers to demand management tools, etc.)

Cost/metering point (EC calculation) || €135

Benefit/metering point (EC calculation) || Not available

Consumers' benefit (% of total benefit) || Benefit not quantitatively evaluated. However, the analysis shows net benefit to the consumers.

Main benefits (% of total benefits) || · Avoided investment in installing existing meters: 30% of total benefits (attributed to the DSO) · Avoided network losses: 25% (attributed to the DSO) · Avoided meter reading costs: 15% (attributed to the DSO)

Main costs (% of total costs) || · Meters (procurement and installation) : 80%, · Data concentrators (procurement and installation) : 10% · IT system : 10%

Energy savings (% of total electricity consumption) || Not available

Peak load shifting (% of total electricity consumption) || Not available

7.5. Critical variables – sensitivity analysis

The result of the CBA outcome associated with the electricity smart metering roll-out appeared to be particularly sensitive to the following parameters:

Average meter installation time and installation rate; Number of data concentrators; and Functional operation of the G3-PLC technology. 7.6. Remarks

The net present value (NPV) of the Linky project is based on the difference between the costs and benefits of carrying out the project and those of not carrying out the project (i.e. ‘business as usual’). The estimated benefits are the investment or operating expenses avoided, whereas the additional costs are the extra costs generated by the project. The result of the performed CBA indicates nearly balanced outcome in scenario 1 (+ EUR 0.1 billion) and positive outcome in scenario 2 (+ EUR 0.7 billion).

The universal deployment of the Linky smart meter system will entail the installation of 35 million meters, or of about 2 to 7 million meters per year, which will take place in two stages:

First deployment stage of 7 million meters between 2013 and 2015 Second deployment stage of 28 million meters over four years (7 million meters per year).

8. GERMANY

The cost-benefit analysis (CBA) conducted (finalised July 31st 2013) advocates a roll-out in Germany which is tailored to the technology and compliant with the national energy reforms. The CBA does not recommend a large-scale roll-out for smart metering (at least 80% of all consumers by 2020) as costs of smart metering systems for final users with low levels of annual consumption would far outweigh the average potential of annual energy savings.

The current legislative approach encourages smart metering roll-out for the following cases: i) consumers with annual electricity consumption over 6000 kWh; ii) major generation facilities pursuant to the national Renewable Energy Sources Act and the Combined Heat and Power Act, and iii) final consumers in new and renovated buildings.

For the rest of the cases, it is recommended to use intelligent meters – an upgradeable measuring system in accordance with Section 21c(5) of the national Energy Act (EnWG) with no external communication link. Combined with a certified smart meter gateway, they can be extended to a BSI[15] Protection Profile-compliant smart metering system and thus securely integrated into any communication system.

8.1. Organisation of the deployment and regulation

A competitive metering deployment set-up is supported in Germany, where the DSO is the owner and responsible party for the smart metering implementation (Table 8‑A). However, the consumer is entitled to the possibility of choosing a third party as meter operator. The Smart Meter Gateway Administrator (SMGA) is the responsible party for granting third-party access to metering data. The role of the SMGA is generally assigned to the meter operator.

Table 8‑A Smart electricity metering deployment set-up and regulation in Germany

GERMANY

Metering activity || Competitive

Deployment strategy || No decision yet

Responsible party -implementation and ownership || Metering point operator (can be the DSO)

Responsible for third-party access to metering data || Metering point operator (can be the DSO)

Financing of the roll-out || No decision yet

8.2. CBA local boundary conditions and scenarios

The economic assessment of long-term costs and benefits associated with the smart metering roll-out in Germany considers the following scenarios:

The ‘EU Scenario’ – it reflects the EU requirement to provide smart metering systems for at least 80% of all consumers by 2020 (which may be subject to a positive CBA as stated in the Electricity Directive 2009/72/EC). The ‘Continuity Scenario’ (‘Business-as-usual’) – reflects 25% of metering points equipped with smart metering systems by 2022 under the current regulatory framework. It indicates a mandatory installation in the following cases: For electricity consumers with annual consumption of over 6000 kWh and operators of RES plants with a connected capacity of over 7 kW; and In new and renovated buildings. ‘Continuity Scenario Plus’ – it considers installation of intelligent meters[16] instead of, or in addition to, the installation of smart metering systems. The intelligent meters must offer the possibility of integration into a BSI Protection Profile-compliant communication system. The same scenario allows for a comprehensive roll-out of smart metering systems by 2029, whereas by 2022 the proportion will be 1/3 smart metering systems and 2/3 intelligent meters. ‘Roll-out Scenario’ – it focuses on the integration of renewable energies. Under the current legal framework, the obligation to install smart metering systems applies only to new RES and CHP with a contracted power of at least 7 kW. This scenario extends the mandatory installation of smart metering systems to old RES/CHP plants as well as to the ones with less than 7 kW, down to a threshold of 250 Watt. ‘Roll-out Scenario Plus’ – it is an extended ‘Roll-out Scenario’ that includes the installation of intelligent meters along with the mandatory installation of smart metering systems, as described in the previous scenario.

Table 8‑B illustrates the local conditions and main parameters used for the economic assessment of smart metering roll-out in Germany associated with the ‘roll-out scenario plus’.

Table 8‑B CBA boundary conditions in Germany

CBA BOUNDARY CONDITIONS

Scenarios || Continuity scenario; Continuity scenario Plus; EU scenario, Roll-out scenario, Roll-out scenario plus

Number of metering points in the Country || 47.9 mn., of which: 11.9 million (2022) to be equipped with Smart Metering 15.8 million (2032) to be equipped with Smart Metering

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || Compliance for all the functionalities, except on functionality g), there is no decision yet

Implementation speed || 2014-Not available[17]

Penetration rate by 2020 || 23 % (by 2022) 31 % (by 2032)

Discount rate || 5 % (for cash flows of commercial stakeholders) 3.1 % (for cash flows of the end consumers and of the distribution system operator (DSO))

Smart metering lifetime || 13 years

CBA horizon || 20 years (2012-2032)

Communication technology || Market based GPRS/UMTS/LTE – 80 % PLC/BPL – 20 % DSL – 5 % Fibre-optics – 5 %

8.3. Smart metering deployment rate

Figure 8‑A illustrates the electricity smart metering deployment rate throughout the roll-out period and refers to the Continuity Scenario.

Figure 8‑A Electricity smart metering roll-out plan in Germany

8.4. CBA outcome

Table 8‑C illustrates the main outcome of the economic assessment of long-term costs and benefits carried out and referring to the Roll-out Scenario Plus.

Table 8‑C CBA outcome in Germany

CBA OUTCOME || POSITIVE (for the Roll-out Scenario Plus) NEGATIVE for the EU scenario

Total Investment || € mn. 6493 (by 2022) € mn. 14466 (by 2032)

Total Benefit || € mn. 5865 (by 2022) € mn. 16968 (by 2032)

Cost/metering point (as communicated by the Member State) || € 546

Benefit/metering point as communicated by the Member State) || € 493

Consumers' benefit (% of total benefits) || 47%

Main benefits (% of total benefits) || · Energy savings - 33% · Load shifting - 15% · Avoided investments in the distribution grid - 13%

Main costs (% of total costs) || · Investments smart metering systems (meter, gateway, communication infrastructure) - 30% · Communication costs - 20% · IT-costs - 8%

Energy savings (% of total electricity consumption) || 1.2%

Peak load shifting (% of total electricity consumption) || 1.3% in average between 2014 and 2022 2.9% in 2032

Figure 8‑B and Figure 8‑C show the share of main benefits and costs, respectively, associated with the smart metering systems roll-out.

Figure 8‑B Share of main benefits associated with electricity smart metering roll-out

Figure 8‑C Share of main costs associated with electricity smart metering roll-out

8.5. Critical variables – sensitivity analysis

The economic assessment of long-term costs and benefits associated with smart metering deployment considers the following parameters for performing the sensitivity analysis, based on the Roll-out Scenario Plus:

Energy savings; Electricity price; Grid efficiency; Halving the EEG (Renewable Energy Source Act) compensation payments for limitation of RES feed-in capacity; Delayed mandatory installation from the past; Optimisation of the organisational structure; Expansion of mandatory installations to further consumer groups; Changes in mandatory installations for new and renovated buildings; Consideration of heat pumps, electric vehicles and other controllable energy applications; Telecommunication infrastructure; Extension of the deadline for mandatory installations and replacement interval; and Provision of value added services. 8.6. Remarks

The CBA conducted by a private consulting firm (finalised the July 31st 2013) advocates a roll-out in Germany which is tailored to the technology and compliant with Germany’s energy reforms. It does not recommend a large-scale roll-out of smart metering systems targeting all (or at least 80% of) households by 2020. Based on the analysis performed, in the case of final users with low levels of annual consumption, the costs of a smart metering system would far outweigh the average potential annual energy savings. The authors of the CBA report believe that compulsory installation would be disproportionate and would represent an unacceptable economic burden. Instead, in the view expressed in the CBA, the current legislative approach, which provides for a roll-out to high-consumption end-users, operators of major generation facilities pursuant to the Renewable Energy Sources Act and the Combined Heat and Power Act, and final consumers in modern buildings, should be resolutely further developed. All renewable energy and cogeneration facilities, as well as controllable consumption units pursuant to Section 14a of the Energy Industry Act (e-mobility, night storage heaters and heat pumps), should be included. Such a roll-out would make sense, as argued in the national CBA, in overall economic terms if it could simultaneously achieve various beneficial effects (e.g. improvement in energy efficiency, improvements in processes, avoidance of need to expand the grid due to active feed-in management, and optimisation of grid planning and operation). For all other installation cases, the report recommends the use of upgradable meters (digital electricity meter protected by protection profile which can be upgraded into a metering system compliant with the protection profile).

The German Federal Ministry of Economics and Technology announced, at the moment of writing this Staff Working Document, that it will give associations and consumer representatives the opportunity to discuss the findings of the study with its authors. Afterwards, Germany will define its roll-out strategy after checking which recommendations of the conducted CBA can be implemented. Business associations and consumer representatives will have the opportunity to discuss the findings of the study with the authors via the Grid Platform's Smart Meter Working Group.

9. GREECE

The economic assessment of long-term costs and benefits associated with the smart metering roll-out was initially conducted in June 2010 and then revised in August 2012. The results presented hereinafter refer to the revised economic assessment under the scenario of ‘Electricity Meters Only with DLC LV’.

9.1. Organisation of the deployment and regulation

The metering activity in Greece is regulated and the DSO is the owner and responsible party for the meter installation and for granting third-party access to metering data (Table 9‑A).

Table 9‑A Smart electricity metering deployment set-up and regulation in Greece

GREECE

Metering activity || Regulated

Deployment strategy || Mandatory

Responsible party -implementation and ownership || DSO

Responsible for third-party access to metering data || DSO

Financing of the roll-out || Information not available

9.2. CBA local boundary conditions and scenarios

The reference scenario for the cost-benefit analysis (CBA) conducted was the electricity smart metering roll-out only with main communications technology PLC (Power Line Communication) to data concentrators and GPRS (General Packet Radio Service) from concentrators to back-office (Data Management System). For areas of low density (assumed to be 10% of the meter population), the technology opted for the appraisal was low power radio (mesh) with GPRS to the back-office.

In summary, six scenarios were used in the assessment, as follows:

Implementation of Automated Metering Infrastructure (AMI) using a combination of Power Line Carrier (PLC) and General Packet Radio Service (GPRS) or fibre optics communications media over the Low Voltage and Medium Voltage network; electricity only option electricity and gas option. Implementation of Automated Metering Infrastructure (AMI) using a combination of Distribution Line Carrier (DLC) and General Packet Radio Service (GPRS) communications media over the Low Voltage network; electricity only option electricity and gas option. Implementation of AMI using optical fibre networks to be provided by OTE in Athens, Thessaloniki and urban centres up to 8000 inhabitants; and a combination of Mesh technology and GPRS in areas and islands where optical fibre is not planned for electricity only option electricity and gas option.

Table 9‑B illustrates the local conditions and main parameters used for the economic assessment of smart metering roll-out in Greece associated with the reference scenario (i.e. electricity meters only with PLC over Low Voltage (LV)/Medium Voltage (MV) networks)

Table 9‑B CBA boundary conditions in Greece

CBA BOUNDARY CONDITIONS

Scenarios || Six scenarios considered (see above) Preferred scenario: Electricity meters only with PLC over LV/MV networks

Number of metering points in the Country || 7 mn.

Common minimum functionalities (as proposed in EC Recommendation 2012/148/EU) || Compliance reported with all recommended functionalities

Implementation speed || 2014-2020

Penetration rate by 2020 || 80%

Discount rate || 8%

Smart metering lifetime || 15 years

CBA horizon || 25 years

Communication technology || From the smart meter to the data concentrator: PLC (for the reference scenario) From the data concentrator to the DMS: PLC (for the reference scenario)

9.3. Smart metering deployment rate

Figure 9‑A illustrates the electricity smart metering deployment rate throughout the roll-out period.

Figure 9‑A Electricity smart metering roll-out plan in Greece

9.4. CBA outcome

Table 9‑C illustrates the main outcome of the economic assessment of long-term costs and benefits carried out and referring to the scenario of ‘electricity meters only with PLC over LV/MV networks’.

Table 9‑C CBA outcome in Greece

CBA OUTCOME || POSITIVE

Total Investment || € mn. 1733

Total Benefit || € mn. 2443

Cost/metering point (EC calculation) || €309

Benefit/metering point (EC calculation) || €436

Consumers' benefit (% of total benefits) || 80.7%

Main benefits (% of total benefits) || · Consumption reduction - direct feedback (44%) · Meter reading savings (14%) · Carbon benefits (11%)

Main costs (% of total costs) || · Procurement and installation of meters (55%) · Display costs (20%) · Communication infrastructure – PLC (9%)

Energy savings (% of total electricity consumption) || 5%

Peak load shifting (% of total electricity consumption) || 5%

Figure 9‑B and Figure 9‑C illustrate the main benefits and costs, respectively, associated with the electricity smart metering roll-out in Greece.

Figure 9‑B Share of main benefits associated with electricity smart metering roll-out

Figure 9‑C Share of main costs associated with electricity smart metering roll-out

9.5. Critical variables – sensitivity analysis

The outcome of the national electricity smart metering deployment appears to be particularly sensitive to the following parameters:

Amount of energy savings – variation from 3% to 7% could lead to negative net present value in the second scenario (electricity and gas smart metering deployment with PLC); Discount rate; Capital costs for meters and displays; Appraisal (discounting) period; Duration of the smart metering roll-out programme; Electricity, gas and CO2 price changes were included in the sensitivity analysis; The labour force costs; and Cost of IHD (in-home display)

The amount of energy savings and the value of the discount rate are the two parameters that trigger the larger variations in the overall net present value (NPV) in all cases.

9.6. Qualitative assessments of non-monetary impacts and new enabled services

A number of other benefits are likely to be accrued with the smart electricity roll-out since it paves the way to the transition to smart grids, therefore enabling a set of opportunities as provided below:

Management of distributed (and micro) generation; Demand response benefits; Easier i