23 August 2012 – Utilities are deploying smart metering not only as tools for exact billing, but as critical sensor infrastructure, says Jon Stretch, executive vice president Europe, Middle East and Africa, Landis+Gyr AG.
He believes that the current challenges for smart metering and smart grids in Europe are not technical. “The technology is there and ready to be deployed, but rather the challenges are regulatory and political. The liberalised, unbundled energy market in Europe makes the regulators’ job of cost allocation difficult. The beauty of smart metering is that the benefits the technology brings are spread across the value chain – from end-consumers who are finally able to take control of their energy usage to the distribution system operators, who now can see into the last blind mile between the substation and the point of consumption and thus optimise their network operations and investment decisions, all the way to the transmission system operators, generators and even to society as a whole.”
However, as the benefits are spread out and long-term, the costs are usually short-term and concentrated with the distribution company, a regulated, natural monopoly. Any cost-benefit-analysis that takes too narrow a view and only looks at the costs and benefit to the distributor, as the market entity investing in the technology, will be distorted, Stretch says. “A broader and longer range view is called for, as the European Union has proposed. It is up to the national politicians and regulators to create the conditions and incentives for the distribution system operator to make investments in innovative technologies, which means allowing them to recover the costs of investment through grid-use fees, etc.
“Smart metering is a massive and necessary societal infrastructure development project, but it is being bogged down by arguments over how to divide the cost pie. Thus, utilities need an advanced metering infrastructure (AMI) architecture based on open and interoperable interfaces to be able to enable the future systems’ interconnectivity. Interoperability, open architecture and security are where our innovations are focused.”
Stretch says that just as we have seen developments over the last few years move from automated meter reading, where there was only one-way communication between the meter and the utility, to truly smart metering with two-way communication, the industry and the technology will continue to evolve at a rapid pace. “We are already moving into a multi-utility environment, and functionalities are being demanded of smart metering systems that not only can support smart grid functions upstream, i.e. to the substation and beyond, but also further downstream into the home with home automation, demand side response, energy management services and support for micro-generation. Eventually, we will see a further interconnection of social infrastructure. Not only will the energy supply system become multi-directional and dynamic, but it will also be integrated – or form the backbone of – a larger interconnected smart community, where energy, transportation and even security and social and personal services will be integrated.”