Smart Meters and Demand Response Where Is Europe Going and Who Will Profit.

1 year, 28 market, in-depth, multi-client study on Demand Response best practice from around the world

Research Basis - A comparison of 43 different pricing or feedback schemes - Peak clipping DR schemes Pricing tools - Energy reduction DR schemes Feedback tools

Demand Response Programs “ Any program which communicates with the customer that either enables them or encourages them to lower or shift energy consumption”

Peak Clipping DR

Energy Saving DR

Demand Response “Turning Energy Consumers into Energy Citizens” Sarah Darby

VaasaETT, Capgemini, Enerdata

USA 5% peak reduction = 625 power plants $66billion over the next two decades split between Consumer and Utility (Brattle Group)

The Four Key Drivers of Value • Size of (peak) load • Amount of peak load offset by DR • Avoided cost of capacity • Avoided cost of energy

Smart Meter requirements - Past Provide automatic meter reading capabilities (AMR)

Smart Meter Requirements Present

Smart Meter Requirements

Present

Financial potential of meter installations 195,593,000 households in the EU 27 X € 400 per meter € 78,237,200,000

PAST Market Structure = Stable Global - planned system equilibrium A monopoly supplier Regulated tariffs (still exist) Basic metering with limited communication TOU pricing because of production constraint

Global - planned system equilibrium

A monopoly supplier

Regulated tariffs (still exist)

Basic metering with limited communication

TOU pricing because of production constraint

Present Market Structure = Volatile Critical peaks increase price volatility in the wholesale market Volatile renewable energy integration (wind & solar) Retail market competition: new entrants, new price offers, new automated home services … New technical progress : Smart metering (more interactive) interconnection of electrical and telecom networks with AMR CO2 reduction goals

Present Market Structure = Volatile

Critical peaks increase price volatility in the wholesale market

Volatile renewable energy integration (wind & solar)

Retail market competition: new entrants, new price offers, new automated home services …

New technical progress : Smart metering (more interactive) interconnection of electrical and telecom networks with AMR

CO2 reduction goals

Peak Clipping Demand Response

Peak Clipping DR

Peak Clipping Program Averages T i me Of Use

Present situation = FRANCE 10 historical peaks in the last 7 years Each new year brings a new record peak Demand peaks : bigger and more often (even in summer) Household consumption is responsible for global increase (increase of more than 75% since 1990) … due to « brown product » use (electronic and communication e.g. : cell phone, computers…) and increasing number of homes

Present situation = FRANCE

10 historical peaks in the last 7 years

Each new year brings a new record peak

Demand peaks : bigger and more often (even in summer)

Household consumption is responsible for global increase (increase of more than 75% since 1990)

… due to « brown product » use (electronic and communication e.g. : cell phone, computers…) and increasing number of homes

Critical Peak Pricing France 1982 “ Peak Day Step Back” 22 days of 18 hours (Nov. – March) Low prices rest of year 50% reductions participants 4% reductions total market

1982 “ Peak Day Step Back”

22 days of 18 hours (Nov. – March)

Low prices rest of year

50% reductions participants

4% reductions total market

Energy Saving DR

Energy Saving Program Averages

Utilities knowledge of residential customers YES Size of Living Space Heating method Age of house Age of boiler Heating system NO Composition of household Age of household members Income Education Profession

Utilities knowledge of residential customers

YES

Size of Living Space

Heating method

Age of house

Age of boiler

Heating system

NO

Composition of household

Age of household members

Income

Education

Profession

RESULT?

Holistic understanding which includes customer drivers is necessary in order to maximise the effectiveness of company resources RISK – Waste of 60% of budget

Market Barriers GAP – EU Commission / utilities Scientists & bureaucrats vs. business & engineers GAP – customers / utilities Lack of trust – Ex. s mart metering = spying GAP – Findings / utility leadership Savings = Losses

Market Barriers

GAP – EU Commission / utilities

Scientists & bureaucrats vs. business & engineers

GAP – customers / utilities

Lack of trust – Ex. s mart metering = spying

GAP – Findings / utility leadership

Savings = Losses

Market Barriers IDEALISM - policy makers “ It is good for society, they should do it for free” Legal barriers - Austria Push the high profile measures - Denmark Weak mandates for regulators - Finland Weak or counter productive regulations – Italy Lost assets and investment without benefit – UK, Spain

Market Barriers

IDEALISM - policy makers

“ It is good for society, they should do it for free”

Legal barriers - Austria

Push the high profile measures - Denmark

Weak mandates for regulators - Finland

Weak or counter productive regulations – Italy

Lost assets and investment without benefit – UK, Spain

EU Market Developments EU commission pull from the top gradually changing the market. Spain SM mandate – micro generation and smart grid capabilities Italy - reviewing smart meters - for Smart Grid Norway – mandated feedback capabilities Austria – high priority on feedback Finland – accurate billing and hourly readings, …. France, Belgium, UK ….

EU commission pull from the top gradually changing the market.

Spain SM mandate – micro generation and smart grid capabilities

Italy - reviewing smart meters - for Smart Grid

Norway – mandated feedback capabilities

Austria – high priority on feedback

Finland – accurate billing and hourly readings, ….

France, Belgium, UK ….

Reasons for optimism Developments in metering market Growing recognition of DR as financially viable and effective Leadership of EU Commission – Regulatory research, technical research, objectives Improvements in customer friendly products Developments in pilot studies

Developments in metering market

Growing recognition of DR as financially viable and effective

Leadership of EU Commission – Regulatory research, technical research, objectives

Improvements in customer friendly products

Developments in pilot studies

Despite the barriers T he market is preparing today f or tomorrow “ We don’t know what the future market will require and we don’t want to shut ourselves out” Norwegian Regulator.