Download - Cost-efficient smart metering, a dynamic model for optimization of costs and benefits of smart metering

Dynamic model for optimization of costs and benefits of smart metering

Backgrounds for dynamic modelling of smart meter deployment

Introduction to the model

Split incentive: investments by metering operator provides benefits reaped by consumers

Projected capital and operational expenses exceed the remuneration for metering services in most cases (emphasis on cost reduction of smart metering)

Most calculations are based on ‘now or never’ and ‘all or nothing’ scenarios

Calculations are based on snapshot whereas implementation and deployment take place in

dynamic environment

Current models are based on ‘Incremental innovation’

Technical developments enable ‘semi-radical innovation’

Identical business model

Changed business model

Identical technology

Incremental innovation

Semi-radical innovation

Changed technology

Semi-radical innovation

Radical innovation

Include strategic fit adjusted to local parameters and legal framework (including remuneration for regulated services)

Including semi-radical innovation based on a technology roadmap with 10 year horizon

Include appropriateness of communication technologies (Quality of service and costs)

Include external costs (i.e. CO2 reduction)

Regulatory framework determines boundaries of strategic fit

Strategic fit itself includes:◦ Future proof◦ Interoperability◦ Number of suppliers◦ Standards◦ Geographical applicabilityWeights assigned to the various factors

determine the strategic fit.

- 2010 2010 - 2013 2013 - 2020

Distributed generation

Domestic energy savings

Plug in vehicles

Distribution automation

Flexible tariffs

Real-time pricing

Fraud detection

Improved billing

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Sustainability

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• Selected functionality determines quality of service for communication technology

• Timing of deployment determines cost for communication

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PLC 2ndgen.

PLC 3rd gen.

BPL

PLC over MV

Wired IP

DSL

CATV

Fiber optics

Mobitex (1G)

GPRS (2,5G)

UMTS (3G)

LTE (4G)

WiMAX (4G)

SMS

Meshed RF

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

LegendIncreasing availability Decreasing availabilityConstant availability

Average CO2 per dwelling in EU is about 3 tons annually (with significant variations accross EU)

Based on EUR 17 / ton this represents a value of over EUR 50,- annually

With projected CO2 reduction of 20 % the benefits add up to over EUR 10,- annually per dwelling

How can smart meters contribute to reaping these potential benefits?

CO2 abatement at the demand side is cost effective providing

opportunities for smart metering

Diagram used with kind permission of McKinsey and company

Direct savings to consumer (reduced energy bill due to savings)

CO2 benefits to enabling technology (smart meters)

Meter operators should be allocated tradable CO2 certificates for abatement facilitated by

them

Hans Vrinds ([email protected])Bart Droppers ([email protected])