Discussion Papers

Matthias Wissner

Smart Metering

No. 321 / July 2009

Summary

Various countries are introducing smart meters in different ways and with different pace. This discussion paper looks at the experiences of four European countries that have decided on a complete roll-out of smart meters or have (partly) realised it. Using the examples of the Netherlands, United Kingdom, Italy and Sweden we analyse how these countries organize a complete roll-out. From this analysis we draw conclusions for the implementation of a full roll-out of smart meters in Germany and derive corresponding recommendations for action. While Italy and Sweden are well advanced or have nearly completed the full implementation, the Netherlands and the UK are at the beginning of this development. The motives for im-plementing smart meters are partly similar but do also have country specific backgrounds. For example, in Sweden a major part of the electricity is used for heating what induces higher electricity bills that claim for a high accuracy. Italy liberalised its electricity market rela-tively early so that a major part of households was equipped with smart meters by a private company. However, in the Netherlands and the UK the focus is more on competition policy and environmental aspects. The requirements for a complete roll-out therefore differ between countries. In Sweden, for example, there was merely a statutory rule that meters had to be read monthly while the other countries have laid down or suggested concrete requirements for the technology that is to be implemented. On the basis of the high number of smart me-ters already installed Italy was able to put up a regulation to realise the roll-out in short-term. However, the UK assesses a time period of ten years for the complete roll-out. Differences can also be found in the design of metering markets. While the Netherlands and the UK have or had liberalised markets, in Italy and Sweden the distribution companies that are subject to incentive regulation are in charge of metering services. It appears that liberalised markets per se do not seem to trigger a roll-out of smart meters. For Germany with its liberalised me-tering market this may give a valuable advice. Basically it should be defined clearly what ob-jectives are to be reached by a roll-out. Particularly it should be analysed what costs and benefits are involved when it comes to a complete roll-out of smart meters and if there are potentially any information deficits on the side of energy consumers. On this basis a corre-sponding strategy is to be developed. This might bring with it a trade-off between a quick implementation (effectivity) and allocative efficiency. Finally, it is a political decision what ob-jectives are of priority, i.e. whether allocative inefficiencies are taken into account in favour of a quick implementation of smart meters or if competition is to provide for an efficient solution. The latter seems more time-intensive, however, and probably will not lead to a 100% roll-out.

(Full version only available in German language)

Discussion Paper is available for download.

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