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Dynamic model for optimization of costs and benefits of smart metering
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Backgrounds for dynamic modelling of smart meter deployment
Introduction to the model
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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
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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
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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)
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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.
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- 2010 2010 - 2013 2013 - 2020
Distributed generation
Domestic energy savings
Plug in vehicles
Distribution automation
Flexible tariffs
Real-time pricing
Fraud detection
Improved billing
Sec
uri
ty o
f su
pp
ly
Sustainability
Imp
rove
d c
om
pet
itio
n
• Selected functionality determines quality of service for communication technology
• Timing of deployment determines cost for communication
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8
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
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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?
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CO2 abatement at the demand side is cost effective providing
opportunities for smart metering
Diagram used with kind permission of McKinsey and company
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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
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Hans Vrinds ([email protected])Bart Droppers ([email protected])