Smart Metering in Private Households: Developments in Germany

  Reasons of electric utilities in Germany for dealing with Smart Metering (Source: FCN/LUM, RWTH Aachen University) Reasons of electric utilities in Germany for dealing with Smart Metering (Source: FCN/LUM, RWTH Aachen University)

In this project, we have so far studied the developments in the Smart Metering market in Germany by undertaking a web-based survey. This survey was conducted in 2008, in cooperation with the Chair of Corporate Policy and Marketing at RWTH Aachen University (Prof. Steffenhagen). Another part of this exploratory analysis, which is still ongoing, also encompasses residential “smart metering” concepts and time-of-use (TOU) rates employed in recent years in Germany, and elsewhere in Europe.

In 2006, residential energy use accounted for 28.9% of Germany’s total final energy consumption. Managing the energy demand of this sector efficiently, therefore, plays an important role in mitigating greenhouse gas emissions and securing the energy supply. A main challenge in this respect is that energy use patterns and prices are ‘invisible’ to the user for most of the time. Most people have only a vague idea of how much energy is needed to provide a specific energy service, and what difference in energy consumption and total cost a change in behavior, or an investment in energy efficiency measures or technology, would make. Real-time feedback to energy consumers is making energy more visible and easier to control, increasing the price elasticity of demand. This feedback may include both tariff- and non-tariff-based approaches. Tariff-based approaches typically provide price incentives to consumers for adopting energy-saving equipment, or to alter consumption patterns. Non-tariff-based approaches try to change consumer behavior through education or financial assistance.

Past studies of providing feedback on energy consumption to private households have shown that it is feasible to reduce energy consumption by 5-15%. Consequently, Smart Metering is a promising way to reach a higher level of transparency in residential energy usage and to provide consumers with instantaneous feedback which, in turn, leads to cost-effective energy savings. These energy savings can be direct or indirect; this means that peak-shifting or redistributing electricity demand more evenly throughout the day (TOU rates etc.) can possibly reduce energy infrastructure requirements. Many features of this demand-side management are not compatible with conventional metering and billing systems.

In Hackbarth et al. (2009) we have reported on the design and results of the questionnaire survey which aimed at detecting the kinds of feedback mechanisms, especially Smart Metering concepts currently deployed or planned to be introduced by German electric utilities. The results of this market survey shed some light on the recent developments in the market for Smart Metering in Germany, and perceptions of electric utilities. They form the basis for a planned more elaborate analysis of the (expectable) effectiveness and efficiency of specific smart-metering schemes implemented in the German residential electricity market and of the benefits that utilities might be able to reap from the new technology and new business models.

In our further research, we want to concentrate on different smart-metering concepts and tariffs, touching mainly upon the following four questions: (1) Which tariff- or non-tariff approach can reduce residential electricity demand most cost-efficiently? (2) How easily can these approaches be implemented and how are they adopted by the customers? (3) How should the costs and benefits of each approach be apportioned among the consumers and the utilities involved? and (4) What are the prospects of sub-metering devices and services?

Project publications

Hackbarth A., Madlener R., Reiss J., Steffenhagen H. (2008). Smart Metering bei Haushaltskunden - Stand der Entwicklungen in Deutschland, Energiewirtschaftliche Tagesfragen, 58. Jg., Heft 11 (November), S. 70-73.