The Emerging Market for Smart Submetering
In this study we have investigated the market potential for smart submetering in Germany that arises from the liberalization of the measurement business. Our focus is particularly on private households, and on the synergies that can be achieved by combining smart (sub-) metering services for electricity, heat and water.
The liberalization of the measurement business in Germany, which is one of the measures contained in the Integrated Energy and Climate Program of the German government (IEKP), has led to a number of initiatives in the electricity industry to collect consumption data by smart meters in short time intervals and to provide these data to the end-user. This new development has also attracted new market entrants who aim at providing such metering services instead of the traditional electric utility (i.e. the grid operator).
So far the major development has been seen on the electricity market. However, due to synergy potentials, it can be expected that smart natural gas metering will also be emerging in the near future. Likewise, activities in the smart submetering business – especially for heat and water consumption – will be intensified, i.e. the metering for individuals or individual households instead of a group of individuals or households (such as in multi-family homes). Interestingly, the development of Smart Metering and Smart Submetering, respectively, has so far not seen much overlap, and solutions combining such systems across the boundaries of the different commodities concerned (electricity, heat, water etc.) are still rare.
In our analysis, we have studied the new European and national regulations relevant for the development of Smart Metering and Smart Submetering in Germany, and the emerging new markets and actors for metering services. Moreover, we have done a SWOT (strengths-weaknesses-opportunities-threats) analysis for three groups of actors: (1) the grid operator, (2) the energy supplier, and (3) the metering service companies. The SWOT analysis shows that grid operators, due to their obligation to provide a (regulated) base supply in metering services, have a special role to play. Energy suppliers, in contrast, can achieve customer binding and a greater differentiation of their products and services offered. Moreover, they may decide to make use of specialized service providers. Finally, metering service companies are in a more difficult position, as they typically can make less use of synergies. For all three groups of actors it is of paramount importance that the necessary investments in metering devices and infrastructure can be recouped in a sufficiently short period of time.
Overall, we find that there are still a number of barriers slowing down a rapid development of a competitive Smart (Sub-)Metering market, including the lack of standardization of procedures between market actors but also of hardware, interfaces and software. With rising energy prices, due to the higher energy cost savings that can be achieved, the demand for and acceptance of Smart (Sub-)Metering will increase, but the ultimate success will also depend on the availability of sufficiently attractive products (meters), services, and tariff models offered that enable this innovative market to evolve.
Richter S. K., Franz O. (2008). Weitere Liberalisirung des Messwesens - Erfolgsmodell für den Wettbewerb oder Sachgasse? Energiewirtschaftliche Tagesfragen, Jg.58, Heft 11, S. 32-37.
Supervised student research
Özer O. (2009). Cross-Category Management of Energy and Water Consumption Data for Consumption Control - An Investigation of the Status Quo in the Market for Smart (Sub-) Meters, Master’s thesis, RWTH Aachen University (Chair of Energy Economics and Management, Faculty of Business and Economics)/Westfälische Wilhelms-Universität Münster.