Energy, Utilities & Chemicals

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Smart Metering: The holy grail of demandside energy management?

Smart metering is on the point of becoming very big news in Europe. It is a trend that has been anticipated for some time. In 2001, the UKs Department of Trade and Industry (DTI) Smart Metering Working Group estimated that even fairly basic smart metering technology was likely to reduce domestic energy consumption by between 510% and cut the countrys carbon dioxide emissions by around 2.5 million tonnes a year. These are impressive figures. They were compelling back then but they are even more so now, when the reality of Kyoto and the need to reduce carbon emissions and manage peak-load demand is very real. The meters put information and control into the hands of the consumer, with integrated domestic

and commercial units enabling individuals to manage their own consumption patterns, and save energy and reduce fuel bills in the process. One of the drivers for the global adoption of smart meters is that they are now cheaper than ever. In Europe the price per meter has dropped in the last 3 years from around 150 each to 30 for a basic unit. In Italy, Enel is now installing around 27 million smart meters. Pilot projects are also being developed by utilities in the Netherlands, Scandinavia, France, Spain, Germany and the UK. Central Europe is also catching onto the potential demand-side savings that digital meters can bring and trials within the accession countries are expected within the next 12 months.

Is smart metering the holy grail of demandside energy management? The experience of leading utility companies suggests it could be, if used strategically.

The Advanced Metering Infrastructure (AMI) Landscape

Data Aggregation Meter Data VEE (validation, error correction, edit) Calculation of billing determinants: consumption by Time-OfUse periods loss adjustment etc.

Calculation of charges using customer/utility specific data: tariffs etc.

High volume data relay Transmit via Fiber? Data Collector

E
Prepare & send customer bills Revenue Mgmt remittance processing late payment charges collections customer accounting
Utility

Hourly meter data (transmitted hourly/daily?) Transmit options: phone (cell, wire, satellite) RF PLC other?

Customer receives bill from utility Customer has access to interval meter data Via web/phone access to database? daily? one day in arrears? Via display on household device?

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On a basic level, smart meters can be used to replace manual meter reading by enabling automatic data collection. One route to achieving this could be to place an antenna on a vehicle and drive around once a month or once a quarter collecting readings. On a more sophisticated level a fixed network, radio frequency or cellular network can be used as a carrier to transfer data in real time both to the utility and to the consumer. However, to use smart meters merely for data collection is to miss the point of this technology. Smart metering is about far more than just gathering data on usage. In fact, you cannot make a business case anywhere in the world to install smart meters just to perform the traditional measurement function. Smart metering can be seen as the main information gathering device for the operations of a utility. With Kyoto, global warming and other environmental issues rising to the top of the agenda, smart metering may be one of the keys to meeting carbon targets. And Automated Meter Reading (AMR) may also be one of the keys to both reliability and quality of power supplies, which are gaining more importance in many communities. But how can something as simple as a new meter provide so many benefits? The answer is that smart metering is more than just a new meter, and it is more than just a communications tool. It is the missing link in the understanding of how electricity is used. Today in any generation facility, operators know to the second when something happens. In the transmission grid they know in seconds. But when it comes to the distribution grid, it may be 30 days to 3 years before there is any idea of where the electricity went, and then it

would take a team of detectives to determine where it really went in any given time period. Smart metering, when widely deployed, changes this. It can measure where power went, and when, and also report this information at regular intervals. It is possible to reverse the trend where the utility gets outage information by the customer calling to tell the utility the power is out. Instead smart meters tell the utility that the power is out and the utility can call the customer first. Another impact that AMR has on the typical utility is in the area of billing. First it makes it possible for a customer to get a bill on demand. So as the customer moves from one home to another, the bill can be prepared while the customer is on the phone and final payment can be made, instead of a bill coming weeks later. The cost of the bill is also significantly less. In studies of the US market, where smart metering is much more established than in Europe, the average cost to prepare a move-out bill is over $50. With smart metering, the cost is under $5. For a utility with one million customers, this can result in an annual savings of approximately $2 million dollars in move-out billing alone. Move-in readings can double this saving. Add the ability to disconnect a meter when the customer does not pay the bill and the total grows significantly. In just dealing with out-of-cycle visits to homes, the average utility can save over $10 million each year per million customers. Further savings can be made by using smart meters to support power restoration because it enables the utility to automatically know where power is out and dispatch crews to the

Case Study: US-based Investor owned utility

Company Profile:
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86 Generating Units 69,000 miles of T&D lines 4 million customers (both residential and Commercial & Industrial) Peak Energy Use: 20GW Pioneer in Load control/AMI, running demand side management programs for over 15 years

Demand-Side Programs:
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Programs geared towards reducing overall energy consumption and utility peak demand AMI module implementation enabled time of use rates, real-time pricing, demand response and eventually load control

Direct Load Control & Curtailment Program:

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Features remote control of convenience loads (2-3 appliances) to reduce peak demand Customers are given incentive payments to sign-up for the program, install the module and have appliances on call air conditioning/heating, water heaters & pool pumps cycled on and off for 15 minutes every half hour over the course of 3 hours per day (or shut off completely for 3-4 hours) Still extremely popular: 300 calls a month, 60 web inquiries a week, 8085% closure rate through word-ofmouth only ability to shed 2-3,000MW in 60 secondsand the company has avoided the new construction of approximately 10 power plants.

I Central

I Today,

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AMI and its Data FLows Touch All Major Process Areas within a Utility

Geographic Information System

Connectivity Validation Closing Verification

Forecasting
Demand Management Load Forecasting Simulation

Engineering
Power Quality Asset Loading Design Standards

Call Center
Remote Disconnect Restoration Verification Remote Issue Validation

Outage Management
Outage Notification IEEE Indices

Regulatory
Tariff Design Rate Case Support Critical & Complex Tariff

Metering
Meter Reading Current Diversion TOU Billing

Scheduling
Load Scheduling Curtailment Planning Outage Planning

Vegetation Management
Blink Target Trimming Trim Effect Verification

Field Communication (Mobile Workforce)

Service Verification Live Line Verification

Collection
Revenue Lift Automatic Shut-off

Billing
Prepay Real Time Pricing Weekly Billing

Dispatch
Order Completion Site/Line Status

SCADA
System Security Load Protection Selective Load Mgmt

Asset Management
Asset Load Profiling Infer Cap Bank Status Maintenance Planning

Home Control Gateway

New Business Areas

Appliance Monitoring Load Analysis

New Revenue

Efficiency

root cause quickly. Current indications from the US are that utilities that have installed AMR can make restoration happen faster, by as much as 5%. In situations where a single meter location is out, the improvement is even more dramatic. With AMR, in most cases, the meter outage is known in minutes from when it actually happened, not when the customer calls the utility. This has the ability to dramatically drop the real outage statistics for utilities. For those utilities that have performance-based rates, the reality is better performance and a chance to collect bonuses for the improvement in reliability. While

bonuses in the US can range from $3 million to as much as $40 million per million customers, extra value is also gained through improved customer retention and satisfaction. The next area for improvement is engineering analysis. Most utilities design their systems to support an anticipated peak load, and in fact spend more than half of the capital in the distribution grid to support the 100 to 200 hours a year in peak demand. With AMR and the load control applications that it can support, utilities can look at significant savings.

The US is leading the way One of the best examples of a successful smart metering strategy is a large US based Investor-owned utility. In the distribution grid alone, over the last 15 years, it has seen savings amounting to more than $1 billion dollars. In addition the company has avoided the construction of several power plants that have saved an additional $3 billion dollars. And to date, the utility has only installed smart meters with 700,000 of its 2.5 million customers. Additionally AMR has enabled this utility to control peak load when it

the way we do it

would most need peaking plants that burn hydro-carbon fuelsand as such it has reduced the amount of carbon it produces. With over 2,000MW of load control, the company can reduce emissions by up to 750 tonnes of carbon at peak for every hour it uses load control (compared to emissions that would be generated if it had to burn coal instead of reducing the load). This utility has done such a good job with its smart metering that most customers cannot tell when their load is being reduced. With 15 years of experience in building and running the program the utility has over a 99% customer retention rate. The total cost of the program to the utility is approximately $72 per customer per year and approximately $100 million in equipment and installation costs. Finally the utility has the lowest cost to purchase outside power, in the southern US, since it can choose to reduce load when the price of peak power is too high on the market. This has saved additional millions.

These kind of savings come from using the full capability of the AMR technology. They also come from gaining experience with the technologies and determining how the customers will react to them best. In California the regulators are looking at installing AMR meters to allow the creation of Critical Peak Pricing tariffs to help California tame its rolling blackouts. This program will allow the utilities to decide, on up to 15 days a year, when the power is too short and let customers decide how much power they want to buy. On a normal day the power may be priced at 15 cents per KWH during peak times; on a critical day that same power may cost as much as $1, more than six times the normal peak price. Tests during 2004 show that the program should achieve the regulators goals to reduce the need for new power plants and transmission lines and eliminate the need for rolling black outs.

In July 2005, such programs did contribute to avoid another blackout in California. Extreme temperatures in the Southwest States coupled with 2,000MW missing on the network as a consequence of some local power plants tripping brought a Californian Independent System Operator very close to a major crisis. Hopefully, the stage II alert issued by the California operator prompted several utilities to invoke demand-response programs to reduce load. Thousands of customers, including both large and small customers, reduced their energy usage, and a crisis was avoided.

Case Study: Ontario Province Cananda

Ontario is Canadas hot spot with a population of approx. 12 million and 92 electric utilities Among the highest per capita consumers of energy in the world Province uses up to a peak of 25GW on very hot/cold days Government mandate to close coal (7,500MW) and replace nuclear (12,000MW) Private power companies invited to fill gap via RFP process underway

Government-driven conservation and load-shifting program ramping up AMI implementation plan will enable move to time of use (TOU) price scheme, and peak mgmt. programs:
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All customers >200KW commencing 2005 Large, compact, urban distributors complete by 2007 (40% of customers) Roll out for other distributors (small and/or rural) commencing 2008

Peak, mid-peak and off-peak daily pricing commencing 2006

Future expansion to include critical peak (15 to 30 highest demand days)

Meters to be funded by a customer fee as part of the regulated rates:

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Plan calls for partial AMI deployment by 2007 and then full rollout by 2010 with following interim milestones:

Estimated to add $4 CND to the monthly bill Estimated to cut the energy cost by more than that

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Back in Europe, Enel is creating new tariffs that will encourage customers to shift demand out of peak times and help flatten the load curve. There are other benefits too I Improvement in safety for workers in the field, since they can check the status of power lines from connected meters quickly. They can quickly see where there is and is not power and ensure that all the power is back on when they finish work.
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Case Study: European Utility

One of the largest publicly traded utility transforming into a multi-utility/service player.

APPLICATIONS:
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Turning the power grid into an intelligent services delivery network Creating platform to provide valueadded services for both distribution companies and retailers Customers select options/features and can extend the network to other home applications 17 million of new metering equipment up and running by end 2004, 27 million total by end 2005 Pace of implementation: 700,000/month $2bn Euro deployment with a payback in savings of $400500m/year $85 per connected meter Communication is via power-line to utility pole gateway, then cellular GSM to base

R E S I D E N C E

Energy Mgmt/Curtailment Security & Monitoring Remote Appliance Mgmt Appliance Diagnostic & Repair Lighting Management
Real-time data exchange Cellphone Internet Powerline/ GSM

Engineering analysis where the engineers can get excellent data on what is actually going on in the grid and where power is being consumed and let them focus the engineering spend on areas that really need improvement. With the information on momentary outages in the meters, there is an easy way to determine where there are trees rubbing on the lines and causing drop outs. The power quality information that is available allows engineers to learn when the capacitor banks are not

U T I L I T Y

Asset/Load Control, Curtailment Remote Physical (Dis)Connect Meter Reads/Time- of- Use Billing Outage Detection/Restoration Theft/Tamper Detection Quality Monitoring Change Max Power Threshold

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AMR Drives Benefits

Settlement (2-4%)

System Control (4-11%)

Billing & Customer Care (2-7%) -

Standards & Construction (15-20% Capex) )

Collections (15-25%)
Field Work Management (3-7%)

supply and emissions management for utility companies, we may even be able to use an AMR meter to be the gateway into home control and security management. The integrated smart meter could become a core information and control hub for the home and office. In short, smart metering enables better data to be gathered from the field and enables utilities to improve services, reduce costs and reduce the need for peak-load capacity and thus emissions. However, to do so AMR needs to be used at a strategic level by both utility companies and consumersif we see this as simply a cheaper way to read meters, it is very difficult to build a business case for the investment.

Asset Management (4-19%) Tariff & Regulatory (1-4%) Outage & Restoration (3-8%)

Benefits

AMR AMR Benefits

Safety (2-5%)

Load Forecasting (9-14%)

Metering (2-4%)

Vegetation Management (3-7%)

Demand Management (2-22%) -

Savings Percentages based on Interviews conducted by Capgemini with North American Utilities having deployed AMR pilot projects. Calculation based on the assumption that AMR is fully integrated and utilized

performing as required. This enables the utility to tune the capacitor banks and reduce power used to manage reactive power.
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About Capgemini and the Collaborative Business Experience

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www.capgemini.com

Customer billing cycles can be matched to customer pay days, so those who get paid weekly, can be billed weekly. And finally the system can be used to track the load on transformers and other field equipment, allowing better maintenance planning and asset management.

The experiences of utility companies and their consumers demonstrate what can be achieved in Europe through utilizing smart metering technology. In the future, in addition to AMRs ability to put greater control for power use and cost into the hands of the consumer, and to enable more effective and efficient control of power

For more information contact: Doug Houseman +1 (313) 887-1464 doug.houseman@capgemini.com

2005 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.

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