Tag Archives: metering

The effectiveness of consultations

Back in February, I gave a brief history of metering innovation in the UK which ended by saying that the regulator, Ofgem, was conducting a consultation on how the next generation of metering technology could be encouraged. The Environmental Change Institute submitted a response in which we shared our views and research experience.

The results of the consultatoin were released at the end of June and identified three areas where Ofgem can make a contribution:

Developing common standards for smart meters
Removing any remaining regulatory barriers
Taking a leading role in the DTI’s pilot on smart metering and consumer behaviour

These are all sensible proposals and hopefully they will promote the growth of innovative metering technologies. On a personal note, it’s very rewarding to see that the Environmental Institute was cited regarding the importance of visual monitoring displays. We tried to stress that smart meters alone will be insufficient if consumers are to play a greater role in managing their domestic energy consumption. Instead an entire system of technologies and policies must be created to provide consumers with information on their energy consumption and its impact on the environment.

Therefore, while it sounds as though our comments were largely taken on board, I think it’s worth re-iterating this line from our original submission: “Ofgem needs to be aware that unless the supporting institutional frameworks are correct, the results [of a metering pilot] may be disappointing”. Perhaps it should read “DTI needs to be aware…”, as they are funding the pilot and setting its terms of reference. In any case, the main message is that consultations are ultimately judged on how effectively the government is able to transform the received responses into a solution to the perceived problem. This cannot be achieved by considering one element of a complex system in isolation and (fingers crossed) Ofgem will adopt a multi-faceted approach in relation to smart metering.

A not-so-short history of metering innovation in the UK

Recent history of metering

The government began to liberalise the electricity sector in the UK in 1989. It took several years to implement all the measures but now the market is an open competitive market and customers are free to choose who supplies their electricity (e.g. a green electricity tariff, split day-night tariffs, and so on).

The industry is subject to regulation by the Office for Gas and Electricity Markets (Ofgem), primarily to protect consumer interests. For example, Ofgem requires that all consumers have an approved meter to measure how much electricity they use from the grid (an import meter). Since you must have an import meter, Ofgem sets a “price control” which restricts the amount that a metering company can charge for maintaining this device (currently £1.12 per device per year).

There are nearly 27 million electricity meters in the UK and so metering is a big business. Previously all aspects of the industry were the responsibility of the electricity boards (now known as DNOs). However Ofgem introduced competition to metering in 2003, dividing the industry into two main groups: meter providers and meter operators (including data collection and processing). The policy had several goals: promoting choice in metering services, encouraging innovation, lowering prices, and improving service. This factsheet (PDF) provides a good summary.

Metering innovation and microgeneration

For microgeneration, perhaps the most relevant aim is encouraging innovation. Advanced meters can provide benefits for microgeneration installations by recording on multiple registers and improving communication between customer and supplier. However there has not yet been any significant evidence of innovation in metering resulting from the introduction of competition to metering.

The reasons for this became apparent during my interviews with industry stakeholders and could be considered to effect both the supply and demand side for advanced metering. On the demand side, electricity suppliers are now responsible for purchasing metering services and so it is up to them whether or not they install more sophisticated metering equipment. However customers can switch contracts with suppliers after 28 days and the new supplier does not have to pay for the value of the “extra” metering equipment; only the minimum basic meter. But since approximately 90% of suppliers still have their metering services provided by DNOs, why doesn’t the supply side initiate the innovation? As mentioned above, the price control restricts the amount that a DNO can charge for metering services. In other words, even if they install a fancy meter, Ofgem won’t let them charge more than £1.12 for the device per year.

Fortunately Ofgem has spotted this “disjointed value chain” (PDF) and has been working to ensure that the regulatory environment does not inhibit innovation in metering. The importance of this issue has recently by reinforced by the approval of the EU Energy Services Directive, which requires member states to provide better metering facilities¹. To this end, Ofgem is currently consulting on domestic metering innovation (PDF) and makes it clear that “no option is ruled out”.

Given the relative lack of understanding about the benefits of advanced metering (specifically in the UK) and the political and financial investments that have been in a competitive metering market, it’s hard to imagine that Ofgem will, for example, set a strict minimum requirement in favour of advanced metering. It’s much more likely that the existing framework will be tweaked and perhaps a large-scale trial initiated to provide better information for future policy decisions. A short list of proposals will be available in May 2006 and hopefully it will be a pleasant surprise. Microgeneration faces a number of obstacles to its success and while metering is not the most obvious or sexiest part of the system, the full benefits of microgen will only be realised if the metering is right.

¹ “in so far as it is technically possible, financially reasonable and proportionate in relation to the potential energy savings” – love those weasel words.

Metering and monitoring for microgeneration

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You may have noticed that I’ve just added an “M&M” category for posts about metering and monitoring technology. I haven’t really talked about these devices yet but they’re an integral feature of microgeneration installations and play a big role in promoting household interaction with these technologies.

There don’t seem to be any hard and fast definitions for these things but here’s what I’ve been using:

Monitors

Monitoring devices record and/or display information about the electricity produced by a microgeneration system (and sometimes household consumption as well). Importantly the information gathered by these devices is not used for ‘fiscal’ purposes, i.e. billing. It simply provides information to the household in an accessible manner, e.g. visually or for download to a PC. There is a wide range of monitoring devices available on the market but here’s a top-of-the-line example from Sharp.

The Sharp PV monitor

I’ll discuss these devices in more detail in a later post.

Meters

Metering technology is used to record flows of electricity for billing purposes (often the information isn’t used for this purpose but the important thing is that is could be). Here’s a simple example:
An electricity meter

There are potentially three types of meters in a microgeneration household:

Import: Required by law for all electricity customers, this meter is typically read twice a year in the UK as a basis for your electricity bill. Ofgem allows suppliers to charge £1.12 per year for operating these devices so there is strong competition in manufacturer and maintenance.
Export: These meters measure the flow of excess electricity returned, or exported, to the national grid. There is no requirement on any actor within the electricity network to provide these devices and so if you want one, you either have to rely on the goodwill of your supplier (and district network operator who provides the meter to the supplier) or pay about £200 from your own pocket. Some suppliers use these meters as a basis for payment for microgenerated electricity.
Generation: Generation meters record how many kilowatt-hours have been produced by your microgeneration system since its installation. Instead of export payments, many suppliers offer generation tariffs based on data from these meters.

Explanation of microgeneration metering

Since having three seperate meters is a bit of a nuisance, there are also discussions underway about whether advanced metering technology, which combines many these features, might be introduced in the UK. More on this in a later post.