Last time, I gave a brief introduction to metering and monitoring for microgeneration. It’s a huge area so I thought I’d give a bit more detail, starting with a quick summary of the historical context for electricity metering in the UK and how it is shaping metering for microgeneration today.
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.