Anyone could play an active role in the energy system of the future, for example, by selling self-generated electricity for a profit or making their heat pump available as a flexible option. To make this possible, however, smart metering systems with smart meter gateway are needed. Anne Köhler from the German Association of Energy Market Innovators (bne) spoke to us about new business models enabled by smart meters and the current situation in Germany.
Digitalization is one of the mega-trends of our time. Where do you see the greatest opportunities for the energy transition?
In a system with a growing share of renewable energies, it is essential that power generation, storage, trading and consumption are automated and coordinated down to the second. This is only possible with a modern, smart, digital infrastructure. Until now, measurement and control technologies have been too slow and expensive, particularly for the large number of small, decentralized systems we have: Photovoltaic power generation on buildings, wall boxes for charging electric vehicles at home and heat pump and battery storage systems. Making the most of these systems is essential for a successful energy transition. Intelligent metering can connect these individual systems in a “smart” way. Smart meter gateways (SMGW) provide a secure communication channel that enables readings and control signals to be transmitted between systems. With demand-side management, the expansion of decentralized power generation from renewable sources can be accelerated and electric mobility can be integrated into the grid more easily. More importantly, the readings provided by SMGW are the basis of innovative business models that enable consumers to play an active role in the energy market.
Can you describe the new business models?
In the past, business models in the energy industry typically followed a linear structure: The energy supplier bought electricity from the producer and then supplied it to the customer through the grid. In the digital energy industry, however, many roles and activities have been redefined. Instead of measuring energy consumption once a year, up-to-date readings provided by the metering provider grant both private and commercial consumers a better overview of their power and gas consumption. More accurate data helps power grid operators to better understand the status of the distribution network at any given time, allowing them to more effectively manage grid congestion in the short and long term. This brings down costs across the board and reduces grid charges. As soon as the legal framework has been established, consumers will be able to take an active role by making their battery storage systems, heat pumps or electric vehicles available as a flexible option for their network operator and thus contribute to the stability of the grid, which will then be compensated with a reduced grid charge.
Particularly when it comes to e-mobility, we are expecting many new offers and business models to emerge. For example: Companies that operate a fleet of electric vehicles may benefit from gathering data on the amount of electricity that is purchased at publicly accessible charging stations to charge their vehicles. Using the combined data on the amount of electricity consumed, it may be possible to negotiate a lower price and agreed quality (e.g. green power) to be invoiced centrally.
How much progress has Germany made compared with other European countries?
Unfortunately, the regulatory framework in Germany is hindering innovation at the moment, while these innovations have been commercially available for quite some time and are being introduced in other countries. The German Act on the Operation of Metering Points (MsbG) makes such complex stipulations for the rollout of smart meters that the installation of smart meter gateways certified by the German Federal Office for Information Security (BSI) was significantly delayed and then only began in a very limited capacity. Above all, the real-time readings and control features, which are absolutely essential, are still lacking. In other countries, the rollout of smart meters is much more advanced, most notably in Sweden, Italy, Finland, Malta and Spain. The introduction of digital meters is also quite advanced in Austria and France.
What has caused Germany to fall behind on the smart meter rollout?
The entire certification process was extremely time-consuming from the start and was not at all focused on the needs and demands of the market or the customers. To avoid wasting any more time or losing out on access to international markets, the German Association of Energy Market Innovators (bne) is calling for the MsbG to allow innovative metering systems and solutions, and to limit the legal and regulatory requirements to an absolute minimum. There are already many independent (not BSI-certified) metering systems available today that meet comparable requirements in terms of security, calibration law and data protection and satisfy international and industry standards. These systems do come with the features that we need for the applications we have just discussed.
What would the next German government need to do to achieve a breakthrough in the digitalization of the energy transition?
The vicious circle of excuses that it is too late, too expensive, too complicated and not sufficient, simply has to end. We need a completely new version of the MsbG with fewer specifications and quicker processes that also encourage and integrate innovations. Policy makers must focus on defining clear and simple minimum requirements for data protection and security rather than controlling every little detail. The MsbG must also allow for a cost-effective basic technology for connected communication to ensure that consumers without flexibility potential can also benefit from energy savings. For the energy industry, this would mean that getting the green light for genuine flexibility is finally on the horizon, providing an incredible opportunity for business models in a growth market.
And what about the consumers – are they ready for smart meters?
It’s crucial that smart meters are able to show their value quickly and that the costs actually equate to a real added value for the consumer. In other words: The metering systems certified by the BSI must finally provide the promised features, which are also essential for the energy transition. The competition in the German electricity market is price-driven and gives consumers a choice between a host of providers, qualities of electricity and utility rate models. Successful marketing of smart metering systems will depend on offering products and solutions for energy, heat and mobility that meet the needs of consumers.
Follow the bne-Leitfaden „Geschäftsmodelle und Rechtsrahmen der digitalen Energiewende“ for a comprehensive overview on the topic of smart metering (German only).
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