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com

Cost benefit studies (CBA)

for smart metering roll-out
in the EU
Overview and way forward
PwC and the speaker
We are independent from manufacturers and
PwC Team in Slovakia/ Czech Republic
integrators and support fact-driven CBAs for
Josef Žádník
Senior manager
Strategy, Energy advisory, Chinese desk
Josef is Senior manager in Strategy team of PwC
in Prague office. Josef is also responsible for
energy advisory and activities of Chinese desk.
Before joining PwC he was working for Roland
Berger Strategy Consultants, Euroenergy and
Czech energy agency
Key clients: ČEZ, E.ON, RWE, Verbund, PRE,
MV V, ČEPS, MIT, ERO, SSE, Group DF and many
other energy and utility companies
smart metering
Austria Regulator- Carrying out a Cost/Benefit
Analysis of the introduction of SM for electricity
and natural gas throughout Austria
Dutch Regulator- Providing advisory services
on the drafting of privacy and security guidelines
Swedish Energy Agency (Government)-
A ssisted the Swedish Energy Agency to review
Smart Grid projects applying for the European
Commission
European Commission- Support in drafting the
recommendation for the European Commission by
Ex pert Group 2 of the DG ENER Smart Grids Task
Force
Spanish Government and Regulator-Legal
and regulatory framework analysis regarding the
dev elopment of new business lines around Smart
Grids
2
After CBA analyses, 16 member states have decided in favor of large
scale (>80%) electricity smart metering roll-outs

Status of CBA studies in the EU

Smart Electricity Metering
Roll-Out
The EU Third Energy Package requires member
Yes states to carry out a CBA in order to determine
Yes, official decision pending the viability of a smart roll-out.
No; based on country’s CBA
No decision yet
The figure opposite shows the outcome of the CBAs
Selective Finland across the EU states and the subsequent decision about
Sweden
Cost Benefit Analysis + roll-outs.
+
+ Positive CBA
- Negative CBA
16 member states have decided in favour of large scale
Estonia
NA Not available +
(>80%) electricity smart metering roll-outs by 2020 or
? Inconclusive earlier.
Denmark Latvia -
Netherlands
+ Lithuania This represents ca. 195m smart meters being deployed.
-
GB
+
Belgium
Poland and Romania have positive CBAs, but an official
+ + Germany
+ decision is pending.
Ireland
- - Poland
? -
Czech Rep 7 states have negative or inconclusive CBAs:
+ Slovakia -
Luxembourg +
+ Austria Hungary
Romania
• Belgium, Lithuania and Czech Republic have
decided not to proceed with large scale roll outs
France NA
NA
Italy
Slovenia +
+ • Portugal’s CBA was inconclusive and will be re-
NA
Spain Bulgaria evaluated annually
Portugal NA

?
• Germany, Latvia and Slovakia have negative
CBAs for a full roll-out, but economically
+
Greece justified for some customer groups
+
Malta Cyprus
Sou rce: European Commission 2014 NA 3
Overall, despite a standardization effort from the European
Commission the CBAs performed by the Member States differ from
country to country
Status of CBA studies in the EU

Standarisation effort by the EC Direct vs indirect benefits DSO perspective vs country

but local approaches prevail… (consumer) perspective

• The European Commission
published „Guidelines for Cost
Benefit Analysis of Smart
Metering Deployment„
• Analysis of different CBAs
submitted to the Commission
prove that different approaches
were used in terms of benefit and
cost qualification and
quantification
• The benefit attributed to the
DSO: meter reading operations,
switching, non-technical losses
etc. (& additional customer
service related benefit)
• The benefit attributed to the
consumers depend on the
involvement of customers and
come from Energy saving and
peak load shifting
• The benefits achievable by smart
metering roll-out depend to a
high extent on the accompanying
DSO investments in „smart grid”
(grid automation)
• Co-ordination between DSO
investment directions and smart
metering roll-out key to
achieving full benefits

The results of respective CBAs are only an indication of the real economic viability of
smart metering roll-out
Important role of consensus reaching between Government / Regulator ambition
levels and readiness (financial and technical) of the DSOs who carry most of the
project risks
Sou rce: PwC analysis, European Com mission 2014 4
The benefits assumed in the Slovak CBA are also among the lowest
in the EU

Benefit quantification in different CBAs

Normalised benefit values per metering point in the Member States

€700
654 €
Benefit per metering point / Euros
€600
551 €

493 € 499 €
€500
436 €

€400 377 €
323 €
€300 269 € 270 €
233 €
202 €
€200 176 € 177 €
162 €
118 €
€100 77 € 82 €

18 €
€0

Sou rce: European Commission 2014 5

Energy saving and peak load shifting which are main benefit
drivers are estimated at conservative levels in the CBA

Assumptions on main benefit drivers

Potential for energy saving over total Potential for peak load shifting over total
electricity consumption expected from smart electricity consumption expected from smart
metering roll-outs in the Member States metering roll-outs in the Member States
6% 12%
Energy s aving / % 5,0%5,0% Peak load transfer / % 9,9%
5% 10%
8,4%
3,8%
4% 3,5%3,5%3,6% 8%
3,2%
2,9%3,0%
3% 6% 5,0% 5,0%
2,2%2,3% 4,5%
2,0%2,0%
2% 1,5% 4%
1,2% 2,5% 2,8%
1,0%1,0% 2,0% 2,0%
1% 2% 1,2% 1,3%
0,8% 1,0% 1,0%
0,0%
0% 0%

6
Slovakia with 70% of the total benefits going to the final customer
is among other countries with high-share of customer benefit

Distribution of benefits among stakeholders

Final customers’ share in total benefits

Of those countries who have explicitly calculated the

Sweden c. 20,0%
customer benefits, there is a significant variance in the
proportion of the total benefits case that will apply to
UK Domestic 28,0% customers.
Of the three countries who have completed electricity smart meter
Germany s. 47,0%
roll-outs (Italy, Finland, Sweden), only Sweden has reported any
achieved customer benefits. This reference point (at 20%) lies at
the lower end of those calculated in other states.
UK SME 60,0%
GB expects around double the benefits share for SMEs than for the
domestic customers.
Slovakia 70,0%
In Slovakia 70% of the benefit is going to the final customer and
16 % to the distribution company (customers > 4 MWh)
Austria 79,0%

Netherlands 80,0%
High data availability at the Meter Data
Management System (MDM) level crucial to
Greece 81,0% achieving customer and DSO benefits

0% 20% 40% 60% 80% 100%

7
The costs assumed in the Slovak CBA rank among low-scores even
compared with other CEE countries (estimations in PL 45% higher)

Cost quantification in different CBAs

Normalised cost and benefit values per metering point

estimated from Member State CBA data
800 € €766
Per metering point / Euros
700 €
1s t s tack – color – cos t values
2nd s tack – gray – benefit s hown €590
600 €
€546

500 € €473

400 €

€302 €309
€288
300 €
€210 €220 €225
200 € €155 €161 €167
€135 €142
€114 €123
€94 €99 €99
100 € €77

0€

Overall on a country level, a negative CBA for the mass roll-out, with only 25% of
the mass customers to become equipped with smart metres by 2020

Sou rce: European Commission 2014 8

Slovakia was joined by Germany to opt for ‚selective
implementation’ however the reasons are different

Assumptions in the CBA studies – Slovakia and Germany

High cost / high benefit

Smart metering roll-out for the following cases: i)
600 € 546 €
consumers with annual electricity consumption over 6 MWh; 493 €
ii)RES generation facilities and iii) final consumers in new and 450 €
renovated buildings. Target represents 32% smart metering
penetration by 2032 (and 23% by 2020) 300 €
The German analysis indicated relatively high benefits (sources
being: energy savings (33%), load shifting (15%), avoided 150 €
distribution grid investments (13%)).
On the cost side, distinction made between smart meters with 0€
and without external communication gateway. Meters with the Costs Benefits
gateway proved too expensive for the mass-roll out

Low cost / low benefit 600 €

Slovak Republic: (i) the number of metering points reported 450 €

are those at Low Voltage level, as estimated
for 2020; (ii) the penetration rate of 23% refers to metering 300 €
points (with annual consumption of over
150 € 118 € 114 €
4MWh) to be equipped with smart meters from a total of
2,625,000 metering points at low voltage level.
0€
Costs Benefits

Sou rce: European Commission 2014 9

Member Countries are urged by the EC to keep updating their CBAs
and tender result in different countries prove that this can
profoundly change the business case
EC Recommendation Change for the ‚better’ – example of a DSO in PL

Average cost per meter (respective tenders)

First wave Second wave Third wave

2012 2013* 2014*
100% 94% 74%

Average cost per metering point (respective

tenders)

First wave Second wave Third wave

2012 2013* 2014*
100% 81% 68%

The prices of metres (which are the biggest single cost factor) changed by more than
25%
New CBA under these circumstances will produce totally new results
*Fir st wave (2012)= 100%; source: tender procedures results in Poland 10
 The UK smart metering program went the opposite direction with
the NPV deteriorating by 8.5% between 2010 and 2014 and on-
going delays in the start of mass roll-out
Smart metering implementation timetable UK

Foundation Phase Mass Roll-Out

Original DCC’s current
Programme Plan

Mar 2011
(Q1 2012 to Q2 2014) (Q2 2014 to Dec 2019, 5 years 9 months)
proposal would
compress mass roll-
Foundation Phase Mass Roll-Out
As of out phase by approx.
Apr 2014 (Q1 2012 to Q4 2015) (Dec 2015 to Dec 2020, 5 years)
1.5 years (25% of the
schedule) against the
Propos ed Foundation Phase Mass Roll-Out original plan
Nov 2014 (Q1 2012 to September 2016) (Oct 2016 to Dec 2020, 4 years 2 months)

2012 2013 2014 2015 2016 2017 2018 2019 2020

£20 000 £18 649 £18 730 £18 635 £18 774
£17 141
£16 000
£11 331 £11 671 £11 458 £12 114 PV Costs
£12 000 £10 927
PV Benefits
£8 000
NPV
£4 000

£0
III 2011 VIII 2011 IV 2012 I 2013 I 2014

11
Summary

Different approaches to the CBA analyses across the EU but all

need to ‚living’ documents and account for the changing
environment
√
Slovak CBA negative (selective) but the assumed meter costs have
lower over the last 2-3 years (as other examples prove) √
Customer benefit is key to smart metering programs and high
data availability is a key enabler to customer reactions √

What does the future of smart in Slovakia look like ?

12
Appendix

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13
Our Smart Metering and Smart Grids Global Publications

Elektromobilität/ Electric vehicles – Challenges for industry and public sector

Electromobility - challenges for industry and public sector - In this study the challenges of electric vehicles for industry
and public sector are presented.
Additionally the associated risks and the chances of this development are identified. The survey of 503 potential users
shows the reasons pro or against the use of electric cars.

Sm art from the Start

In Autumn 2010, we brought together nearly 40 people in a roundtable of senior executives from the US, Europe and the
Middle East, as well as PwC Smart Grids experts, to gain first–hand insight into the rollout of Smart Grids. Participants in
the roundtable included major utility companies, network operators, suppliers, regulators and PwC specialists working on
Smart Grids projects in different parts of the world. The event benefited from the insight of companies in a variety of
markets and a variety of different rollout stages.
Sm art Grid Growing Pains

In this whitepaper, PwC discusses the need to ensure that industry players' smart grid goals are in synch with their overall
business strategy, and that they closely agree with their customers' and regulators' needs and interests. We report on the
growing pains companies in this space have confronted, and outline what companies need to be mindful of as they move
forward.

Study on a Cost/Benefit Analysis regarding the introduction of Smart Metering throughout Austria

This study analyses and assesses the introduction of Smart Meters for electricity and natural gas throughout Austria.
Smart meters are new electronic measuring devices which are to replace the mechanically operated meters currently in
use. In future, meter readings will no longer be taken manually. Instead, readings will be transmitted directly to the grid
operator. The system comprising the Smart Meters and the electronic data transmission is collectively referred to as Smart
Metering.

Pw C. Electricity & Co-Generation Regulatory Authority. SM & SG Strategy for KSA 14

Our Smart Metering and Smart Grids Global Publications (II)

Sm art Metering – State of realisation and strategic implications for the German utilities market

The German firm published a survey regarding the new regulatory and law statutory requirements for the implementation
of so called intelligent meters. This results in an affirmative replacement of nearly 44 million electricity meters and nearly
1 3 million natural gas meters by AMM-(Advanced Meter Management) systems in Germany. It was examined and
compared how effective the German utilities companies are prepared for these challenges and which requirements are
needed to enhance the implementation. Also the effects on corporate strategies and IT-systems where evaluated.
Sm art Solutions for Smart Grid

PricewaterhouseCoopers can help bring effective rigor and challenge to the decisions that companies need to make at all
stages of Smart Grids development and implementation. We have extensive experience of helping companies assess and
roll-out Smart Grids programmes in all the major power markets around the world. Our goal is to help our clients deliver
on their smart grid ambitions in a way that gives them maximum value and competitive advantage.

Sm art Grid Growing Pains

This document considers the potential industry process, regulation and compliance assurance opportunities that may exist
forwards as the UK transitions to a Smart world

Building Smart Infrastructures

Efforts are underway to build foundational infrastructures that will support a smart electricity grid and an electric v ehicle
ecosystem. Building a smart infrastructure requires technologies aimed at transforming existing electricity grids to create
greater efficiencies, reliability and the integration of renewable energy sources. This PwC publication offers insight into
the role both large and start–up companies can have in this transformation.

Pw C. Electricity & Co-Generation Regulatory Authority. SM & SG Strategy for KSA 15

Add closing statement here...

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