Italy reaping first-mover benefits of smart meters

February 3, 2010

by Livio Gallo, director of Enel's Infrastructure and Networks Division,

Italy has been one of Europe's forerunners in implementing smart metering systems to help households keep track of their electricity consumption, says Livio Gallo of Enel in an interview with EurActiv.

Italy was the first country in Europe to roll out smart meters on a large scale. What was the main driver of this?
In 2001, Enel began an investment programme of two billion euros that sought to replace traditional electromechanical meters with new modern electronic devices over five years. These new meters, managed by the Enel Automated Meter Management (AMM) Solution for its 32 million Italian customers, can be locally and remotely managed. The project was completed in 2006.

The main drivers towards the full implementation of the Enel Automatic Meter Management Solution are to empower consumers, who are now able to manage their energy consumption, to increase energy efficiency, thus cutting emissions, and to help network operators reduce operational costs thanks to the meter's remote management system.

What magnitude of impact do you think smart metering systems could have on CO2 emissions in Europe?
As suggested by the Third Energy Package, smart meters can help increase energy efficiency. Enel estimates a 5% reduction in consumption peaks as a result of increased customer awareness and energy price signals, with reduced energy losses.

The next step is to further reduce greenhouse gas emissions by optimising integration of distributed renewables within the power grid. This is to be achieved through the use of aggregators, which will help match the power supplied by various distributed renewable sources and the demand by groups of consumers equipped with smart meters.

Italy has been a forerunner in adopting smart metering systems. Do you think there are disadvantages to being an early adopter? Are you concerned about the possibility of stranded investments once standards develop and new equipment goes on the market?
We think that being a forerunner in the implementation of the smart meter system was the right decision to take. Now we can rely on our experience as well as on all the relevant data should the system be re-engineered at a later stage, taking into account new standards and equipment.

In Spain we are starting to install 13 million smart meters with a new technology based on the Enel Automatic Meter Management system and experience.

Would you prefer a European standards or separate national standards for smart meters? How has Italy addressed the issue of standards?
As anticipated following the launch of the project in Spain, we are creating an open meter association that will help European countries join a common set of standards at the European level.

What do you consider as an optimal number of meter-readings per year to make the most of the functionalities of smart meters? Is once a month enough to change consumer behaviour if the bill then arrives two months later?
Enel's smart meter allows power billing in accordance with different tariff profiles on a multi-hour, daily, weekly and seasonal basis. It also provides data on the total energy consumed during the current and the last previous billing period (two months for households, one month for small businesses and free market).

In particular, the meter stores and shows on its display the energy consumption data related to each active tariff rate for the current and the previous billing period.

In 2008, smart meters collected 50 million load curves (equivalent to one sample every 15 minutes). The collection of load curves allows for linking the energy consumption data related to each active tariff rate to a specific week, a specific day and a specific temporal segment of the day.

Enel customers can currently read their energy consumption, rates, and contract on the meter display.

Enel smart meters are also ready to provide access to detailed usage data (such as consumption graphs) via an in-home display connected to the meter, and will begin providing this new service, as well as detailing the specifics of the service, as soon as it is approved by the Italian Energy Authority (AEEG).

Who should pay for smart meters? Distribution system operators (DSOs) are concerned that they will end up paying for the roll-out although benefits are spread across a number of stakeholders. How would you address this problem?
The Italian tariff scheme has allowed the investment in new smart meters and the replacement of old meters. At the same time, distributors benefited from an annual 5% reduction in their meter management costs through a 'price cap' mechanism.

For this reason the impact on both system operators and customers in the medium term is negligible.

Moreover, following the introduction of smart meters, the average number of minutes of service interruption per customer per year dropped from 128 minutes to 49 minutes, and the related costs for DSOs decreased significantly from 80 euros per customer to current 49 euros per customer per year.

This is why the Enel AMM Solution represents a worldwide cost-efficiency benchmark.