International case-study: Harnessing Smart Metering for Kyoto Compliance

Jeffrey H. Michel Ing.-Büro Michel Heuersdorf, Smart Metering West Coast 2006 87% of Germany‘s greenhouse gas emissions consist of carbon dioxide.

After the country‘s Kyoto objective of -21% was nearly attained in the year 2000, Germany‘s domestic objective of a 25% aggregate emissions have CO2 reduction by 2005 (referred to now risen to 1990) was abandoned after three lignite 17.4% below plants at Lippendorf and Boxberg were 1990 levels. dedicated in 2000. Difficult Fulfillment of Kyoto Mandates in the EU

Aggregate greenhouse gas emissions in the EU-15 states are diverging from a linear reduction path due to persistent deficiencies in emission European Environment Agency: “Only two Member reduction States — Sweden and the United Kingdom — expect that strategies. existing domestic policies and measures alone will be sufficient to meet or even exceed their burden-sharing targets. All others are projected to be significantly above their commitments with their existing domestic policies and measures.” (EEA Report 8/2005, p. 16) German Lignite Power Plants Produce Three

Times the CO2 Emissions per Kilowatt-Hour of Highly Efficient Natural Gas Generation

Annual Data: 11 million tons of lignite

13 million tons of CO2 1 million tons of DeSOx gypsum 14 billion kWH • 2% of German power production • 3 times the annual generation of the Hoover Dam

Kraftwerk Lippendorf near , dedicated 2000 Germany: World Leader in Lignite Production German Lignite Regions and Mining Output

• Rhineland 100 MT/a • Lusatia 60 MT/a • Middle Germany 20 MT/a

• Lignitetot 180 MT/a + Overburden 970 MT/a = 15 times the original Suez Canal (1869, 74 million cubic meters) Lignite Mining for the

More than 300 villages have already been destroyed in Germany by lignite surface mining. This number may exceed 400 by the end of the century. The German village of Heuersdorf began developing a smart metering infrastructure in 1996 for enhanced resource use efficiency as an alternative to being devastated by lignite mining for the Lippendorf power station.

A court decision in November 2005 has now sealed the fate of Heuersdorf. The village will be devastated by the US-owned MIBRAG corporation before 2009 in preparation for mining 60 million tons of lignite at this location. Lignite Pricing Policies

Power produced from German lignite is sold at national market prices.

In the USA, the power rates in The profits from lignite power lignite mining production in Germany are states are generally not devoted to improving significantly lower demand side efficiency, but are than in coastal used instead for new generation regions. capacities and foreign acquisitions. Diversion of Lignite Profits to Foreign Investment

The Swedish state-owned Vattenfall invests in wind power and solar energy in Sweden using profits accrued in Germany from ecologically destructive mining and CO2- intensive lignite power generation. Public programs Breakdown of emissions that promote abatement strategies due to energy efficiency disregard of real-time data generally focus • Energy demand is presumed to have on point-of been anticipated and minimized in a purchase cost-effective manner during decisions for manufacturing and installation. buildings, motor vehicles, heating, • Little regard is paid to ongoing generation, and consumption. manufacturing • The inability persists to estimate the equipment. frequency and intensity of equipment use, the observance of procedures for operation and maintenance, or possible deviations from specified system performance. Controlling Consumption in Real Time The Sampling Theory requires that a control device operate at double the frequency of the process it is intended to regulate. Implications of the Sampling Theory

• Yearly power invoices (such as employed in Germany) allow only those demand variations to be detected with mathematical certainty that endure for at least two years. • It is impossible to recognize daily or even seasonal changes of power consumption on the basis of annual meter readings. • More frequent decisions on energy use are necessarily based in part on random information, which will inevitably misdirect a portion of available energy resources into ineffective or counterproductive responses, thereby reducing process efficiency. Entropy: The randomness, or disorganization, that diminishes the effectiveness of any process

• The term was first used by Rudolph Clausius in the middle of the 19th century to specify the wasted quantity of usable energy that is irretrievably lost to dissipated heat.

• Norbert Wiener observed that the probabilistic formula for entropy H is the negative expression for an equivalent amount of information. ∞

H = - ∫ w(v) log2 w(v) dv -∞ • It follows that “the processes which lose information are, as we should expect, closely analogous to the processes which gain entropy”. Norbert Wiener, Cybernetics or Control and Communication in the Animal and the Machine (Cambridge: MIT Press, 1947), p. 76. Increased Information → Lower Entropy = Greater Resource Use Efficiency

• Power bills are issued monthly in many countries (USA, Canada, Australia, Norway) to improve customer responses to changes in consumption. • Billing invoices may include easy-to-understand graphical comparisons of consumption data (www.wapa.gov/es/pubs/esb/1997/97Dec/at_abill.htm). • Two types of comparisons may be employed: historic monthly data or cross-comparisons between customers with similar use profiles. Historic Data Comparison Feedback Monthly Individual Data and Average Demand of All Customers Cross-Comparison Data Feedback Demand of Neighboring Households Energy Savings Realized with Monthly Feedback of Information to the Customer

The Centre for Sustainable Energy in the United Kingdom has determined in an international survey of utility billing practices that the monthly feedback of printed and graphical data to the customer offers potential sustained energy savings of 5 to 10%.

Simon Roberts, William Baker, Towards Effective Energy Information (Bristol: Centre for Sustainable Energy, July 2003), p. 4. Real-Time Control using Smart Metering Technologies for Additional Savings • Continuous electronic monitoring and evaluation of power (and other resources such as heating oil, natural gas, and water) enables consumption data to be returned to points of decision in real time for interactive control. • The Energy Policy Act of 2005 in the United States recommends that “customers be provided with electricity price signals and the ability to respond to them”. Normal consumption patterns can then be altered “in response to changes in the price of electricity over time”. Benefits of Data Collection and Control in Real Time • With continuous data collection and intercommunication of current demand information, the customer becomes a functional component of the grid control system. • Preferred times of power delivery may be established by the utility company using either static time-based tariffs or variable time-of-use rates that fluctuate in step with power trading prices, thus improving grid utilization and diminishing required generation capacities. • Continuous data interrogation at all points of the grid allows power interruptions or critical load conditions to be pinpointed for rapid restoration of service. • Unforeseen restrictions (“contingencies”) of power generation or grid transmission may be countered by the remote control of load devices (water heaters, electrical appliances, machinery). Provisional Directive 2005/.../EC of the European Parliament and of the Council on energy end-use efficiency and energy services

Article 13 Metering and informative billing of energy consumption

1. Member States shall ensure that, in so far as it is technically possible, financially reasonable and proportionate in relation to the potential energy savings, final customers for electricity, natural gas, district heating and/or cooling and domestic hot water are provided with competitively priced individual meters that accurately reflect the final customer's actual energy consumption and that provide information on actual time of use. 2. (...) Appropriate information shall be made available with the bill to provide final customers with a comprehensive account of current energy costs. Billing on the basis of actual consumption shall be performed frequently enough to enable customers to regulate their own energy consumption.

3. (…) the following information is made available to final customers in clear and understandable terms (...): (a) current actual prices and actual consumption of energy (b) comparisons of the final customer's current energy consumption with consumption for the same period in the previous year, preferably in graphical form; (c) wherever possible and useful, comparisons with an average normalised or benchmarked user of energy of the same user category (...). Limitations of the EU Directive on Energy End-Use Efficiency and Energy Services

• Considerations are omitted of the efficiency enhancements that can be achieved using cross-comparisons of data between individual consumers. The corresponding data has been normalized to a “benchmarked user”. • Real-time metering capabilities may not be expected for the majority of private residences, since implementation costs must be “reasonable in relation to the volume of consumption and savings potential”. Cost Benefits in the USA using Remote Metering to Replace Monthly Manual Readings Customer Advanced Metering Utility Benefits Infrastructure (AMI) at Benefits California Public Utilities Savings per Meter and Month Accounting & Customer $0.64 $0.25 Service Meter Operation $0.60 $0.00

Meter Reading $0.67 $0.00

Other $0.34 $0.00

Revenue Protection $0.37 $0.00

Service Reliability $0.29 $0.08

Total $2.91 $0.33

Patti Harper-Slaboszewicz, "California and Ontario: A Bold Approach with Promise", Issue Alert (August 10, 2004). Orienting Smart Metering Toward Kyoto Compliance and Energy Conservation • If current annual billing routines were retained in Europe, the cost benefits of an Advanced Metering Infrastructure (AMI) would be less pronounced than in the United States. • However, that situation would change dramatically if real-time readings were required for demand- side management in fulfilling the EU Directive on energy end-use efficiency. • Once a corresponding commitment to AMI had been made, additional monitoring functions and ancillary tasks could be implemented at little cost. • In Germany, consumers will be able to install their own power meters after July 1, 2007, opening the way to new independent energy services. Requirements for Real-Time Metering in Implementing Demand-Side Management

Time-of-Use rate structures Processing of 15 minute rate data, stored for at least 45 days Peak Demand or Class of 45-day storage of the maximum Service rate structures peak demand of each 15-minute time interval Dynamic or Real-Time Pricing Rates received from the utility and shown on a customer display Critical Peak Pricing Optional rates for critical load periods, advanced notification Wide Area Network Data Wireless or hardwired connection Telecommunications to utility or grid operator Tom D. Tamarkin, Small Customer Demand Response Enabling Technology (Sacramento: USCL Corporation, September 26, 2005). Cost Defrayment with Utility Services via WAN/Internet • Service outage reporting • Service restoration reporting • Remote service connect & disconnect • Theft of power reporting • Over voltage and under voltage reporting • Power factor monitoring and reporting • Emergency disconnect of electric, gas, and water services • Service personnel data base and report transmittal Cost Defrayment with Customer Services via WLAN/Internet/Telephone • Multiple metering of power, water, heating (natural gas, oil, district heat), and wastewater, with information feedback • Intrusion alarm • Smoke alarm • Medical emergency alarm (pendant transmitter) • Appliance and device control

Cost defrayment results from a combination of energy and water savings, reduced insurance premiums, and enhanced operational efficiency. Smart Meters for Centralized Data Administration

An AMI power meter can function as a Network Gateway intercommunicating with: • monitoring, control, and display devices on the premises via a wireless local area network and • utilities and other service providers via the Internet.

Diagram courtesy of USCL Corporation Uncertainties of Smart Metering Implementation in Europe • It is not apparent to what extent real-time metering might become compulsory under the terms of the EU directive on energy end-use efficiency owing to the low level of average private consumption in many households (in eastern Germany only about 2000 kWh/a). • It is difficult to make an economic case for the adoption of AMI technology if only miniscule amounts of electrical power can be saved, unless multifunctional capabilities are realized. Multifunctional Cost Efficiency

Low power demand in many parts of Europe limits the potential efficiency contribution of data comparisons. However, multifunctional meters capable of measuring power, heating energy, and water consumption will provide aggregate savings to justify the cost of AMI realization. Considerable undetected variations prevail between the heating energy demands of individual households. Opportunities for Market Development in Europe

1. The lower average electricity consumption of European households and businesses should be multiplied by higher utility rates to determine the attainable motivation for reducing demand. Display readouts translated into monthly budget savings will likely prove more effective than power readings in influencing customer behavior. Opportunities for Market Development in Europe

2. Since the beginning of 2006, an energy performance certification has been obligatory for all buildings sold or rented in the European Union. The cumulative measurements of a multifunctional meter for electricity and gas (or heat) can enable actual energy usage to be verified to the new owner or tenant. Opportunities for Market Development in Europe

3. In Germany, utility customers will be able to commission qualified contractors to install smart power meters after July 1, 2007. The subsequent attainment of reduced power demand by metering service companies dedicated to improving energy efficiency will constitute a virtual power station that has supplanted physical generating capacity. Opportunities for Market Development in Europe

4. The United Kingdom is considering the allocation of personal carbon allowances to all citizens as a contribution both to Kyoto fulfillment and to energy security. The allowances would be registered on a "swipe card" that could be inserted into utility meters for booking carbon credits. Opportunities for Market Development in Europe

5. Germany has 200 thousand photovoltaic arrays with a total peak power capacity of nearly 2,000 MW that could be combined by a dedicated metering infrastructure to form a nationwide solar power station. These units have proven invaluable for supplying electricity on hot summer days, when the output of many conventional power plants has been reduced to avoid overheating local rivers. Opportunities for Market Development in Europe

6. The German feed-in law (Erneuerbare- Energie-Gesetz EEG) for reimbursing power from renewable energy sources has since been emulated by Spain, the Czech Republic, France, and Portugal, as well as by China and Brazil. The specification of real-time metering capabilities in the corresponding legislation would enable all CO2-free improvements of grid performance by both renewable energies and interactive efficiency measures to be included into the payment schemes. Smart Metering as an Indispensible Step of Evolutionary Power Development

Smart metering can materially contribute to fulfilling Kyoto commitments while enhancing European energy security by reducing reliance on fossil fuels.