By Gerard Wynn
LONDON Nov 2 The reluctance of utilities and
makers of appliances and intelligent meters to develop demand
response systems undermines a core motive in a massive smart
meter rollout in Europe.
It is a great idea: when everyone rushes to turn on the
kettle at half-time in a football final the utility can remotely
turn off non-urgent services like air conditioning to avoid a
demand surge and so save firing up another power plant.
Demand response is one of the most obvious examples of a
system which helps avoid building new power plants and boosts
At the household level, the user agrees to pay a reduced
tariff (called dynamic pricing) in exchange for allowing the
utility remotely to control more energy-intensive appliances,
including, in future, charging of electric vehicle batteries.
Such a system depends on the rollout of smart meters which
allow two-way communication between the appliance and utility.
It was part of the motive for an EU mandate to roll out
smart meters to most energy consumers by 2020.
But smart, wireless-enabled home appliances barely exist,
except as additional features in the most expensive products,
meaning the meters will have nothing to communicate with.
As the smart appliance internet page of U.S.-based GE
says: "Smart Appliances / Demand Response info coming soon." ()
As it happens there are enough benefits of smart meters, but
demand response will not be one of them for a decade or so.
That raises questions over the value for money of a massive
rollout programme whose costs will be passed to consumers, and
means putting back in the box one of the few energy efficiency
measures to grab the public imagination.
Unlike legacy analogue meters, smart meters automatically
send electronic readings through the power cable or by wireless
to the energy supplier.
One important benefit is to allow utilities to read meters
remotely, avoiding costly home visits and making readings more
accurate, avoiding a subsequent true-up of estimated bills.
Another is to give utilities for the first time information
about energy use in real time at the household level, allowing
grid optimisation where energy companies can more accurately
tailor supply to demand at any time.
Both of these largely benefit energy generators and
A third advantage, for households, is that the smart meters
will display regularly updated data on power consumption.
In addition, the data can be processed to give users for the
first time detailed, granular information showing patterns in
energy consumption, comparisons with their peer groups and so on
- but that means spending more on an extra console.
The idea is that once consumers can see their energy use
they will be more aware of waste and potential savings.
And there is the demand response benefit, if the smart meter
can communicate with individual appliances where these are
wireless-enabled - allowing the utility to remotely switch these
off to shed load during peak demand and for the consumer to
access cheaper tariffs.
But demand response services barely exist yet on the market.
The ability to shift load to off-peak hours makes demand
response so tempting to policymakers staring at the alternative
of public investment in power generation.
The EU expected demand response benefits in its mandated
rollout of smart meters to at least 80 percent of consumers by
2020, compared with about 10 percent now.
In March this year the European Commission detailed "minimum
functional requirements" in its recommendations on the smart
"Smart metering systems should include advance tariff
structures, time-of-use registers and remote tariff control.
This should help consumers and network operators to achieve
energy efficiencies and save costs by reducing the peaks in
energy demand. This functionality ... is a key driving force for
empowering the consumer and for improving the energy efficiency
of the supply system.
"There is a significant consensus on provision of
standardised interfaces which would enable energy management
solutions in 'real time', such as home automation, and different
demand response schemes."
The European Regulators Group for Electricity and Gas last
year identified a "load shedding" benefit.
"Load shedding schemes driven by the meter could allow
customers to fully and easily benefit from new tariffs. Through
customer information and settlement of incentive tariffs, peak
load could be reduced."
What went wrong?
For one thing, the benefits may have been overstated: as
home appliances become more efficient, and so use less energy,
there is less benefit from controlling these in real time,
unless on a large scale.
Second, the low replacement rate of appliances is a drag on
Third, many actors are needed to cooperate, including
utilities (to develop new tariffs), appliance manufacturers (to
make and retail wireless-enabled units), smart meter companies
(to ensure compatibility), regulators (to design standards) and
software companies (to develop the back office).
A similar problem has been seen in the roll out of electric
vehicle (EV) charging infrastructure, where the manufacturers of
street-side charging stations have to work with utilities to
identify and bill motorists.
Also similarly to EVs, there is a chicken and egg problem
where there is no point developing sophisticated systems before
retailers are selling large numbers of smart appliances, or
On balance a smart meter rollout is a good thing, but it
will not deliver for a while the futuristic intelligent home
that was on the packaging.