More complex definition of smart metering was developed during the preparation of Implementation Study of Smart Metering in Poland issued by the Institute of Power Engineering and Ernst & Young Warsaw.
The study defines smart metering in its two aspects: a technical and a functional one. This definition is illustrated by the drawing below.
The estimated total costs of AMI implementation are significant and vary in the analysis conducted in different countries from above EUR 102 to as much as EUR 162 per e ach metering device (for details please refer to page 20 of this Report). The differences in CAPEX result mainly from different assumptions regarding chosen meter functionalities, number of substations and IT systems’ cost.
As a consequence of high investment costs it is necessary to prepare deep cost-benefit analysis, which would take into consideration not only long-term costs of the AMI implementation, but would also cover such specific aspects of each CSE’s country energy market as:
- the size and structure of the market,
- average energy consumption and its price constituting the potential for consumer behavior change,
- level of network losses,
- other market factors such as share of RES and actual electricity delivery quality.
These factors are crucial for the analysis of each market’s potential regarding the implementation of AMI and potential benefits attributed to it, and are further discussed in this executive summary and the Report.
CSE markets’ potential for AMI implementation
Based on the described market features criteria of the analysed CSE countries, a ranking of their potential regarding AMI implementation has been prepared. Every criteria has been assigned a weight:
- market size (2 points),
- average electricity consumption (2 points),
- average electricity bill (5 points),
- network losses reduction potential (3 points),
- quality of supply (4 points),
- planned share of RES in electricity production in 2030 (5 points),
- implementation complexity level – based on the number of DSOs (1 point).
A country could obtain a maximum of 308 points. The results of the assessment of the potential for AMI implementation in each CSE country are summarized in the graph below
The ranking suggests that Greece has the highest potential for AMI implementation, while Lithuania is least likely to implement smart metering. The countries with the second highest AMI implementation potential are Romania, Cyprus, Slovenia and Hungary with a similar number of points.
In the case of Greece, it is the market size, the electricity consumption, and the average annual cost of electricity for residential customers, as well as the future share of RES in electricity production, which have the greatest influence on the country’s high score in the ranking.
What matters most in the case of Romania is the market size, significant distribution network losses, low quality of energy supply, and high future share of RES in electricity production. Cyprus, Slovenia and Hungary are countries, where the average electricity bill and consumption build the AMI potential.
Lithuania is the country with one of the lowest average annual electricity price for residential customers, consumption per household and, in the same time average level of network losses and quality of supply metrics. That is why we assess Lithuania’s potential for AMI implementation as low. For the other countries not commented above, different drivers affect AMI implementation potential.
The size and structure of the market
The size and structure of the market – mainly the number of consumers – drive the level of necessary CAPEX per metering device. It can be assumed that the higher the number of customers, the stronger is the economy of scale, therefore the lower CAPEX per metering device.
The following chart presents the size of selected CSE countries’ energy markets – the overall number of electricity consumers. In the CSE countries households constitute over 80% of customers and this group is mostly considered when analysing AMI benefits.
As far as the size and the structure of the energy market are concerned, it is clear that the biggest potential lies in Turkey and Poland. As a consequence, it may be expected that these countries may mostly benefit from the economy of scale during massive AMI roll-out.