How Ostrom will help fighting climate change with Smart Meters

Everyone knows those dreaded letters from the electricity supplier asking for the current meter reading. With a flashlight in your hand, you go down to the dusty cellar to get the meter reading amidst the cobwebs. Not a very pleasant experience! At the same time, however, politicians and companies use the word digitization in nearly every second sentence.

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In the energy industry, traditional electricity suppliers are shying away from the topic of digitization. Yet, a world in which Smart Meters are the norm would be the most efficient solution for everyone involved. We explain why this is the case in this blog.

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What are Smart Meters?

Analog Electricity Meters — most German households have them. Square boxes, with a rotating counter disk, whose revolutions are recorded and collected by an analog counter. Compared to our otherwise innovative and modern gadgets like smartphones and laptops, Analog Electricity Meters seem very outdated. Customers have to read the Meter manually and report it to their electricity provider. The electricity consumption is visible to the consumer at the earliest with the annual- or the final bill.

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In contrast, Smart Meters can send real-time data to the electricity supplier and network operator securely and encrypted. This requires connecting the Modern Metering Device to a Smart Meter Gateway so that the system becomes an Intelligent Metering System (Smart Meter). In this case, the electricity supplier and the network operator automatically receive the electricity consumption and customers no longer have to send Meter readings manually.

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Some Smart Meters transmit the measured consumption data directly to the Metering Point Operator. If a Smart Meter is connected to the household's Wi-Fi, customers can initially see their consumption themselves and then approve transmission to the electricity supplier. Thanks to connected apps, consumers may even be able to track consumption data in real-time. For this purpose, the electricity supplier, for example, must provide an app for data collection. Smart Meters must be certified by the German Federal Office for Information Security to ensure that the transmission of household-related energy consumption data is secure and protected.

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Why Germany wants to rollout Smart Meters

On 31.01.2020, the German Federal Office for Information Security decided the legal obligation for the rollout of Smart Meters by the responsible Metering Point Operators. As installers and operators of Meters in all of Germany, Metering Point Operators are also responsible for the rollout of Smart Meters.

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Initially, all private households with annual electricity consumption of more than 6.000 kWh are obliged to install them. The primary goal of the legislator is to provide a technical infrastructure that makes the energy transition possible.

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• In addition to introducing variable electricity tariffs and the associated exploitation of lower electricity prices during the night, Smart Meters also enable the control of decentralized electricity generators such as photovoltaic or wind power plants.
• Smart Meters can make a decisive contribution to the energy turnaround by giving citizens a clear overview of their electricity consumption in the future and enabling them to control it intuitively.
• Manual Meter reading will become a thing of the past.

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However, it may still take some time before this happens. The problem is not only the hesitant rollout of Smart Meters in households, but also the old and entrenched structures of the grid operators. In order for them to break out of their habits, stricter legislation needs to be implemented, that obliges network operators not only to do the minimum required, but to push the rollout of Smart Meters.

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In 2032, all Metering Points in Germany with an annual consumption of more than 6.000 kWh must have a Smart Meter installed.

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With Smart Meters, the billing based on standard load profiles that has been practiced up to now will become a thing of the past. It is, therefore, necessary for network operators to support those changes if Germany wants to successfully rollout Smart Meters.

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The following picture shows that Germany has considerable catch-up demand in terms of Smart Meter coverage:

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Before the decision by the German Federal Office for Information Security, there were hardly any Smart Meters in German households. By comparison, Scandinavian countries have an almost seamless coverage of Smart Meters. Spain and Italy are also pioneers.

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Why customers will benefit from Smart Meters

Nasty surprises and expensive additional payments, thanks to the lack of transparency of traditional electricity suppliers. If this sentence brings back bad memories, you were already a customer of one of Germany's numerous municipal utilities or traditional electricity suppliers. With Smart Meters, this problem is a thing of the past. Thanks to the exchange of electricity consumption data, customers will see their electricity consumption on a daily basis via an app – as long as the electricity provider makes an app available.

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The advantages of this long overdue renewal are numerous.

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• Customers can identify power guzzlers in the home and automatically switch appliances on and off thanks to smart home technology. Household appliances are only supplied with electricity when they are actually in use.
• Variable electricity contracts enable customers to take advantage of fluctuations in electricity prices. Electricity is significantly cheaper at night than during the day, due to society's lower electricity demand at night. Likewise, solar power is cheaper at midday. Smart Meters make these differences in electricity prices visible, and variable tariffs ensure that customers can use the fluctuations to their advantage.

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The graph clearly illustrates the daily load curve and how prices fluctuate:

Source: https://de.wikipedia.org/wiki/Spitzenlast#/media/Datei:Lastprofil_EWE_Frühjahr_mit_Kraftwerkseinsatz_schematisch.svg

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If you want to start saving money on your electricity bill now, read our blog with useful electricity-saving tips.

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Smart Meter as an essential part of Ostrom’s vision

Smart Meters can only develop their full potential with variable electricity tariffs. Traditional electricity suppliers and municipal utilities do not yet offer such tariffs. Ostrom is one of the few electricity suppliers offering a flexible tariff. Increases and reductions in the electricity price are passed on directly to our customers, with a notice period of four weeks. The next logical step for Ostrom is to offer a variable tariff, which passes on the daily price differences in the electricity price directly to the end consumer.

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A variable tariff can only be fully effective if Smart Meters become the norm in German households. That's why we at Ostrom are big supporters of the Smart Meter rollout in Germany. Customers can save themselves money. Reading the Meter in the dark basement is no longer necessary, and the home becomes smart. A win-win situation for all parties.