COST-BENEFIT TOOL: CASE STUDY FOR 15.

000 METERS NORWEGIAN CITY

1. Initial data
The SmartRegions Project's Cost-Benefit Tool (www.smartregions.net) allows knowing the socio-economic and environmental aspects related to the implementation of smart meters and the innovative energy services associated. The tool is developed in Excel and the basic version of the tool, which includes electric energy meters exclusively 1, can be used as support when evaluating pilot projects or massive deployment of new smart meters. The SmartRegions Excel tool allows knowing the most relevant costs and benefits values for different scenarios, identified by market actors and the interactions between them. The calculations are based on input variables that can be modified by the user. This example case is developed to show the usefulness of the tool. This case simulates the implementation of electric energy smart meters and energy efficiency associated services, considering a Norwegian city with 15.000 meters and an average yearly consumption of 18.000 kWh/household. The initial data are the following (only the most relevant data are indicated in Table 1):
Table 1: initial data.
Total number of electricity contracts Total number of years to roll out all meters Electricity annual consumption per household Average cost of an electricity smart meter Maximum service life of smart meters Annual inflation rate PLC/GSM communications proportion 15.000 5 (2012-2016) 18.000 kWh 100 20 years 1% 60%

An extended version where gas, heat and water meters can be included is also available at www.smartregions.net.

2. Results
Smart meters implementation costs In this case it is specified 5 years for roll out of all meters and 20 years as maximum service life for a smart meter. This means that the meters have to be replaced after 20 years. However this is an average and there might be some meters that have to be replaced earlier and others could last longer. In a 30 years model as the studied, the need to carry out periodical investments in smart meters can be observed in figure 1.

Figure 1: Annual spend on meters.

Figure 1 shows two prominent replacement periods: the first, during the first 5 years and representing the smart meters roll-out period; and a second, from year 17 to 23, corresponding to the renovation of the smart meters installed previously. The figure also shows that some meters are installed between the installation and renovation period, due to an annual failure rate of the meters. The cost data is constant during the calculation period. A possible cost reduction is not included, and the costs in the renovation period should therefore only be used as an indication. Also, the periods of investment execution last for five years during which the costs are shared out. In the first year (2012), it can be observed an ascending ramp due to the fact that initially the implementation is not massive. It is possible to specify the number of years to ramp up rate to full annual installation rate. At the end of the roll out there is a wrap up year when market growth during the roll out period is dealt with. In the fifth year (2016) this ramp goes down to finish the installation. In this case the ramp up period is set to 2 years, which means that full annual installation rate is achieved in year 2 (2013). The Smart meters with display curve, hyphenated green line, is the higher one due to higher investment costs for this type of meters, related to the purchase and installation of displays. In this case it is specified that in average an installer daily can install 8 smart meters or 5 smart meters with displays.

Meter reading costs

The meter reading cost increases appreciably with smart meter systems along all the years of the model regarding to the current situation and due to the communication allowed by the new devices (Figure 2). This is because the traditional method for meter reading in Norway has been periodically self-reading by the user (4, 6 or 12 times per year). The meter reading costs for the current situation is related to initiating self-reading of the meter and handling the meter data. In both replacement cases, with/without display, the results are the same because the display is the only difference between them and it does not influence the reading process.

Figure 2: Annual meters reading costs.

Socio and environmental benefits

Figure 3 shows the evolution of the annual energy consumption regarding the three different scenarios considered. In both scenarios with the installation of smart meters without/with display, there is an improvement of the current situation, since the energy consumption are reduced compared to the initial situation. This expected result is due to the improved information the customers receive, and estimated energy saving due to this information. Figure 3 also shows how the use of smart meters with display reduces energy consumption more compared to meters without display. Based on experiences from different tests of displays, it is estimated the largest energy savings during the first year after receiving a smart meter. The saving potential will be reduced during the next years, until the customers reach a stable, but reduced consumption level. For the current situation it is estimated 0% increase in energy consumption, according to the Norwegian trend of flattening out the electricity consumption.

Figure 3: Annual energy consumption (electricity).

Smart meters installation does not only result in a decrease in energy consumption, but leads also to social benefits. The tasks related to initiating self-reading, receiving the data and estimating missing data for customers will be redundant when smart meters are deployed. However, the employment figures increase because these new systems need professionals working on installation, data management, system operation, services supply, etc. As Figure 4 shows, there would be two peak periods corresponding to the equipment roll out and renovation periods. In this figure it is included all the employment generated by the new smart meters.

Figure 4: annual employment.

Stakeholders benefits

The stakeholders' benefits results are presented in figure 5 and 6, for the customers, energy suppliers, the distribution system operator (DSO) and in total.

Figure 5: Stakeholders benefits due to installation of smart meters.

Figure 6: Stakeholders benefits due to installation of smart meters and display

The total benefit of the deployment of smart meters will be positive. The energy supplier (RESC) and the customers take benefit from the economical savings due to the massive smart meters implementation and the associated innovative energy services that can be offered. DSOs will gain knowledge on real electric energy consumption in the residential sector. The customers can see how their consumption figures are improved, and in consequence their savings. Both figures 5 and 6 show how the benefits grow constantly during the 30 years of the model for the customers and the energy supplier. However, it should be mentioned, that the annual benefit for the DSO is not outstanding as a consequence of the investment they have to carry out during the roll-out and renovation periods. The calculations do only include the costs, and not an evaluation regarding how to cover these costs, for example a possible increase in the revenue cap of the DSO. The main difference between both scenarios (smart meter without/with display) is that in the second case, with the real time information, the energy supplier and the user results are improved. Although the investment when the display is installed is higher, the benefits are too. These benefits are calculated based on expected energy efficiency due to the display, based on recent European experiences. Due to the communication allowed by these new metering systems, the energy supplier can now offer innovative services according to the market needs which would help them to attract new customers. The DSO, even considering the replacement investment, will obtain benefits due to the improvement in the grid management, but only a limited level is included here.

3. Conclusions
Based on the SmartRegions Cost-Benefit Tool results for the case of a Norwegian city with 15.000 smart meters and associated innovative services, an average yearly electric consumption of 18.000 kWh per household and a maximum service life of 20 years for the equipment the following conclusions can be drawn: For a 30 years model it is observed the need for periodical investments in the smart meters installation and the subsequent renovation. Considering the electronic meters average service life, it will be necessary to start a new implementation period every 15-20 years. The massive smart meters and energy services implementation would provide benefit to consumers due to an improvement in their energy efficiency and additional social benefits as a consequence of the expansion of smart meters and all the systems and services related. Nevertheless, it should be indicated that energy savings gained by users would be reached if clear information and indications are provided. Furthermore, it will produce benefits in the long term for the stakeholders considered. The energy supplier companies will obtain higher benefits from the innovative services offered and the DSOs will improve the grid management and reduce their costs.

However, initially and according to the results, the DSOs' benefits will be low due to the initial investment needed for the massive replacement. Using the NPV (Net Present Value) for different years, the following economical values are obtained:
Table 2: Financial analysis for better billing. ()
Year to review NPV Energy supplier Distribution system operator Customers Total 10 2.80E+06 6.65E+05 5.00E+06 8.46E+06 20 6.20E+06 3.77E+06 1.09E+07 2.08E+07 30 9.95E+06 7.46E+06 1.74E+07 3.48E+07

Table 3: Financial analysis for better billing with display. ()

Year to review NPV Energy supplier Distribution system operator Customers Total 10 3.84E+06 -1.91E+06 7.33E+06 9.26E+06 20 8.77E+06 -6.69E+05 1.66E+07 2.47E+07 30 1.42E+07 1.33E+06 2.69E+07 4.24E+07

Comparing the massive smart meters without display in household implementation opposite to the meters with this device (to visualize real time information) the benefits assessment indicates that in this last case the results for the energy supplier and the user are improved.

This report has been prepared in the European Smart Regions Project framework and the results presented are not guaranteed, so that the authors give up over any responsibility derived from it use. Furthermore, it does reflect neither EACI nor the European Commission opinion, which are not responsible of the use that may be made of the information contained therein.