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The Likely Impact of Smart Electricity Meters in Ireland

The Likely Impact of Smart Electricity Meters in Ireland. Seán Lyons (with Conor Devitt & Anne Nolan) ESRI/EPA Environmental Economics Seminar, 30 May 2011. Contents. Introduction and approach Counterfactual and scenarios Some key parameters Effects on:- Networks Suppliers

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The Likely Impact of Smart Electricity Meters in Ireland

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  1. The Likely Impact of Smart Electricity Meters in Ireland Seán Lyons (with Conor Devitt & Anne Nolan) ESRI/EPA Environmental Economics Seminar, 30 May 2011

  2. Contents • Introduction and approach • Counterfactual and scenarios • Some key parameters • Effects on:- • Networks • Suppliers • Consumers • Generation • Future research

  3. Introduction • Smart metering: meters read remotely with high frequency data collection, allowing time of use tariffs • ESRI assisted CER in preparing CBA, work funded by Energy Policy Research Centre • Objective of CBA is to estimate the payoff to society of various scenarios, compared to “no action” baseline • Include effects on consumers, networks, suppliers, generation • Key data from technical trial, consumer behaviour trial and estimates from firms and consultants

  4. Approach to CBA • CBA compares all benefits and costs in a given option to those expected in baseline scenario • Counterfactual baseline scenario: what would happen if no Smart Metering? • Assumptions on service characteristics, costs, prices and demand in the future • Calculate Net Present Value of each option relative to baseline; consider unquantifiables too • Memo items: effects of each option on quantity of CO2 and SO2 emissions

  5. Counterfactual • Existing metering technology retained • No new time of use tariffs • Meter replacement programme goes ahead • New solution for prepaid metering; large rise in households on prepayment tariffs • Bi-monthly billing continues • Variant: Monthly billing from 2020 including monthly manual meter reads and bills

  6. Scenario Dimensions • Communications technology (3 options) • DLC-RF • DLC-GPRS • GPRS-only • Billing frequency (bi-monthly or monthly) • In-home display or not • Monthly billing in baseline or not (from 2020)

  7. Some Parameters and Assumptions • Timing: rollout 2014-2017; evaluation to 2032 • Discount rate: 4% (Dept of Fin. Guidelines) • Macroeconomic outlook, incl. growth in connections: ESRI Low Growth Scenario 2010 • 100% rollout and mandatory ToU charging • Emission intensities (CO2 and SO2) • Customers on Nightsaver tariffs assumed not to respond, along with 15% assumed vacant properties/holiday homes

  8. Consumer behaviour trial • Over 5,000 residential customers included in randomised controlled trial; about 600 SMEs in a separate trial • 6+ month control period applied for all, then one year treatment period for most (remainder left as controls) • Treated residents faced one of four time of use tariffs plus an informational treatment: 1) bimonthly billing, 2) #1 plus in-home display, 3) monthly billing or 4) Overall load reduction incentive • Results • Half-hourly demand data • Pre-trial, post-trial and leavers socioeconomic surveys

  9. Effects on Consumers • Benefits due to net reduction in average bills as customers cut 24 hour usage and switch to cheaper times of day • Significant treatment effects, but no additional price effects found in statistical analysis of residential results • No significant effects found for SMEs

  10. Total NPV by Option

  11. NPV breakdown by component

  12. Sensitivity tests • Effects of informational stimuli were sensitive to tariff group in the trial • Attractiveness of GPRS communications depends heavily upon assumed network charges • Supplier billing system expenditure and network costs such as cost of meters and IHDs are relatively significant • Other cost items less important • Viability not very sensitive to discount rate • Inclusion or not of SMEs makes little difference to NPV

  13. Emissions reductions andnon-quantified benefits • Emissions reductions relative to baseline once meters are fully in place: • CO2: 80,000-100,000 tonnes per year (included in NPVs) • SO2: 110-140 tonnes per year (not included in NPVs) • Unquantified benefits from smart grids, microgeneration, electric vehicles, gas/water smart metering, electric vehicles, smart appliances, extra scope for service differentiation and competition

  14. Details of NPVs (€m) by Option

  15. Sensitivity test: discount rate

  16. Sensitivity test: tariffs from trial

  17. Future research • Dataset should be made available to researchers, e.g. through ISSDA • Consumer electricity demand parameters • Effect of appliance ownership and use on electricity demand • Segmentation of electricity user types by patterns of use • Rich data set, so probably many other applications...

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