Smart metering to be priced according to use

24.07.2024

The Federal Ministry for Economic Affairs and Energy still sees a need for adjustment in the regulation of the digitalization of the energy transition and smart metering.

Section 48 of the Metering Point Operation Act (MsbG) stipulates that the Federal Ministry for Economic Affairs and Energy (BMWK) must report on the development of the digitalization of the energy transition by 30 June 2024 at the latest and then at least every four years.

In this context, the BMWK is also obliged to examine the level and design of the price caps in the smart metering system. The BMWK has now fulfilled its obligation, albeit with some delay. When asked by E&M before publication, a spokesperson for Minister Robert Habeck (Greens) emphasized that this was not for political reasons. It was more a matter of editorial additions.

The level of the statutory price caps for the installation and operation of smart metering systems has caused a great deal of displeasure among metering point operators in recent years. They have repeatedly complained that the specified cap is not sufficient to provide the required range of services. The metering point operators repeatedly said that it was high time to adjust the values based on a cost-benefit analysis from 2013. Economical metering point operation is not guaranteed under the current conditions. A study conducted by the consulting firms EY and BET on behalf of the BMWK in spring 2024 largely supports this view - at least from a business perspective.

Efficiency benchmark to be applied

In its current report, the BMWK refers to this report and states as an "important result for further discussion" that a distinction must be made between the costs to be covered by the basic metering point operator (gMSB) and their distribution based on the respective benefits. The installation of smart metering systems must be cost-covering for an "economically efficient basic metering point operator", according to the 98-page paper from the Federal Ministry of Economics. At the same time, the refinancing interests of the metering point operator must be reconciled with the protection of the end customer. An efficiency standard must therefore be applied to determine the upper price limit.

According to the BMWK, various approaches are possible for the distribution of costs. A linear adjustment of all price caps in the current structure - which metering point operators and distribution network operators in particular have advocated - would be the simplest solution, but would also meet with skepticism or even rejection from other industry players and consumer advocates.

In contrast, focusing on the benefits of digitalization would be cost-effective and economically efficient. In this context, the authors of the report refer to the benefits that connection users and grid operators will gain from the mandatory installation of smart metering systems.

Against this backdrop, the Federal Ministry of Economics is in favor of abolishing the regulation according to which a connection user may only be charged reduced fees for multiple metering points on a smart meter gateway. The expert report by BET and EY revealed a major economic efficiency gap here. However, the legislator has already addressed the need for regulation with the GNDEW - the law to restart the digitalization of the energy transition.

In addition, the Ministry considers it appropriate to increase the cost contribution of connection users to EUR 30 for "simple" electronic meters without a communication unit and for smart metering systems that have a smart meter gateway as a communication unit.

Up to now, connection users with an annual electricity consumption of between 6,000 and 10,000 kWh who receive a smart metering system in accordance with the law do not have to pay more than EUR 20 for its installation and operation. The grid operator will have to pay €80, meaning that the metering point operator will receive €100 in revenue, albeit gross. "The bottom line is that the moderate adjustment of the connection user cost sharing by EUR 10 gross per year makes sense both from a system perspective and for the connection user," the report states verbatim.

Adjustment also for voluntary installation of smart metering systems

For the connection user, the increase in the cost share is also justified by the greater benefit of simple basic meters. "Contrary to what the affected gMSBs may have assumed at the time, tenants in apartments in particular also benefit from modern meters with bidirectional metering, for example through the possibility of using a balcony PV system," it continues.

The ministry is also in favor of adjustments beyond the mandatory installation of smart metering systems. A "customer price cap" could compensate for the difference between the marginal costs of mandatory installation and the costs of optional installation.

The full report entitled "Further strengthening resilience, consistently leveraging the system benefits of the digitalization of the energy transition: Analyses and reports by the Federal Ministry for Economic Affairs and Climate Protection in accordance with Section 48 of the Metering Point Operation Act in 2024" is available for download on the BMWK website.

Author: Fritz Wilhelm
Source: Energy & Management Powernews