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Will Germany Reject Smart Meters?

While we in the energy sector are used to thinking of Germany as a global leader in the adoption of new energy technologies, recent analysis points to an area where this may not be the case — and it's mainly due to privacy issues.

According to Frost & Sullivan analyst Neha Vikash, Germany could reject smart meters due to a small but vocal minority of energy users who are opposed to any storage of information on households and uncomfortable that utilities could have access to data on how and when they use electricity. The industry has assumed that Germany would eventually accept that smart meter deployment is necessary, Vikash said, but now it looks as though the nation could be leaning toward a rejection of the technology, threatening the €33 billion it is set to invest.

Germany has been one of the top European investors in smart grid technology, along with the UK, France and Italy.  But in August Germany’s federal ministry of economics published a report which concluded that a full rollout of smart meters, in compliance with the EU Energy Directive’s requirement that 80 percent of European households have smart metering by 2020, would not deliver economic benefits for German consumers.

"The report shocked the industry and could have major ramifications, although it should be pointed out that the report could still be rejected by the German government," said Vikash. 

Jonathan Robinson, F&S senior consultant in energy, environment and building technologies, noted that cost-benefit analyses “can generate negative or positive results depending on the terms you set for them," and that the brief given by the government to Ernst & Young, which carried out the study, may have influenced the conclusions. The smart meters report “is really dealing with semi-hypothetical unknowns,” he said. “Nobody really knows how consumer behaviour will change and what the savings will be. And the government is not forced to take [the report] on board; they may decide to do another assessment or roll out smart metering anyway," he continued.

When asked how likely the government is to decide against smart meters, Robinson said: “It’s quite hard to tell — maybe we’ll know more after Sunday’s [federal] election.” If the Green party does well and ends up in a coalition government, he said, “we could well see that they do go ahead with smart metering because environmentalist like it.” But if the conservative government forms a coalition with the business-minded Social Democratic Party, he added, they might decide to delay, and the rollout would happen at a much slower pace.

Given that, among other issues, the election will include a de facto referendum on the Energiewende, the German Energy Blog recently ran profiles of each party’s position on grid extension, energy storage and the implementation of smart grids and demand-side management.  It found that all of the major parties endorse the extension of the nation’s grid, especially to connect offshore wind farms, and all parties support the development of smart grids and modern energy storage technologies as essential aspects of solving the country’s energy supply problem. The parties differ only on how these solutions should be implemented, the Blog said.

“Most people say they’re in favour of [smart meters],” Robinson said. “While a cost benefit analysis is being carried out, [the parties] don’t want to be seen saying they don’t like it.” He characterised the major parties’ views on the topic as “not massively strong” in either direction, but noted that the privacy campaigners “have been very good at pushing the idea that it’s too controlling of people’s lives.”

“A parallel is the US’s NSA spying thing,” he said. “Here in the UK that story has largely died away, although it was a big story for a couple of days, but in Germany it’s been a major factor in the election campaign.”

Robinson hastened to reassure that a lack of smart metering would not mean the end of Germany’s renewable energy industry. “Quite a lot of rooftop solar installations may have a separate meter anyway, which would still enable them to track what’s going on and off the grid,” he said. And he said Germany will “probably go ahead anyway with offshore wind integration” since last month’s Smart Energy for Europe Platform report on projected grid update delays showed that Germany’s level of investment in grid infrastructure could slow significantly without affecting the Energiewende. 

The SEFEP report showed that “the grid wasn’t as threatened by renewables as people think,” Robinson said. “There were a few cases where there was a lot of wind in the northwest, close to the Danish border, but there are no massive problems at the moment. Germany can still get away with investing more in renewable energy. What they need to do is invest in high-voltage transmission pipelines to bring more from the north to the central and southern regions," he continued.

Renewables have also been a campaign issue due to rising energy prices. “Renewables have taken some blame, in many ways unfairly because gas prices have been a big factor in rising energy costs as well,” Robinson said.

But he believes that large-scale grid investment in order to integrate more renewable energy will go ahead, albeit perhaps more slowly than expected. What he doesn’t understand is how pulling back on smart meters makes sense.

“They’re taking away a piece of the smart grid network,” he said, “when Germany is a key investor in so many smart grid areas. And you can’t really get proper dynamic pricing without investment in smart meters because you can’t track average household consumption properly, you can’t have live price changes — it’s strange for Germany not to embrace this because they’re normally so good with other technologies,” he said.

Lead image: Historic Black Forest farm house with modern solar panels on large roof, via Shutterstock

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