Data Privacy Regulation Vs. Energy Efficiency Targets

Published: Mon 02 Sep 2013
A blog entry by Sasha Bermann

Contributed by:

Sasha Bermann
Chief Dissemination Officer

Sasha Bermann's Blog

– How to protect consumers AND at the same time delivering maximum Benefits?
The EU’s proposed Data Protection Regulation could eliminate 95% of the potential energy savings and demand reductions from energy management programmes through restrictive data privacy rules.
Potential benefits of intelligent metering systems and energy management solutions and services are in the tens of billions of Euros. Various EU legislations instruments promote the deployment technologies and services aiming to provide feedback to consumers about their energy consumption. However, the General Data Regulation could make such benefits impossible, through an overly strict interpretation of legitimate interest, ignoring the importance of public service obligations and even making it difficult for companies to fulfill the requirements of a contract. 
Metering technologies record energy usage data and usually send it to a data center, this can be done on a 15 min. up to an hourly basis.  As described below, interval consumption data at the household level is needed by operators to maintain electricity systems and by retail suppliers and service providers to fulfill contractual obligations and to enable them to maximize the benefits of their services obligations to electricity end-users. By proposing restrictive default “opt in” mechanisms in the current data protection proposals, EU policy-makers have not recognized the critical connection between access to interval consumption data and the benefits promised by EU energy efficiency policies. SEDC fully supports the need for personal data privacy and security, but does not see this as contradictory to access to the interval data necessary to fulfill the promise of energy efficiency. This is a false choice.  Data access and the ability to process such data, by entities providing electricity service to customers and who require use of the data for legitimate interest and to meet European Union directives, is critical if the EU is to promote its energy efficiency objectives and develop its energy services sector. We believe the EU should specifically define TSOs and DSOs as having a “legitimate interest” in the processing of interval data of the specific customers that they each serve.  We believe also that 3rd party suppliers and energy service providers must have access to data in order to fulfill public service obligations, and/or the terms of their contractual obligations.  This should be possible in a fair and open manner, through mechanisms which encourage and enable the creation of energy efficiency services to consumers at a reasonable cost.  
Currently retailers have the automatic right to only one bi-monthly meter read for billing purposes.  Energy management programmes enable energy service providers and retailers to provide consumers with informative bills and reports on actual consumption (these can include charts of consumption throughout the month, comparisons to prior months, comparisons to houses of a similar size along with bespoke energy saving tips, etc.).  These require at least one daily meter reading though hourly meter reads are optimal.  In markets where such information is offered to all automatically, studies have demonstrated that 80% of consumers review such informative bills and consumption reports and reduce their energy consumption by 2-3%. Where real-time data is provided and viewed by consumers, the savings average 9%. In Europe, just 2-3% savings would create 20 -25 TWh of savings, equaling 45 power plants. This equals 3 to 4 billion EUR at current average retail prices to consumers of 0.15 EUR per kWh. However research by the SEDC shows that a default opt-in service will result in such information be provided to only 5-10% of consumers. The majority of consumers will not take the initiative to ask specifically for access to their own data. If only 5 % of the population was signed up for such a service, the savings amount to only 1.25 TWh. The benefits are therefore reduced by 95%.  
Damaging the market for consumer services: The default mechanism in the current EU draft data protection regulation, may not allow consumers access to their own data in a systematic and cost effective manner – even data they have paid to have measured. This is due to market realities ignored within the suggested regulation. 
Default opt-in mechanisms require consumers to proactively ask for access to their own consumption information. At the same time it is often difficult and expensive to gain the customer’s attention - consumers do not value their data until they have had the opportunity to engage with it. The high marketing costs required for opt-in programs quickly destroys the business case and can remove industry interest in providing services. Contacting a customer and obtaining their permission to opt-in costs over 10 Euros, based on historical opt-in rates.  In contrast, an electricity retailer may earn only 7-13 Euros per year on a given home.  
If the business case for energy efficiency services is removed or if no programs are offered – data privacy laws will ensure NO effective services will be available.  Consumers will in effect be blocked from accessing their own interval data – interval data they will be paying the utility to measure. A system biased toward the wealthy: Opt-in services are inherently more expensive than opt-out.  The business case for services requiring consumers to pay directly is positive only for those owning homes with high consumption levels.  Thus, while all consumers will pay for the rollout of intelligent metering systems, effective energy efficiency services will be available for only a few and will be provided automatically to none.  Data privacy regulation which blocks a basic information and/or pricing service being provided to all consumers on an opt-out basis is therefore inherently biased toward the wealthy consumer.   An opt-out service can be offered for ‘free’ but still give the consumer the choice of whether to participate or not. Smart Meter benefits and energy efficiency goals: For the EU to achieve its energy efficiency goals in the energy transition and its climate change strategy, it must avoid the negative market consequences of an unnecessarily strict data protection regime on its energy policies.  Most of the Member States have performed cost-benefit analyses of intelligent metering, and most have found the result to be positive. Critically, most of those business cases assume the availability of interval data for multiple uses.
We cannot overemphasize our agreement with the need for data privacy and security; this paper regards data access, by entities providing electricity service to customers and who require use of the data for legitimate interest and to meet European Union directives. We believe the EU should ensure that DSO and TSOs can gather the needed data to ensure the efficient use of their systems. We believe also that 3rd party suppliers and energy service providers must have data access in order to fulfill the terms of their contracts in a cost effective manner.  
The current Data Privacy Measurement does NOT guarantee these requirements and should therefore be strengthened.