Spain has been a trailblazer in smart meter installation, having reached 100% rollout at the end of last year following a government mandate. The cost to the customer was among the most efficient of Europe, at 40% less than the EU average, according to KPMG. But the mandate was not based on a cost-benefit analysis, and the value to the consumer will depend on how the smart meters and the data they produce are deployed. A small levy is added to consumers' bills for smart meters, so companies had some costs covered, and they can reduce meter reading costs. In rural areas, consumers benefited for the first time from real rather than estimated consumption readings. Smart grids add resiliency, allowing for automatic rerouting when faults occur and detecting and isolating outages, therefore minimizing the effects when they happen.
Spain has a healthy generation capacity margin, but the smart meters could be used in future to support a demand response programme. However, more clarity will be required on data ownership and privacy issues, as the data belong to the consumer and can only be used with their permission.
Customers have better access to information to be able to choose different tariffs and prosumers can export power to the grid without having to pay a fee. Regulatory changes under discussion include a definition of the role of the aggregator, and a more granular billing cycle.
Brief background on Iberian market
The wholesale electricity market in Spain and Portugal is managed by OMI-Polo Español (OMIE). Prices in Spain and Portugal are the same unless the interconnector is full: last year they converged 95% of the time. The spot market MIBEL also has intraday markets and auctions while OMIP manages the derivatives market. The National Commission of Markets and Competition (CNMC) regulates the market, and in January this year was given more authority by the government to make it more independent. Red Eléctrica de España (REE) is the transmission system operator.
Engerati talks to some Spanish market experts to hear their views on the smart meter achievement, whether the consumer is getting value for money and what more can be done to drive further benefits from digitalisation.
“Why was Spain so successful in achieving 100% smart meters and what can other countries learn from this? What else can the regulator do to promote further digitalisation and efficient use of the new data?”
Armando Martínez Martínez, director of the networks business of the Iberdrola Group
The success story of the Spanish deployment was mainly due to the firm determination of DSOs to comply timely and in an efficient manner with the regulatory mandate of replacing all household meters with smart meters. The regulator set up a plan, with clear milestones and specified the technical and functional characteristics that the smart meters should comply with. At the same time, DSOs transformed the obligation into an opportunity to improve and digitalise their networks, achieving efficiencies and making possible new services to customers. Other countries may benefit from the Spanish experience, especially regarding the use of an open and interoperable solution, as well as the lessons learnt from the deployment plan itself.
We believe that the regulator should keep encouraging network companies to innovate and make their grids smarter. Therefore, a reasonable rate of return must be established, alongside a stable framework that guarantees the remuneration of the digital investments. And finally, data must be securely kept and shared with the players that have the right of access to it: the customer, its supplier and third parties if the customers authorize it. DSO must be the neutral entity managing/storing metering data and provide non-discriminatory access to it (consenting).
An efficient data management model has to be set, in which data is interchanged amongst agents at minimum costs. All decisions based on sound cost benefit analyses: avoid expensive, inefficient and ‘politically inspired’ data hubs. The metering data will be of great help to supplier and aggregators to provide new services to customers.
Antonio Espinosa de los Monteros, CEO, i-DE
Electricity distribution networks are the circulatory system of the new energy model and the platform necessary for the transition toward a decarbonised economy based on renewable and competitive energy. Facing the energy transition challenges, we are in strong competition for the required capital to do the energy transition. The battle for the required capital is unprecedented and the capital/investors will go wherever the regulatory framework will be more attractive, concerning with the return on investment/security and incentives. Leading this transition and making it a reality requires a tariff framework that fosters quality and efficiency, provides incentives for digitisation and promotes innovation.
Carolina Vereda, regulatory affairs, Endesa and chair of Eurelectric's DSO working group
The spur for the 100% smart meter penetration in Spain was a regulation in 2007 with the aim to ensure efficiency in the energy consumption, ensuring that all homes had smart meters by the end of 2018. The rate of installation was gradual and there were no cost-benefit analyses before the decision.
The meters have an estimated life span of 15 years, so replacements will be needed from about 2025. Current smart meters provide the functionalities required and foreseen, but they could require an upgrade in order to improve the massive near-real time access to data. Unlike in other EU countries, Spanish consumers are responsible for their smart meters. They can rent or buy them and about 10% of consumers have bought meters, becoming responsible for installation costs and maintenance. Consumers pay €0.81/month for renting meters.
Billing is based on hourly pricing, and billing every 15 minutes is likely from about 2025. We are pushing to have a definition of aggregators by the end of the year. Sharing of data is currently allowed and regulated. Now that the rollout is successfully concluded, our national regulatory authority is working on a new regulation to extend the access to new data for customers and third parties.
Some customers were concerned initially about the security of data managed by the smart meters, the reason why some of them expressed reluctance to change to them. DSOs ran campaigns and public events for customers to better understand the benefits of the meters as well as data security and privacy.
Antonio Colino, COO, Feníe Energía
Indeed, smart meters deployment in Spain is quite in advance compared with other European countries, but we still don’t consider it a success. First, it has been a very long process of over 10 years to deploy (it started in 2007) and second we have deployed a lot of hardware but we have not set the rules for the software to really be able to exploit the infrastructure. In this sense, all the regulation on how the smart meter information comes from the DSO to the retailer is defined mainly for invoicing not for energy management or to offer demand response services to the customers.
This is one of the main issues in Spain now because the technology deployed is competitive restrictive (power line connection through the DSO lines) and the regulation establishes that retailers receive the information on a weekly basis while the DSO is able to access on real time and even publishes this info to customers in proprietary web-pages. Probably this might have been one of the drivers that has fostered the deployment in Spain because DSO have seen an opportunity to get closer to market services and win the relationship with customers that they had lost in the liberalization. The National Regulation Authority should tackle this issue and create an Independent Metering Operator allowing all the participants of the system to receive the info with the same time and quality and be able to use it for all the new market services that have to be delivered (demand response, energy management, etc.)
Francisco Rodríguez López, head of regulation, production and institutional relations, Viesgo
The success of the smart meter in Spain followed a mix of different factors. First of all, a strong commitment of the Spanish regulators towards this technological change, with a new legal framework has been needed, setting a step by step rollout, supervising the implementation and taking this journey together with the distribution companies and regional governments.
But it is important to remark that distribution companies have transformed the way of doing things. Viesgo, has been a relevant player in this success by installing all the smart meters by 2016, some years before other distribution companies. Compared to other European countries, Spain and Italy have led this full implementation, going ahead of 2024 which is the official date established by the European energy market rules.
In 2019, all Spanish customers (30 million approximately) have hourly metering data which enables them not only to know their consumption habits, but also to optimize contract power and receive a better quality of service by distribution companies. Also, the existence of 100% smart meters will allow a new regulation to implement the self-consumption roadmap. Nowadays, we can say that the distribution activity in Spain is no longer an infrastructure activity but also a customer-oriented activity and electronic meters have much to do with this new scenario.
In the future, once the implementation has been consolidated, the regulator faces new challenges and regulation must be develop in this way. In Viesgo we considered that meters should be considered like other distribution grid assets and remuneration methodology must be adapted in this way. Also, incentives mechanism should be developed to consider innovation, like the smart metering in the remuneration scheme.
Enric Vinyes, power systems automation activity manager, Schneider Electric
It's mainly a billing tool but the Spanish system operators are convinced that something more can happen. It is more accurate to say we are not leveraging the data we get. Any huge masses of data need to be interpreted to produce information, because if data is too much you are hiding information. Customer service can be improved a lot, for example with better management of outages and over/under-voltage. By having all this information we can also enhance electrical vehicle charging, for example by deciding the optimal siting of charging points by understanding the demand curves for charging and where demand is. What we need to see as a consumer is what is the value? That could include energy savings and lower bills. I'm really convinced that what we have done in Spain can be done elsewhere.
Pierre Mallet, director of R&D and innovation at Enedis
Spain was very successful in achieving 100% smart meters because they selected wise technical options, including using PLC based solutions, as did, for instance, Italy, France and Portugal. The regulator should fully acknowledge the central role of DSOs as neutral data managers, responsible for collecting, storing and giving access to metering data to energy services providers, under the strict conditions needed to protect privacy and to guarantee cybersecurity.
Andrés Pinto-Bello, policy analyst at smartEn
Spain achieved significant success on the infrastructure front: a 100% rollout of smart meters by the end of 2018. On the services side, it remains to be seen whether this rollout will have had any impact both now or in the coming years. Most Spanish consumers are not aware that they have a smart meter installed in their home and they do not know the meter’s capabilities as they are usually installed in the basement of apartment blocks. Additionally, the rollout has not been accompanied by a deep reform of the tariffs and services offered to customers. One of the principal arguments for the smart-meter rollout was the creation of a new type of tariff for small consumers (under 10 kW), which consists of a regulated price with hourly pricing and the option of a day and night-time differentiation. Even though this tariff is cheaper for most households, only 40% of customers are subscribed to it (most of them unknowingly), and this percentage is steadily decreasing every year due to a lack of proper information by suppliers. There is still a clear need for more transparency towards customers. The smart meter rollout, even though successful in covering the whole customer base, has not been accompanied with new and innovative services and offerings from suppliers. To take advantage of their full potential, further reforms of the Spanish electricity market regulation are needed to encourage competition and innovative service offers, including truly dynamic price contracts for retail consumers.
Marina Serrano, president, aelēc
Back in 2009, the European Commission ordered all member states in the EU to ensure at least 80% of its meters as “smart” by 2020. Spain, following Sweden, Italy, Finland and Malta is one of the European countries who has decided to replace 100% of domestic devices, and has already achieved it in December 2018. There are now 28 million of these new devices in our grids with functionalities such as load management, remote firmware upgrade, quality control or fraud detection. But there is more. There is an ambitious initiative by the Spanish utility companies that complements the legal obligation to change meters with an extensive modernisation and digitalisation of the electricity grid. The Spanish smart metering architecture solution is a great case of success and is based on a fully interoperable design, using multi-vendor devices, based on open standards which are exchangeable at any time and place. This architecture is designed in a way to both connect the customers and enable the medium voltage-low voltage monitoring and control: apart from the smart meters located in households, there are concentrators located at the secondary substations which receive data from the closest smart meters and there is a central data management system at the utility end which receive all data from the concentrators.
Alicia Carrasco CEO olivoENERGY
The main reason for the success of the smart meter rollout is that in 2007 the Spanish government decided that even without going for a cost-benefit analysis it just requested that 100% of the meters should be smart by the end of 2018. So it was a mandate from the Spanish government and of course the effort from the industry. In fact in Spain we do have two protocols for communication which are really supported in Spain, one is Prime by Iberdrola and one is Meters and More with Enel and Endesa. Now, thanks to full smart meter rollout, it is time to decide and work on how to facilitate neutral and easy data access.