Solar may be regarded as a disruptive upstart by conventional power utilities but the sector can itself fall prey to disruptive innovation, as the planned mandatory deployment of smart meters in Chile and Belgium has demonstrated this week.
Though seen as a positive, the arrival of smart meters could see residential PV system owners face new costs and, maybe, lower earnings.
As Belgium’s wealthiest and most industrialized area, Flanders has the nation’s highest amount of installed solar power. Of the 4.2 GW in Belgium, more than 3 GW is in Flanders, with most of it rooftop residential systems not exceeding 10 kW in capacity. That means several dozen thousand PV system owners will have to deal with new rules mandating smart meters. Domestic solar association PV-Vlaanderen moved quickly to reassure PV owners over the measure.
The majority parties in the Flemish parliament this week reached agreement on the introduction of digital smart meters and, as revealed to pv magazine by PV-Vlaanderen president Bram Claeys, the solar sector was consulted on the proposal. The legislation includes a 15-year grace period for household PV system owners, during which they can continue to operate under the current system – which calculates tariffs based on presumed electricity consumption – or they can embrace smart meters and receive payments based on actual electricity usage. Regardless, smart meters will start to be rolled out from July 1.
“The current tariff methodology ensures that the investment return [on a residential PV system] may be achieved within seven or eight years,” Claeys said. He added, the current rules have supported strong market growth and said the 15-year grace period was a good arrangement.
Most will gain
“The owners of PV systems not larger than 10 kW in size that are currently entitled to inject to the grid surplus power under net metering, will have also the chance to choose the new tariff methodology, and for some of them, especially those with [an] high self-consumption rate, this may even result in more gains,” he said. “According to an analysis of online simulations on the website of the Flemish regulator, VREG, around 40% of them should benefit under the new methodology.”
Claeys said the 15-year term will be calculated from the date of grid connection of PV systems, with the Flemish government considering replacing a net metering scheme that is expected to expire at the end of next year with a feed-in premium [top-up] system based on contracts for difference. “We hope they will announce these new changes before [the] easter vacations,” added the PV-Vlaanderen president.
Smart meters welcomed by Chilean solar sector
In Chile, a January 2018 law mandated the deployment of 6.5 million smart meters up to 2025, and this week the government and domestic solar sector commented on the matter after media reports raised concerns about additional costs for consumers.
“This new measurement, monitoring and control system will have multiple benefits for end customers, such as knowing how much each household or company consumes every hour; opening spaces to optimize spending and generate savings, know historical consumption, have greater accuracy of payments that are made [and] have a shorter interruption period, among other benefits,” said Chilean energy minister, Susana Jiménez. “Customers can better manage their consumption with more information. It will also be the gateway to enable the measurement of your own generation of energy if you take advantage of distributed generation.”
The minister admitted installation of the devices would imply a cost for consumers which would be added to electricity rates, but said it will not imply greater profitability for distribution companies, which are regulated by a General Law of Electric Services.
The new provisions have so far raised few concerns among residential and commercial PV system owners, but that is probably due to the fact only around 25 MW of distributed generation capacity operates under net metering in the country.
Chilean solar energy association Acesol joined the debate by highlighting both the issues and benefits of the new technology.
The association says the new devices, in addition to modernizing the electricity system, will offer an undoubted benefit to electricity consumers, and especially residential customers who want to install PV, since the bidirectionality of the new meters will allow them to directly control the excess energy injected into the network under net billing.
Acesol added, however, the law should have been discussed more before approval and said an international public tender for the purchase of meters would now be necessary to guarantee users the expense they will face for installation is made transparently and with optimal savings.
Ownership of data
According to the Chilean association the use and ownership of the meter’s information also requires more attention. Acesol says that information should not be used without the express permission of its owners – the consumers. Acesol also said distribution companies should have access to consumption data only for the purposes of the technical quality of service standard for distribution systems (NTCSSD) and to calculate bills.
“We firmly believe that it must be a third party, a meter information manager, who will have to deal with this information,” the association said. “We hope that the New Distribution Law will create an organization with these faculties and characteristics for greater transparency in the market. Smart meters bring significant benefits to customers because they generate hour-by-hour consumption information that can be analyzed by independent third parties of the distributors – duly authorized by the same clients – designing and promoting new services that allow customers to use even more efficiently the energy.”
Additional costs for customers
While installation costs will increase electricity rates, Acesol said power distribution companies will see operating costs fall through not having to send staff to read meters or to cut off supply in the event of non payment of bills.
“All of these reductions in operating costs should be passed on to regulated customers via lower distribution rates, whenever such rates are set,” the association said in its statement, adding power distribution companies should use new investment and additional operating resources to make up the shortfall. “According to the calculation of the last VAD [the costs on top of the wholesale power price paid by consumers], the reductions for operational costs would only partially offset the cost increases to implement the smart meters and more demanding standards.
“In summary, within the framework of the demands of better standards for the provision of public distribution services, replacing old meters with smart meters is an important step in the right direction from the point of view of regulated distribution customers, although this ultimately represents a higher initial cost for users.”