Germany, usually at the forefront of energy technology adoption in Europe, nonetheless has reservations about smart metering. Privacy issues have always been a concern among a small, but vocal, minority which is not comfortable with the idea of energy utilities having access to when and how consumers use electricity. However, the assumption in the industry was that Germany would eventually fall into line and accept that smart meters must be deployed.
But there is a possibility now that this will not happen, and a German rejection of smart metering could pose a threat to €33 billion of smart grid investment.
In August, Germany's Economy ministry published a report, carried out by external consultants, rejecting smart meters as too expensive to deliver economic benefits. Frost & Sullivan energy analyst Neha Vikash commented: "The EU Energy Efficiency Directive mandates for 80 % of households in Europe to have smart metering by 2020. The exception to the Energy Efficiency Directive is if a country can prove that smart metering would not pass a cost benefit analysis.
"The report has shocked the industry and could have major ramifications, although it could still be rejected by the German government".
Germany has 48 million meters and the replacement of them over a 5-7 year period would have generated an estimated €6 billion in revenues for smart meter and communications manufacturers, plus an estimated €7.5 billion that would be spent on supporting infrastructure, project management and installation. These figures are based on Frost & Sullivan's internal forecasts, made for its forthcoming Global AMI report to be published in the autumn.
"If Germany instead decides to install smart meters only when existing meters need replacing, this would be a massive blow to the industry," says Neha Vikash. Approximately 90 % of Germany's meters are electromechanical and these can have a working life of 20-40 years.
The situation for meter manufacturers could worsen if other countries follow Germany's lead. "If a country with the political strength of Germany opts out," adds Ms Vikash. "It could embolden EU countries to follow suit. Prior to the German announcement, the UK government had already announced it would delay its rollout by one year to allow further consultation - could this be scrapped or delayed further?"
Excluding Germany, there are an estimated 180 million residential meters in the EU, and of these approximately a third are either already smart or in countries with smart rollouts that are underway and unlikely to be stopped. This leaves 120 million meters. Assuming 80 % of the 120 million meters in Europe were to be replaced by 2020, this would mean an estimated 96 million meters being replaced at an estimated €9 billion, and this does not take into account the support infrastructure and installation costs which would be an estimated €10.5 billion.
"The German government may reject this report and go ahead with the rollout. Other countries may ignore Germany and install smart meters regardless. But with $44 (€33) billion in the balance, this development has got everyone in the industry concerned," concludes Ms Vikash.
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