Cost Benefit Analysis of Gas Smart Metering for Commercial and Domestic Users in Spain

Abstract

Directive 2009/73/EC of the European Parliament and Council introduces the obligation for Member States to review the use of smart metering, whose implementation may be subject to the outcome of an economic evaluation of costs and benefits. Consequently in July 2010, by Order ITC 1890/2010, the CNE is responsible for conducting a study on the use of smart meters in the field of supply to domestic and commercial consumers of natural gas. The decision to implement gas smart meters needs to be based on a comprehensive economic analysis that reflects a balance between costs and benefits of all stakeholders in the gas supply chain to calculate whether their implementation is beneficial for the whole society. In order to know the effects resulting from the future implementation of smart meters in Spain, a study was conducted using the cost benefit methodology suggested by EUROGAS. This methodology compares the marginal costs and benefits from the project of smart meters for gas. To carry out this study an investigation of the current state of Spanish metering equipment and current technologies for gas smart metering has been done. Benchmarking have also being conducted from studies in France, UK and a study commissioned by NARUC / ERRA for the Licensing Committee / ERRA competition. Research shows that the status of smart metering technology is still immature and the behaviour of consumers has not been studied deeply. But measures such as awareness campaigns on issues of energy efficiency and use of new technologies to achieve the same appear to be a good support policy. The result of the cost-benefit analysis is negative, in which case supports the no-go decision with the project. The benefits are mainly for distributors. For consumers the benefit is less and is directly related to changes in their behaviour with respect to gas consumption. However, it is considered that the implementation of smart meters will be carried out independently by the distributors, due to the benefits it brings like improvements in the gas network management. This can happen now or in later stages as a result of advancing technology. It is therefore important that the regulator is aware of these developments, which also may be beneficial to them, and intervene to ensure competitiveness in retailers (interoperability), protect the rights of consumers, promote the participation of consumers and encourage distributors to innovate.