Perspective on

New Zealand Smart Meter rollout

Smart Energy Forum

27 November 2014, Newcastle, Australia

Ron Beatty

Principal Adviser Market Services

Smart meters or AMI

• New technology is providing large amounts of accurate and timely data

• Smart meters are just complex, programmable, measuring and recording devices • New Zealand Electricity Market (NZEM) defined as advanced metering infrastructure – AMI –

includes comms and back office systems where information is collected by users

Smart technology transformation

• The real “Smart” we are seeing in the NZEM is

• new customer pricing offers and availability of time of use tariffs

• development of rapid and reliable two way communications

• internet of things

• smart phones

• developing communication protocols

• promise of “Smarter” appliances that may integrate with other systems

• mining of useful information from the extra data collected by the new technology

NZEM is a mix of contestable market

arrangements

Hedge

market

Wholesale

market

Customer

market

Approved

test

houses

Ancillary

market

Retail

market

Networks

Metering

market

Smart

home

NZEM competitive metering

• Since 1 April 1999 metering has been a workable competitive market

• metering services are independent of distributor and retailers

• commercial arrangements required

• guidelines available at

http://www.ea.govt.nz/operations/retail/metering/metering-installation/

• The participant responsible for the electricity flow through a point of connection must ensure there is an MEP

• trader (retailer) for customer connections to networks

• grid owner for GXPs

• generator for GIPs

• network owners for network interconnection points

• Voluntary roll out of AMI has resulted in no discernible cost increase to customers as costs and benefits currently accruing to the trader

Smart meters are part of wider market facilitation

including

• AMI policy and guidelines

• Set out expectations, recommended functionality and arrangements

• http://www.ea.govt.nz/operations/retail/metering/advanced-metering/

• Settlement of secondary networks (customer, network extension and embedded)

• Global reconciliation implemented (UFE)

• Integration of distributed generation into the electricity market for seamless market settlement and customer switching

• Default process for connecting smaller generators to distribution networks

• Centralised data hub

• High speed customer switching

Smart meters are part of wider market facilitation

including

• New metering rules

• regulated some AMI issues

• dealt with programming changes to AMI

• centralised metering records

• establishment of MEP role

• security and data access

• MEP responsible for AMI meter reading

• guidelines available at http://www.ea.govt.nz/operations/retail/metering/metering-installation/

• Regulated business to business file exchanges

1 – First industry led data clean-up process completed

2 – Regulator signalled intent to enforce switching regulation, use of estimates commenced

3 – Global reconciliation and monitoring became effective

4 – Regulator required 50% within 5 business days and 100% within 10 business days

5 – Regulator put in place new metering rules and data cleanup – no impact to switch period

3 4 5 2 1

Smart customer switching

AMI installations as at 31 October 2014

-

500,000

1,000,000

1,500,000

2,000,000

Jan-0

8

Apr-

08

Jul-08

Oct

-08

Jan-0

9

Apr-

09

Jul-09

Oct

-09

Jan-1

0

Apr-

10

Jul-10

Oct

-10

Jan-1

1

Apr-

11

Jul-11

Oct

-11

Jan-1

2

Apr-

12

Jul-12

Oct

-12

Jan-1

3

Apr-

13

Jul-13

Oct

-13

Jan-1

4

Apr-

14

Jul-14

Oct

-14

Jan-1

5

Apr-

15

Nu

mb

er

of

ICP

s

Year and month

AMI installations

Actual installed Current trend Number of ICP identifiers

Trend based on last 6 months installs of 17,043 ICPs/month

• NZEM rollout • signalled regulatory requirements and

expectations early to market

• costs and benefits initially realised by traders

• AMI takes a long time to roll out

• regulated agreements

• opt out/in and customer customers

• process changes have been disruptive

• Either rolling out AMI or intending to roll out AMI • 8 MEPs owned by networks

• 3 MEPs owned by retailers

• AMI being used in customer settlement • 21 retail brands

• most still use NHH meter readings

• only 2 retailers use HHR AMI meter readings for invoicing and market settlement

55% of customer installations have AMI (communicating) installations operational

Reconciliation and distributed generation

• NZEM uses full global reconciliation • traders provide consumption information

• identifies unaccounted for electricity (UFE)

• All buyers and sellers to NZEM do so on same terms

• monthly revisions to 14 months

• Reconciliation model solves for 378 NSPs by trading period and allows for • grid connected generation

• any amount of embedded generation

• grid connections to local networks

• interconnections between local networks

• interconnections to secondary networks

• customer networks

• network extensions

• embedded networks

UFE decreasing markedly as AMI is being installed

AMI has already enhanced market outcomes

• Integration of consumers into the electricity market using innovative tariffs – indirect load control

• Improved consumer information using web portals

• Accurate monthly customer invoicing – no estimates

• Reduction in network losses

• More accurate monthly wholesale market settlements

• Retailers able to manage vacant consumption

• New retailers entering the electricity market with innovative competitive service offerings to customers

• Flick is a new entrant retailer that uses 30 minute AMI information to invoice customers at wholesale cost (48 different prices per day, every day)

• Flick provides web browser access to customers to keep track of their expenditure and the savings made on Flicks tariff

• Customers receive incentives from the pricing to shift consumption to low cost weekend and night periods

AMI enabled retail competition

13

Retail competition is working

HHI refers to the Herfindahl-Hirschman Index. This index is the sum of the squares of the market shares of every retailer in a market. For example, if there are two retailers and one has 80% market share and the other has 20% then the HHI = 80x80 + 20x20 = 6,800. If they each had 50% market share then HHI=5000

• Number of customers choosing a new retailer steadily increasing since 2006

• Last 12 months about 20% of customers switched

• Number of new entrant retailers entering market with new products

Retail competition is working

Future smart developments

• Around the world, the energy industry is facing fundamental change • change is disruptive to current processes

• digital consumer technologies are creating new opportunities for utilities and others

• “internet of things” evolving – consumer choice with smart products

• Networks may become balancing systems • development of microgrids

• economic battery storage

• Smart use of “Big Data” - AMI and SCADA information • safety

• asset maintenance improvements

• capital deferral

• integration of renewable generation

• Consumers are becoming more • connected

• expectations are increasing

• self sufficient

• energy efficient

Ron Beatty Principal Adviser Market Services

DDI: +64 4 462 0609 Mobile: +64 21 618 048 Email: ron.beatty@ea.govt.nz

Electricity Authority - Te Mana Hiko Level 7, ASB Bank Tower, 2 Hunter Street PO Box 10041 Wellington 6143 New Zealand

www.ea.govt.nz