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Hungarian utility operators to introduce smart metering experimentally

Utilities are revving up to announce experimental tenders to sum up the effects of extensive smart metering installation. This could mark the first step towards the creation of smart grids.

Three utility companies – E.ON, RWE Elmű-Émász and EdF Démász – are keeping  the energy, telecoms and R&D industries excited with experimental tenders this year. The winning applicants are to install so-called smart meters in thousands of households and gather information on how the technology could be introduced on a wider scale.

Smart meters in general combine traditional metering methods and a telecommunications infrastructure, basically assuring real-time surveillance of household utility consumption. Utilities can thus monitor multiple aspects of consumption to make them operate as efficiently as possible and also prevent overloads and outages, said Gábor Turóczi, presales specialist at SAP, which delivers software solutions for smart electricity technologies.

“In Hungary, people pay 18% of their salaries on their utility bills, compared to countries where smart metering is far better established like Austria with 1.4% and Sweden's 1%,” Metrima's executive director for Central Europe Dr Peter Steinreich told the BBJ.

His company is advising the government regarding Swedish laws and regulatory practices which have been in use in the last five years and is also looking to participate in the tenders in partnership with Ericsson.

For Hungary, smart metering could also pave the way for new energy tariffs that would better facilitate that social aid is spent on its actual purpose, according to Peter Steinreich. “Smart metering would allow pre-paid solutions in energy payments, similarly to mobile telephones. This would make sure that the aid is really spent on paying utility bills, not other things,” Steinreich said.

That there are plenty of benefits is obvious, which is why the EU issued a directive requiring 20% of every member state's households to be fitted with smart meters by 2020. However, estimating the costs and challenges of installing the technology is difficult. “There are so many variables that every town or area where we would want to install the system has to be mapped out on a case-by-case basis,” said László Kovács, key account manager of Ericsson's new business division.

As Steinreich pointed out, the tenders cover not only the procurement of the devices, but the entire system comprising the meters, the IT infrastructure as well as the telecommunications setup needed to gather and process the data coming from consumers. This is why he expects at least ten formidable rivals in the application process (for the two bigger tenders, the one to be called by EdF Démász is smaller in scale), major companies forming similar groupings or consortiums trying to clench the commission.

Telenor, which is struggling to keep its mobile revenues from shrinking, is expected to bid, and there are also IT firms with existing solutions such as SAP.

Still in the middle ages

The presence of smart meters in households is the first milestone to reaching the next step, making the entire grid smart, said Ericsson’s Kovács. This is a much more complicated issue than smart metering, but is also key to the long-term energy efficiency of the country. It assumes a decentralized national – or even continental – power supply system that incorporates a multitude of smaller power plants that generate power, which is then efficiently directed to where it is needed. This would assure that every watt generated is well spent instead of dissipating over the grid.

But, despite the prospective gains, introducing a smart grid in Hungary is at present still little more than a utopia. Utilities are now looking to use smart metering within their own organizations, as shown by the tenders, but introducing smart technology over the whole grid is still far away. In fact, the Hungarian Energy Office (MEH) canceled a tender at the end of March which called for experimental smart metering projects citing a lack of interest on the part of utilities.

Since the same utilities are showing a lot of interest in smart metering, it could be that they simply were not prepared to deliver a solution at the time of the MEH tender. However, if the utility tenders proceed according to plan, they will have established know-how and partnerships about a year from now.

MEH, as it told the Budapest Business Journal, has no plans to re-announce the tender for the time being. However, it will eventually have to do so to conform to EU requirements.

Even R&D firms working to develop smart technology are sometimes discouraged by slow speed of change. “In Hungary, this subject is still bogged down in the middle ages,” said István Szabó, project manager of Ecotech Zrt. His firm is a project company established by the College of Dunaújváros to develop an experimental smart grid solution. Ecotech is also working on the specifications of the telecommunications system it plans to use in the project.

Nonetheless, certain elements are already present in the grid-controlling structure that provides the juice for our computers. “We have already introduced several developments or their introduction is underway,” Gábor Tari, CEO of the Hungarian grid operator Mavir said. These include a Work and Asset Management project replacing an outdated IT system, allowing better control, the almost complete overhaul of the transfer structure, and installing remote management functions, a development that was set to be completed by the end of March.

All about the costs

Considering the long-term effects, smart grid investments could yield serious cost savings. As Szabó explained, if the availability of the small power plant network was a given, the intelligent grid regulating the generated power flow could reduce electricity consumption by 50%, which is the amount estimated as going to waste at present.

However, since the private sector has yet to throw its full weight behind the necessary developments, he believes that only state involvement or the introduction of EU or UN directives could actually lead to advancement.

Tari likewise found that given the uncertainty surrounding the issue and the number of factors involved, making calculations is senseless. “Considering the conditions, such as frameworks yet to be developed, and other issues requiring clarification, identifying the sources of financing is currently impossible,” he said.