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Smart Meters yet to Catch on in Hungary

Still regarded as expensive, it will take time for smart meters to replace conventional ones in Hungarian households. A recently ended pilot project may give some new cues to consumers and transmission operators on the business case for these systems, but its result are yet to be published.

András Lengyel

In an era when anything smart from phones to activity trackers sells like hot cake, it is somewhat counterintuitive that smart meters have taken so long to catch on, in particular in households, where the promise of saving on energy bills is supposed to convince most. Yet, to date, only a fraction of Hungarian households have had a smart meter installed. The main culprit is price; although it has dropped somewhat in the past few years, it is still regarded too high to help smart meters become widespread.  

In the past few years, there have been several changes in the energy industry that make the introduction of smart meters more timely than five years ago. Among them are the growing ratio of intermittent renewable energy on the grid, the appearance of “prosumers” (a consumer who also produces energy) by, for example, using solar panels, and the ever stricter rules on energy efficiency.  

One major benefit of smart meters is that they promote energy saving, but this is not the only one. By tracking their consumption every 15 minutes, users get a clear picture of, for example, the fluctuations of the energy flow, the peaks and lows throughout a day. There is no need to call customer service and dictate the monthly consumption.  

“It is also useful for traders: this way they can keep track of the actual consumption and can bill more precisely as opposed to a monthly estimate,” András Lengyel, senior manager at PwC Energy & Utilities Advisory told the Budapest Business Journal. Transmission system operators, too, can benefit by seeing the production of solar PVs and being able to plan ahead more, he added.

Business Case Not Made?

Yet, despite all these advantages, smart meters are barely used in Hungarian households. (The largest energy consumers have already switched to smart meters: they are responsible for more than two-thirds of the country’s energy consumption.) Compared to a traditional meter, smart meters may cost up to ten times more, around HUF 20,000-30,000 or more.

The current logic is that it is the distribution system operator that owns, operates and also finances the rollout of smart meters, and in most cases, it is still not worth it for them. It is also questionable whether there is a business case for a full-scale rollout at a national economy level.  

“Therefore, many countries opted for a selective rollout – there is little benefit to installing a smart meter in a garage where the lights are switched on twice a day,” Lengyel says.  

The European Union mandated a smart meter rollout by 2020 with a target of at least 80% of households for electricity in countries with a positive cost-benefit analysis previously run across the EU. From Hungary, however, there was no data available according to official EU data (see box).

In the meantime, another project aimed at analyzing the benefits of a smart meter rollout was run by KOM Központi Mérés Zrt., a subsidiary of state-owned MAVIR. Started in 2016, it looked at the issue from a different angle; it took a multi-utility approach rather than focusing on just electricity and gas. The project ended this March, and a report on the findings was submitted to the Hungarian Energy and Public Utility Regulatory Authority in September. (The BBJ contacted KOM Központi Mérés Zrt. for some preliminary results, but received no answer). The results are not likely to be published until the end of this year.

Regardless, the rollout of smart meters will definitely take place in the medium-term, Lengyel says. The process will be driven by further price drops and the expansion of intermittent renewables – such as solar power – as well as e-mobility, he adds. All of these will create a demand to get a clearer and more up-to-date picture of households’ energy consumption and production.

Why no Rollout? 

Hungary is not the only country in the EU where smart meter rollout is yet to happen. According to a review by the EU’s Joint Research Center and the Energy Directorate in 2017, in Hungary, Bulgaria, Cyprus, and Slovenia cost benefit analysis or rollout plans were not available. At the opposite extreme are 14 member countries (Austria, Denmark, Estonia, Finland, France, Greece, Ireland, Italy, Luxemburg, Malta, Netherlands, Spain, Sweden and the U.K.) where a large-scale rollout will likely finish by 2020 or earlier, or already has done so, the report says.

For these countries, the stated expected penetration by 2020 is 95% or more, compared to the EU’s 80% target. In three of the countries (Finland, Italy and Sweden), close to 45 million smart meters are already installed, amounting to almost a quarter of the 2020 total. 

The estimated member state commitments amount to close to 200 million smart electric meters and 45 million smart gas meters by 2020 at a total investment of around EUR 45 billion.

These correspond to smart meter penetrations among European consumers of almost 72% for electricity and 40% for gas. They indicate that while the 80% target should be exceeded in many of the deployment countries, the 80% EU-wide target will fall short, the report notes.