Becker Büttner Held Solicitors
M2MAPPS: The deregulation of the metering market is currently creating lots of activity among energy providers and in the industry as a whole. What are the most important legal initiatives in this regard in the EU at the moment?
JAN-HENDRIK VOM WEGE: This and next year, the industry will mostly be kept busy implementing the third EU domestic energy market package. The individual guidelines and directives that make up the package were passed at EU level in 2009, but their fundamental adoption into national law is only taking place this year.
Germany will be implementing the package with an amendment to its Energy Management Act (EnWG). Just when the amended EnWG will come into force is not yet clear; we anticipate, however, that it will be in the second half of the year.
M2MAPPS: Energy providers complain that a lack of clarity in the legal regulations governing smart metering is an obstacle to investment. What needs to happen, and at what level (national / EU)?
JAN-HENDRIK VOM WEGE: Section 21b of the EnWG, as it stands, should actually lead to more smart meters being installed. Under certain conditions (for example if the customer requests it or in new-build properties), the grid operator is obliged to install a "Section 21b meter".
The German Legislator has unfortunately forgotten, however, to define the exact properties of this "Section 21b meter" and describe it as a smart meter. This is leading to obstacles to investments among grid operators. If an installed meter fails to comply with the legal requirements, there is a risk that all of the meters will have to be replaced with new ones at a later date.
If the grid operator, as a metering point operator, over-fulfils his legal obligation, there is the risk that the additional costs (for the additional functions) will not be recognised under the terms of the pricing regulations. This catch-22 situation has led to the installation of true smart meters stalling.
The amendment of the EnWG therefore needs clarification of the properties that a true smart meter must have. Regulations can therefore initially be made at national level. In future, standardised European regulations should then be drawn up that ensure that smart meters are able to communicate in a standardised way across borders, allowing the development of an internal European market.
M2MAPPS: What can the legislator do to encourage the acceptance of smart metering among consumers?
JAN-HENDRIK VOM WEGE: The main problem with smart metering is that installing a smart meter doesn't make the consumer a short-term profit. The second issue is the recurrent theme of data protection and privacy.
The advantages of a smart grid, the key component of which is a smart meter, lie in the fact that the system is generally more efficient since consumption and usage can be made more flexible. It is therefore clear that the costs of installing and operating smart meters need to be made more socially acceptable to a certain degree, in other words financed from grid fees, in order to achieve the ultimate goal.
This consideration is addressed by the concept from the German Federal Network Agency, which is advocating that grid operators should install a basic meter at every meter point. The costs of these should then be deductible from grid fees. For consumers, the installation of such a meter would then not be directly associated with extra costs. This would certainly increase the acceptance of smart meters.
It must be possible to then upgrade these basic meters to intelligent ones that not only measure the energy consumed, but also offer customers added value. This type of offer can be made through competition. The customer then has a free choice of whether and at what price he wishes to use the added value that a smart measurement system or the service provider using it offers him.
M2MAPPS: Where are the greatest challenges in relation to smart metering as regards data protection? Do you see any solutions for these?
JAN-HENDRIK VOM WEGE: The biggest challenge with regard to data protection is uncertainty among customers, which is mainly due to a lack of information: what data can be recorded under what conditions? Does it require consent, etc.?
The use of communicating meters of course raises new questions that current data protection legislation does not yet specifically cover. The issue of data protection is important and needs to be resolved as quickly as possible in order to increase acceptance among consumers.
When drawing up new standards, care must be taken to ensure that as little personal data is recorded as possible, and that the grid is managed as much as possible with only "technical data". However these principles of "data economy and data reduction" already exist in data protection legislation. They simply need to be transferred to the domain of smart metering.
I see a lot of common features with other areas in which sensitive data is already being handled in a confidential manner, such as the field of telecommunications.
M2MAPPS: What other legal hurdles still need to be overcome on the way to a smart grid?
JAN-HENDRIK VOM WEGE: A smart grid is intended to increase the efficiency of power supplies by making information about the grid utilisation, in other words consumption and production, constantly available for all grid sectors, allowing the grid to be managed effectively. This enables production and consumption to be coordinated with each other. Consequently, costs can be saved in the expansion of the grid and production.
What's also clear, however, is that the path to a smart grid will be littered with additional costs. The incentive regulation, especially the regulation of power grids, therefore needs to move away from being a purely "cost-cutting regulation" to a regulation with a sense of proportion that not only takes account of cost reductions but also energy efficiency targets.
This change of principles in the context of regulation is something that the German Federal Network Agency can only do on its own to a limited extent. A change in the law to accommodate this is therefore needed.
M2MAPPS: By so doing, will we also be accelerating the prevalence of battery-operated vehicles (e-mobility)?
JAN-HENDRIK VOM WEGE: The question can always be answered with a yes if you turn it around: the prevalence of battery-operated vehicles accelerates the expansion of a smart grid. This is because grid operators primarily see battery-operated vehicles as storage devices.
The more electric vehicles are connected to the power grid, the greater the possibility of storing excess energy (for example during very windy periods). This means that the frequently inefficient downwards-regulation of conventional power plants and the expansion of the grid can in part be prevented.
M2MAPPS: Which country or region is leading the way in terms of legislation for a smart grid on the international stage? What do you think will be the impacts on technological development (key word standardisation)?
JAN-HENDRIK VOM WEGE: In terms of legislation for smart grids, there is not yet any clear front runner. In the USA, the issue is being addressed with as much priority as in the European Union and Japan. With regard to standardisation, the USA is one step ahead of the European Union. However, the European standardisation institutions are currently also working together to agree on creating new standards for communication between the grid and IT systems.