Smart meters Smappee
“If you want consumers to save energy, offer them a fun factor – and real-time feedback.”

Almost every European country today is taking initiatives to roll out smart meters – it’s a multibillion dollar industry. But will these initiatives deliver on energy efficiency? Early results in some markets show that some initiatives are not cost effective and fail to deliver on energy efficiencies. The lesson for other countries is this: if you want consumers to change their habits and save energy, allow for a fun factor – and to make that possible, you need high quality access to the energy data. 

By 2020, the European Union aims to replace at least 80 percent of electricity meters with smart meters , the objective being to cut emissions in the EU by up to 9 percent and energy consumption by equally as much.

Smart meters aren’t mandatory – yet. For now, the EU Commission wants to roll out smart meters where it’s cost effective, although it did draft a proposal in 2016 to make it mandatory for member states to supply a smart meter when consumers ask for it.

But European countries have taken up the cause for smart meters with some enthusiasm. The thing is that while smart meters promise energy efficiencies of up to 20 percent, and while smart energy monitors frequently report high energy savings for the users, we have yet to see real success stories with public smart meter projects.

Take the Netherlands, one of the pioneers in smart metering. The Netherlands hoped that energy use would decrease by approximately 3,5 percent thanks to smart meters, resulting in around €4.1 billion in savings. The cost of the rollout was budgeted at €3,3 billion, which would amount to almost one billion in savings.

With a quarter of the Dutch population now using a smart meter, it’s clear that the initiative will not deliver the projected savings. In fact, consumers are barely saving 1 percent on their energy bill.

This has the unfortunate effect of pushing the entire smart metering initiative into the red: savings will only amount to about 3,1 billion, creating a deficit of 200 million euros. A spokesperson of the Dutch Planning Office said that the initiative would end up “costing some money.” More specifically, the resulting defecit would cost the consumer money, with the 200 million euros being shouldered by Dutch citizens .

In the UK, consumers will foot a £11 billion bill for the installation of smart meters, or £200 per smart meter (£ 400 per household in case you have gas and electricity). The UK has already installed some 3 million smart meters and is aiming for 53 million to be installed by 2020.

But again, they are not delivering on the promise of energy savings. While reports forecast energy savings of up to 20 percent, consumers are only saving about 2-3 percent on their energy bill, or £33 per year. 

Only in the case of Germany are smart meters showing notable progress. Europe as is having a less-than-stellar experience with smart meters.

It all makes sense if you look at the implementation of smart meter initiatives. Member states are pushing smart meter implementation, but not always for the right reasons. Instead of installing smart meters to create energy and cost savings for consumers, governments push smart meters because they’re necessary to evolve to smart transmission and distribution grids.

Energy savings for the consumer are not necessarily kept in mind when designing smart meters. Consumers – who see their energy bill rise every year – are very interested in energy savings, but have no say in the design. They want to make environmentally conscious choices, but the device they get just doesn’t live up to its promise.

As one early adopter wrote: „I thought I was doing the right thing. I got my smart meter early. Little did I know that early adopters (...) were receiving meters with far more limited functionality than those who were prepared to wait.“ 

In other words, the incentives of the grids and those of the consumer are not always aligned.

The important question is why the smart meters are not delivering on their promise. One mistake that both the Netherlands and the UK made is that they are not thinking of the consumer in the design process, which makes the consumer lose interest in energy savings.

How do you get consumers interested in saving energy? Research indicates that the answer is in feedback loops . As the Netherlands Enterprise Agency noted in 2014, users will not change their habits if they only receive feedback on their energy usage every two months, as was the case in the Dutch pilot. Realtime insights, it seems, are the biggest driver of energy savings.

In fact, the Netherlands Enterprise Agency suggests that any national smart metering project should aim to create a level playing field for third party applications that offer feedback to the consumers in the way that they want it. Older consumers might prefer basic real time meter readouts. More tech savvy consumers might enjoy mobile apps that allow them to drill down into their energy use, or gamified experiences that help them cut down on energy use.

Fun is an essential factor in getting consumers to engage. It is what Tom Chatfield describes in his book Fun INC: „People have been ‚gaming’ life in the pursuit of profit for decades, even for centuries: if you create a fun, rewarding activity within a certain context, you make that context more appealing.“

There’s a reason why an app like Waze offers points, badges and „thank you’s“ for helping other drivers. Without a dose of fun, it might feel like you’re providing free labor to Waze when you alert other drivers of a vehicle on the shoulder.

The same goes for energy. If we want consumers to cut back on energy use, we’ll need to make it engaging. And governments and grid operators should have the self-awareness to realize that they are just not very experienced in delivering fun to their subjects – it’s not their job after all. If we want smart meters to deliver on their promise, governments have to open up the smart meters to third party developers and provide them with access to the data.

European countries are finally embracing the ideas of open data on a macro level – opening public data to entrepreneurs to build on it. But when it comes to private data, again we see a tendency to keep the high frequency, real-time data locked in a black box, only accessible to the grid operator or the energy supplier.

The EU seems to have understood the challenge of making its member states understands this . The EU Commission specifically states that member states should „fully“ take into account the objectives of energy efficiency and benefits for the final customers. Also, „the metering systems must provide final customers with information on actual time of use“. 

The good news is that the solution is dirt cheap. It consists of a simple P1 port that allows third party access to the real-time, high frequency readings of the meter (between 4000 to 8000 measurements per second). Germany and recently Flanders have seen the light – they will require a P1 port in smart meters. Let’s hope the rest of the continent will follow their example. European consumers deserve access to their energy usage data.

Stefan Grosjean is founder and CEO at Smappee, a company that produces award-winning smart energy monitors. Follow Stefan on Twitter: @StfnGrsjn.