The challenge of making smart use of smart meters: The case of the Dutch electricity market

Tom Aben*, Martijn Jonker, Henk Akkermans, Wendy van der Valk

*Corresponding author for this work

Research output: Contribution to conferenceAbstractScientificpeer-review

Abstract

Purpose
The world around us is digitalising rapidly. Not only organisations and their operations are being transformed by digital technologies, also our homes are undergoing a transformation due to ‘smart’ devices that are connected to the internet and are able to collect large amounts of data (Holmström et al., 2019). Examples include IoT devices, big data (analytics) and remote monitoring (Kamalaldin et al., 2020). The introduction of these digital technologies brings opportunities as well as challenges and risks for organisations (Birkel and Hartmann, 2019; Kache and Seuring, 2017).
The recent introduction of smart meters in the electricity sector is an example of a digital technology causing a large-scale digital transformation. Triggered by European law that aims to capitalise on the digital transformation of the electricity sector, the Dutch government mandated an accelerated roll out of smart meters among consumers by utility companies (Van Aubel and Poll, 2019). Data generated by these smart meters is thought to provide enhanced insights into energy consumption and result in savings for consumers, and more effective management and maintenance of the electricity grid.
Although the roll out of smart meters was not hampered by any major issues, to date, the data that is generated is only limitedly used. This research aims to investigate how organisations in the electricity sector can be enabled to use smart meter data for both themselves as well as consumers.

Research Setting
The electricity sector is a heavily regulated sector in which several different stakeholders play important roles. The most important stakeholders include the national government (laws and regulations), distribution system operations (DSOs; organisations with the legal task to manage and maintain electricity grids), electricity suppliers (private organisations that sell electricity to end consumers), and independent service providers (private organisations that provide smart meter analytical services to end consumers).
To capitalise on digital transformation following European regulations, the Dutch
government decided to mandate a national roll out of smart meters by DSOs. This mandate was supported by Dutch energy laws that were adapted following the European regulations (i.e., a top-down approach was used). Once installed, the Dutch government envisioned that initiatives to use smart meter data to save energy and to enhance the management and maintenance of the electricity grid would be triggered by consumers and DSOs themselves (i.e., bottom up).

Methodology
Given the novel situation provided by the introduction of smart meters, case research is being performed in which we aim to elaborate on existing theory (Ketokivi and Choi, 2014) related to digital transformation of operations. Initially, a multiple case-research design was pursued, involving both successful and unsuccessful initiatives in which smart meter data was used for more effective management and maintenance of the electricity grid as well as for enhanced insights into and consequently managing consumers’ electricity consumption. However, after having conducted a first round of interviews (9 interviews) and studying various reports, the majority of the initiatives were either unsuccessful or still remain in the pilot phase due to steep hurdles preventing the usage of smart meter data. We therefore started to study why it is challenging to use smart meter data and decided to build a case based on insights from the different stakeholders in the electricity sector. These insights came from either pilots (both past and current) performed by the different stakeholders, as well as discussions with those stakeholders that opted not to use smart meter data in their offerings.

Preliminary Findings
Our preliminary results show that the stakeholders in the electricity sector primarily struggle with ‘social’ challenges (Birkel and Hartmann, 2019) stemming from privacy concerns regarding smart meter data. DSOs are not allowed to use the data to enhance service reliability unless this results in great social benefits (e.g., using historic smart meter data to predict impending failures, thereby greatly reducing the chance of future blackouts, and resulting economic losses). Similarly, commercial companies (including electricity suppliers) can only use smart meter data with explicit approval of individual consumers.
In addition to social challenges, DSOs also face ‘political’ challenges (Birkel and Hartmann, 2019) as different people and/or institutions interpret privacy regulations and the legal tasks of DSOs differently. On the other hand, commercial organisations that are supposed to develop products/services for end consumers to encourage energy savings, struggle with the ‘economic’ challenges (Birkel and Hartmann, 2019) of generating profit and having consumers pay money to save energy.

Contribution
From a theoretical perspective, we expect to contribute to the literature regarding digital transformation, specifically regarding the standardisation of networks and changing business models because of the introduction of digital technologies such as smart meters. From a practical perspective, we expect to show how both consumers and organisations can be enabled to utilise digital technologies that are implemented because of (inter-)national regulations, as well as the data that these technologies produce.
Original languageEnglish
Publication statusAccepted/In press - 16 Feb 2021
EventManaging the “new normal”: The future of Operations and Supply Chain Management in unprecedented times: 28th EurOMa conference - Berlin, Germany
Duration: 4 Jul 20217 Jul 2021

Conference

ConferenceManaging the “new normal”: The future of Operations and Supply Chain Management in unprecedented times
Country/TerritoryGermany
CityBerlin
Period4/07/217/07/21

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