VREG makes strong cost-benefit analysis for rollout of digital meters

The roll-out of the digital meter is a good decision. After all, the meter is crucial to the energy transition. The insight it provides into energy consumption will enable smarter use of natural gas and electricity: using less energy, consuming when electricity is cheapest, using the electricity produced by solar panels immediately, according to the VREG.

At the request of Minister Zuhal Demir, the VREG updated the cost-benefit analysis (CBA) on the rollout of digital meters. They also studied an accelerated rollout of 80% of the digital meter by 2024 at the latest.

For Flanders as a whole, they examined whether the positive effects of the digital meter rollout exceed the costs. They analysed the difference between the situation with conventional meters and the situation with the introduction of digital meters from the point of view of various players: consumers, government, environment and society, distribution network operators, energy suppliers and producers.

For an 80% roll-out of digital meters by 2024, the benefits for society far outweigh the costs. At an average value of the installation cost, the overall benefit is +888 million €. This is much more positive than a 15-year rollout, for which we calculate a benefit of +€768 million.

The benefit to the environment and society makes a significant contribution to the CBA. This is mainly due to reducedCO2emissions. Part of the benefit comes from fraud avoidance. In addition, there are the energy savings for consumers.

Impact on distribution network tariffs
As opposed to the general benefits for society, the accelerated rollout of the digital meter does lead to increased costs for the distribution network operators. A cost that they can pass on to customers via the distribution network tariffs. With an 80% rollout in 2024, the effect for an average household is approximately € 3.6/year more for electricity and € 2.8/year more for natural gas, compared to the rollout over 15 years that is currently in progress (average tariff increase over 15 years).

However, the accelerated roll-out of the digital meter allows customers to monitor and control their consumption more quickly. These benefits may result primarily from a change in consumption behaviour: saving energy and consuming when the energy costs are low, for example. As a customer with a digital meter, you therefore also gain the tools you need to save on your energy bill in the long term and pay less.

In addition, thanks in part to the investment in digital meters, electricity consumers can manage their consumption in a better informed manner, thereby avoiding high investments in the grid over time that would otherwise be necessary to make new applications such as heat pumps and electric vehicles possible on a wide scale. The digital meter is thus part of the bridge to energy transition.

Advice from the VREG

The VREG compiled the results and conclusions of the CBA in an advisory report to the Flemish Government.

They advise the Flemish Government to provide in the Energy Decree for the installation of a digital meter in the case of small-scale electricity consumption, so that by 31 December 2024 at the latest, 80% of small-scale electricity consumption facilities will have a digital meter, with full rollout envisaged by 1 July 2029. The accelerated rollout for 80% by 2024 will also ensure that Flanders will be able to comply with European Directive 2019/944.

You can read the full report on the website of the VREG.

Source : https://www.vreg.be/nl/document/adv-2020-02

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