In Malta, power and water are intricately linked. The country depends on imported fossil fuels to generate virtually all of its electricity demand and electrically-powered desalination plants provide over half the water supply it needs. Moreover, Malta's underground freshwater source is continuously being threatened by illegal over-extraction and rising sea levels in the future.
The country is faced with a series of challenges that need to be addressed now if Malta wants to have sustainable resources for the future. For this reason, Malta's national power and water utilities - Enemalta Corporation and Water Services Corporation - supported by a strategic partnership with IBM, jointly embarked on a programme to become the first country in the world to build a nationwide smart grid.
The new solution will fully integrate water and electricity through a common meter management system, enabling a streamlined and shared meter-to-cash process. The utilities will be replacing all electricity meters with smart electricity ones and will be fixing a probe device to the present water meter to permit similar functionality for both water and electricity metering and billing operations.
What makes smart meters so different from our present electricity meters? Put simply, smart meters can store data and can communicate. This permits the utilities to operate much more efficiently and provide new and better services to their customers. Apart from these benefits, smart metering is being promoted worldwide to support energy efficiency and green initiatives.
The existing electricity meters are dinosaurs in today's technological age. Suffice to say that, since they cannot be accessed remotely, physical visits are needed to read them, forcing the utilities to issue unpopular estimated bills in the absence of actual readings. Smart metering technology will allow us to eliminate estimated bills and do away with another inconvenience to our consumers. The remote reading facility would also solve another big problem, namely accessing closed or vacant premises.
The smart meter eradicates metering limitations, reducing substantially operating costs and, in doing so, proposes new billing options. Since the smart meter can be programmed to store readings whenever necessary, implementing day and night tariffs is simple. In fact, introducing a structure of differential contracts or tariffs, which would provide consumer with more choice and fit to their particular lifestyle, could very well become a reality. It has been successfully done abroad where smart meters are installed. The introduction of new tariff structures would not only benefit energy conscious consumers but also help flatten the electricity demand curve, which would translate into more efficiencies all round.
One smart meter manages all consumption and device control complexity within a single household. At the same time, programming of smart meters does not necessitate a physical visit to each premise each time but can be carried out remotely from the utilities' central office at a fraction of the cost. This extreme flexibility in technology allows the utilities to implement changes in services that necessitate meter access or reading quicker and at a lower cost. A classic example could be the introduction for electricity of prepayment billing, similar to that on mobile phone.
From various studies and pilot projects abroad it is apparent that there is a sizable percentage of consumers who prefer to buy power like any other commodity, that is, pay and consume. Consumers who often have budget constraints, or are accustomed to purchase consumables on a weekly basis, are usually inclined to do the same with electricity. This market segment abroad has been found to be over one third (sometimes even exceeding one half) of the total customer base. In Malta. this service would be very well suited for rental apartments.
Smart metering technology will drastically decrease electricity theft, a situation costing the utilities tens of millions of euros a year in revenue. The technology to track down electricity theft is embedded within the new smart meter and triggers automatic alarms to head office once tampering is detected. In addition, sophisticated mechanisms are embedded within the communication technology and back-office business intelligence, which analyse consumption trends and patterns and are able to pin-point areas of potential abuse.
Handling a continuous increase in electricity demand, together with pressures to reduce greenhouse gas emissions, poses a dilemma for the utilities. The new approach is to make consumers aware of their electricity usage, promote a shift from energy hungry appliances to eco-friendly devices and furthermore entice them to shift consumption patterns from peak to non-peak hours. As citizens become more conscious of their CO2 footprint, the smart meter becomes an effective tool for collecting and relaying detailed consumption data to the individual. As peak demand is continuously rising, a consumption shift from peak to non-peak hours postpones expensive investment in generation capacity.
Introducing smart metering in Malta will not be cheap. A smart meter infrastructure includes the installation of smart devices in all premises in Malta and Gozo together with the communication infrastructure to allow remote access. In addition, a robust IT software and hardware platform to manage all new meters automatically and intelligently, while storing large amounts of data, will be needed. There are also labour, transport, storage, logistic, communication and promotional costs. Not to mention the recurring operational costs to maintain such a system. And, yet, even though the total cost of the project is considerable, the decision to carry out this ambitious project in Malta is wise. Implemented according to set targets, the overall benefits to Malta will substantially outweigh the initial investment in technology and implementation.
Granted, Malta is a microstate and the size of the investment and the number of meters to be installed is comparably small to other countries. However, being small definitely has its advantages. The world will be watching closely as Malta begins to test whether an integrated solution for water and electricity will contribute to energy-efficiency targets. In tandem, Malta will be transforming its utility retail service landscape for the years to come.
The author is policy and strategy manager at ARMS.