The power of policy transfer in the European Union: exchanging knowledge on urban household energy consumption

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The power of policy transfer in the

European Union: exchanging knowledge on

urban household energy consumption

MA Thesis in European Studies Graduate School for Humanities

Universiteit van Amsterdam

Author: L.A. Duin BA Student number: 10383174 Main supervisor: Dr J.B.M.M.Y. Shahin

Second supervisor: Dr P. Rodenburg

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List of acronyms and abbreviations

CEN European Committee for Standardization

CENELEC European Committee for Electrotechnical Standardization CEU Council of the European Union

Commission European Commission

Council European Council

ECJ European Court of Justice

ECSC European Coal and Steel Community

EEA European Environmental Agency

EEC European Economic Community

ENSCC ERA-NET Cofund Smart Cities and Communities ETSI European Telecommunications Standards Institute

EU European Union

EU ETS European Union Emissions Trading System JPI Joint Programming Initiative

JRC Joint Research Centre

MHw Megawatt hour

NGO Non-governmental organization

OECD Organisation for Economic Co-operation and Development

OMC Open Method of Coordination

PARENT PARticipatory platform for sustainable ENergy managemenT Parliament European Parliament

QMV Qualified majority voting R&D Research and development

SM-CG Smart Meters Coordination Group

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Introduction

Global warming and the deterioration of the earth’s biocapacity are permanently on the political agenda of countries, organizations and individuals, who have slowly realized that the majority of natural resources are finite. Furthermore, they want to secure the legal enforceability of environmental commitments.

The Paris Agreement of 2015 has been called a milestone in climate action on several occasions. However, the Commission realized that additional steps would be necessary before this global climate deal was adopted.1 As a result, the EU energy strategy aimed at promoting sustainability and reducing energy import from third countries was developed. The urgency to do so only increased with the election of a new American president who has been sceptical on climate change and has threatened to pull out of the Paris Agreement.2

With the EU Energy Strategy, the Commission acknowledges that the energy consumption process needs to become sustainable.3 By increasing Europe’s energy efficiency, the necessity for energy production and import can be lowered simultaneously. Thus, policy makers are entrusted with the task of creating policies to achieve higher energy savings, while minimizing the rebound effects on for example employment.

With the coming of the digital age more and more technologies with the intent to inform consumers about various consequences of their behaviour, expressed in for example economic gains or losses, have become available. The smart meter is an example of such a technology, and its potential to reduce energy consumption is frequently highlighted. However, it has become clear that more information does not necessarily lead to better decisions by consumers, who for a long time were thought of to act purely rational. This applies to the energy consumption process as well. As a consequence, much uncertainty remains on how to exploit smart meters.

It is a well-known fact that cities are energy-intensive and are the largest contributors to global warming. Here air quality standards are most often not adhered to. Due to air pollution,

1_{European Commission, ‘Paris Agreement’,}

http://ec.europa.eu/clima/policies/international/negotiations/paris_en, accessed 10 December 2016.

2_{John Vidal and Oliver Milman, ‘Paris climate deal thrown into uncertainty by US election result’,}

https://www.theguardian.com/environment/2016/nov/09/us-election-result-throws-paris-climate-deal-into-uncertainty, accessed 10 December 2016.

3_{European Commission, ‘Energy Strategy’,}_{https://ec.europa.eu/energy/en/topics/energy-strategy}_{, accessed 5}

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400,000 premature deaths in Europe occur each year.4_{Nevertheless, cities are also the place} where innovation occurs, producing new technologies able to solve pressing environmental issues. The EU increasingly recognises their importance and creates research projects to foster sustainable development in urban areas. Scientists with different educational backgrounds and expertise come together to address common European challenges.

This is how the PARENT (short for PARticipatory platform for sustainable ENergy managemenT) project came into being. It seeks to find out how to offer not only information to consumers about their energy consumption, but knowledge as well. ‘Gamification’, the act of employing game mechanics in a different domain to achieve certain objectives, takes up a central role here, in the context of local community-based participation. The smart meter is used as an enabling technology and allows the development of a customized energy management platform based on feedback from users.

Residents from Brussels, Barcelona, Bergen and Amsterdam, each with different cultural, socio-economic and behavioural profiles, participate in the PARENT project. They will generate data which will be used to study the social aspect of energy consumption. The learning outcomes of each city will be compared to each other when the PARENT project comes to an end in 2019. Subsequently, policy makers at the European, regional and local level will be provided with recommendations on how to effectively integrate energy savings into daily life.

A priority should be to optimize the impact of the PARENT project by ensuring its relevance for European citizens, because they pay indirectly for the conducted research through their national taxes. For this purpose it is crucial to get a better understanding of how to successfully disseminate the results throughout the EU on different levels, with information and communication technologies rapidly evolving.

All things considered, the following research question arises: how can policy transfer in the EU be useful in a policy area as diverse as urban household energy consumption? Since this policy area covers a wide variety of topics, such as behaviour, social acceptance and ethics, and requires a good understanding of the different social, economic, territorial and cultural characteristics of member states, it is unclear whether policy transfer can be of added value. Therefore, the goal of this master thesis is to answer the previously raised question. It consists of five chapters, each addressing different, interlinked subjects.

4_{European Environment Agency, ‘Air pollution’,}_{http://www.eea.europa.eu/themes/air}_{, accessed 2 December}

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The first chapter deals with EU urban and energy policy, to comprehend the rationale behind the European Energy Union and to establish the relevance of urban household energy consumption in its development. The most important implications of the Energy Efficiency Directive and the Energy Performance of Buildings Directive for member states are analysed. Additionally, smart meters are discussed in-depth. The Commission considers these electrical devices helpful to achieve higher energy savings and stimulates their implementation in Europe, but why so?

The second chapter takes a closer look at infrastructure, data and behaviour in relation to the smart meter roll-out. These aspects reveal the diversity of urban household energy consumption and are key to better understanding consumers of different member states and better EU policy making. Moreover, a case study is conducted for the Netherlands to identify several common European challenges for smart meters.

The third chapter introduces the PARENT project, for it aims to unravel the earlier mentioned aspects and provide recommendations based on data obtained from fieldwork. The PARENT project’s origins and goals are discussed. Also, the energy management platform, a key deliverable, is reviewed.

The fourth chapter provides an overview of governance and policy transfer in the EU. Policy transfer is critical as it offers a theoretical basis to better understand how knowledge can be transferred successfully from one political setting to another, based on years of research. Its instruments, potential and challenges are addressed. EU governance is examined to adapt policy transfer to a European context. The OMC, being a relatively new form of governance as an alternative to the traditional Community method, is evaluated as well.

The fifth and final chapter is the conclusion, which is based on the results of the previous chapters and provides a comprehensive answer to the research question.

This master thesis takes a multidisciplinary approach, not merely adopting a humanities perspective, but also addressing more technical topics. This was required to come to an informed and satisfactory conclusion.

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Theoretical framework

This master thesis is based on a significant amount of information, obtained from policy documents, reports, scientific articles, books, news articles and other sources. The bibliography provides a complete overview thereof. The general approach was to first determine the quality of a source. If there was even the slightest reliability concern, it would be left out.

The idea was to review as many recent publications as possible to prevent the incorporation of outdated information. Yet, in some cases, in particular when defining governance and policy transfer in the EU, the consultation of older, well-renowned sources was necessary to track down the development of these concepts over time. Policy Transfer in

European Union Governance: Regulating the Utilities written by Simon Bulmer et al. and

published in 2007, is an example of such. Additionally, the work of David P. Dolowitz and David Marsh was frequently consulted and referred to, as they contributed greatly to the grown interest in policy transfer with their paper ‘Learning from abroad: the role of policy transfer in contemporary policy-making’. These sources were complemented by other scientific articles produced by researchers currently active in the field. They also based their observations on the findings of their predecessors, but provided a more actual perspective on them.

Directives, websites and other material of not only the Commission, but also national governments were used to sketch an overview of the EU policy context regarding urban and energy matters. Moreover, several Science and Policy reports of the JRC were used to this end as well. The JRC is the Commission’s science and knowledge service, which potentially could lead to a conflict of interest concerning the conclusions drawn in their scientific reports. However, these reports are embedded in a large amount of research from scientists who are fully independent and cannot be linked to the Commission. Also, some JRC employees clearly take a critical stance on issues, adding to their credibility. Occasionally, news articles from respected, international newspapers were referred to. Finally, Dr Jamal Shahin was kind enough to provide documentation from the PARENT project, such as the proposal and draft versions of the first deliverables.

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1. Urban and energy matters in the context of the European Union

1.1. Urban policy

1.1.1 The significance of cities

Cities, some of which have transcended the size of countries, accounted for 60 to 80% of the total energy consumption and CO2 emissions worldwide in 2016, while urbanization is only expected to rise.5 The world will be two-thirds urban by 2050 according to a report of the U.N.6 Certain aspects of city life, currently the reality for three quarters of the European population, put an unsustainable pressure on natural resources and are the subject of EU urban policy. On a side note, the degree of urbanization varies highly across regions with continents such as Asia or Africa remaining predominantly rural.

Urban areas consume large amounts of energy, because several conditions have to be met to ensure a high degree of liveability. The temperature of not only relatively new, but also historic and poorly insulated buildings needs to be regulated, which is an energy-intensive process. In 2000, Berlin’s residential and commercial buildings were responsible for 56% of total energy consumption and this turned out to be even higher for Greater London in 2003 with 68%.7 In the summer cooling energy chiefly originates from electricity, whereas in the winter demand for heating energy is linked to fossil fuels, harming the environment as a result. Figure 1gives an overview of household energy consumption per dwelling by end-use in the EU.

5_{European Commission, ‘Cities’,}

http://ec.europa.eu/clima/policies/international/paris_protocol/cities/index_en.htm, accessed 21 June 2016.

6_{United Nations Department of Economic and Social Affairs/Population Division, ‘World Urbanization}

Prospects’, https://esa.un.org/unpd/wup/Publications/Files/WUP2014-Report.pdf, accessed 16 September 2016.

7_{RRojas Databank, ‘Energy Consumption in Cities’,}_{http://www.rrojasdatabank.info/statewc08093.4.pdf}_,

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Figure 1. Household energy consumption per dwelling by end-use8

For nearly all member states, ‘Space heating’ constitutes by far the largest part of the total tonnes of oil equivalent consumed per dwelling. ‘Lighting and electrical appliances’, ‘Cooking’ and ‘Water heating’ take up most of the remaining consumption. The amount of energy used for ‘Cooling’ is very low. This distribution might change in the future, since companies and households increasingly depend on computers and other electrical devices.

Electric utilities have to keep up with an ongoing and fluctuating demand. To this end they rely on base-load power plants, which provide a continual supply of electricity. However, the same utilities use peaking power plants, not nearly as efficient as base-load plants and kept offline for most of the time, to meet demand during peak hours. A feasible solution is to prevent the onset of these peak hours, by for example stimulating consumers to delay their washing machine or dishwasher for a couple of hours. Innovative technologies are required to provide them with relevant information on this matter.

8_{European Environment Agency, ‘Progress on energy efficiency in Europe’,}

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Even though urban areas and their need for a constant a large supply of energy are a major source of environmental stress, they are also innovation hotspots. Universities, think tanks, NGO’s and other knowledge centres are often located in cities, facilitating the work of individuals seeking to create a more sustainable future. Being both part of the problem and the solution, it is clear why the EU acknowledges the significance of cities.

1.1.2 Urban Agenda for the European Union

Europe is a highly urbanized continent, as 72% of its population lives in cities. These cities have a density of 3,000 residents per km2_{and increasingly have to deal with issues varying in} nature.9 A lot of issues are climate-related such as rising temperatures, deteriorating air quality, heavy rainfall, but also urban poverty, large flows of migrants and terrorism. They constitute the reality mayors have to face on a daily basis.

Benjamin. R. Barber, an esteemed political theorist, argued in his book If Mayors Ruled

the World: Dysfunctional Nations, Rising Cities that governments are limited by their political

ideologies and cannot provide mayors with the help that they need to maintain stability. Therefore, cities should be given more power to pursue their pragmatic vision aimed at problem solving.

The EU has a less radical conception in this respect, but recognises the need for a coordinated approach with a view to better include its cities in policies and legislation. This was confirmed for the first time with the Riga Declaration: ‘Towards the EU Urban Agenda’ in 2015, which was supported by the Commission, member states and other stakeholders, turning into a multi-level project.10 In this declaration the EU ministers responsible for territorial and cohesion and urban matters state their support for the development of a EU Urban Agenda establishing a functional framework and effective tools to horizontally ameliorate the urban aspect of EU policy making, and the possibility to share knowledge, best practices, research and collaboration.11

The Pact of Amsterdam was agreed upon one year later during the Dutch presidency of the CEU, with which this framework was created. It focuses on better regulation, better funding and better knowledge exchange. Better regulation to revise existing and design future

9_{Directorate-General for Regional and Urban Policy of the European Commission and the United Nations}

Human Settlements Programme, ‘The State of European Cities 2016’,

http://ec.europa.eu/regional_policy/sources/policy/themes/cities-report/state_eu_cities2016_en.pdf, accessed 25 December 2016.

10_{EU Urban Agenda, ‘Pact of Amsterdam’,}_{http://urbanagenda.nl/pactofamsterdam/}_{, accessed 12 June 2016.} 11_{No author, ‘Informal meeting of EU Ministers Responsible for Territorial Cohesion and Urban Matters’,}

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legislation, better funding to improve access to financial resources for relevant authorities (in this case ‘Urban Authorities’) and better knowledge exchange to foster more research-based urban policy making.12

The EU Urban Agenda ‘[…] acknowledges the polycentric structure of Europe and the diversity (social, economic, territorial, cultural and historical) of Urban Areas across the EU’.13 Its twelve priority themes are:

 Jobs and skills in the local economy  Urban poverty

 Housing

 Inclusion of migrants and refugees

 Sustainable use of land and nature-based solutions  Circular economy  Climate adaption  Energy transition  Urban mobility  Air quality  Digital transition

 Innovative and responsible public procurement14

The invocation of thematic partnerships is the key mechanism for executing the EU Urban Agenda. These partnerships, wherein the Commission, member states and European cities work together to book progress on the previously listed 12 themes, last around two to three years and are a new instrument for horizontal and vertical cooperation.15 They go through approximately five phases; stocktaking phase, preparatory actions, action plan phase, implementation phase and evaluation phase.16

The principles of subsidiarity and proportionality need to be respected and the Pact of Amsterdam stresses that the EU does not gain new competences with the EU Urban Agenda, but is limited to utilizing pre-existing legislation and instruments. The underlying idea being

12_{EU Urban Agenda, ‘Pact of Amsterdam’.}

13_{European Council, ‘Urban Agenda for the EU: Pact of Amsterdam’,}

http://urbanagenda.nl/wp-content/uploads/2016/05/Pact-of-Amsterdam_v7_WEB.pdf, accessed 3 June 2016.

14_{EU Urban Agenda, ‘Urban Agenda for the EU themes’,}

http://urbanagenda.nl/pactofamsterdam/twelve-themes/, accessed 14 June 2016.

15_{European Council, ‘Urban Agenda for the EU: Pact of Amsterdam’.}

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that member states should not be deterred from participation out of fear for a degradation of their sovereignty.

Thus, working together by exchanging knowledge on a voluntary basis is critical to book progress on the EU Urban Agenda. Member states are able to learn from each other without having to give up competences. Policies that have been proven to be effective in one political setting can be transferred to another, to avoid duplicated efforts and maximize the impact of available best practices.

However, it remains uncertain whether the EU Urban Agenda will be a practical example of a successful, alternative form of governance, or that the focus on better as opposed to new regulation is a convenient way for member states to secure their sovereignty.

1.1.3 JPI Urban Europe

In 2008, the Commission created joint programming to maximize the effectiveness of public R&D funds. Herewith, member states research’s efforts are bundled with partnerships. These partnerships are based on shared visions and Strategic Research Agendas to invent solutions to common European challenges.17 Joint programming aims to reduce fragmentation in research and ensure the quality of R&D projects, by letting member states voluntarily cooperate in line with their national interests. As a result, they achieve outcomes on a larger scale which can be compared and contrasted to each other.18

JPI Urban Europe is an example of such an initiative. Set up in 2010, it seeks to host coordinated intra- and interdisciplinary research to create appealing and sustainable European urban areas. The Strategic Research Agenda outlines the long-term strategy, the research priorities and the implementation plan for 2015-2020, and was developed by scientists, funding agencies, cities, businesses, industry and civil societies from different regions.19 JPI Urban Europe’s goal is to:

 Enhance the capacities and knowledge on transition towards more sustainable, resilient, and liveable urban developments

 Reduce the fragmentation in funding, research and urban development to build critical mass to realise urban transition

17_{European Commission, ‘What is Joint Programming?’,}

http://ec.europa.eu/research/era/what-joint-programming_en.html, accessed 13 June 2016.

18_{JPI Urban Europe, ‘Introduction JPI UE’,}_{http://jpi-urbaneurope.eu/about/intro/}_{, accessed 6 January 2017.} 19_Ibid.

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 Increase the profile of European urban science, technology and innovation on the global stage20

In January 2017, JPI Urban Europe had 13 members; Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Slovenia, Sweden and the United Kingdom, with Latvia, Poland, Portugal, Romania, Spain, Turkey and the European Commission merely observing. More countries participate in specific activities.21

The PARENT project, which will be discussed in chapter three, was approved by JPI Urban Europe, under the call from the ENSCC (ERA-NET Cofund Smart Cities and Communities).

1.2. Energy policy

1.2.1 The European Energy Union and long-term strategies

The formal foundation of the ECSC in 1951, being the predecessor of the EEC and the EU, was predominantly perceived as a political move to take away Western Germany’s ability to wage war. This organization marked the beginning of a European wide cooperation in the energy sector, only later on obtaining a more mandatory character. With Jean-Claude Juncker becoming the President of the Commission in 2014 it received renewed attention:

‘As a second priority, I want to reform and reorganise Europe’s energy policy in a

new European Energy Union. We need to pool our resources, combine our

infrastructures and unite our negotiating power vis-à-vis third countries. We need to diversify our energy sources, and reduce the energy dependency of several of our Member States’.22

The EU is highly dependent on energy imports and consumes one fifth of the available energy worldwide. Half of this is imported, which amounts to 350 billion Euros per year.23 Moreover, the EU does not have not a lot of reserves.24 Consequently, securing the energy supply is used to justify the EU Energy Strategy, which is underpinned by three objectives;

20_{JPI Urban Europe, ‘Mission & Vision’,}_{http://jpi-urbaneurope.eu/mission-vision/}_{, accessed 6 January 2017.} 21_{JPI Urban Europe, ‘Introduction JPI UE’.}

22_{Jean-Claude Juncker, ‘MY PRIORITIES’,}_{http://juncker.epp.eu/my-priorities}_{, accessed 16 June 2016.} 23_{European Commission, ‘Energy Strategy’,}_{https://ec.europa.eu/energy/en/topics/energy-strategy}_{, accessed 15}

June 2016.

24_{European Commission, ‘Energy’,}_{https://ec.europa.eu/energy/sites/ener/files/documents/energy.pdf}_{, accessed}

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security, competitiveness and sustainability. In short, in Europe the energy supply needs to be reliable, the energy market competitive and energy consumption sustainable.25

According to the Commission, a European Energy Union is the most appropriate course of action. The framework through which these objectives can be realized underscores the importance of defragmenting national energy markets. Connecting the electricity grids of member states and allowing the free movement of energy are conditions to do so, introducing among others a lower risk on blackouts and a reduced demand for new power stations.26 To that end, the Council requested them to strive for an interconnection of at least 10% by 2010 in relation to their electricity production capacity, which is now known as the electricity interconnection target.27

The idea of a single European energy market gained momentum when the Commission adopted ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’ on 25 February 2015.28_{This momentum can be traced back to the content of} the Investment Plan for Europe in 2016, when 24 projects directed at the energy sector comprised 29% of the available funding.29 Each year, the State of the Energy Union is presented, wherein Commission reports and initiatives are combined to analyse the progress made and to determine where there is room for improvement.30

The Energy Union is made up of five highly interlinked policy areas strengthening each other; supply security, a fully-integrated internal energy market, energy efficiency, climate action – emission reduction and research and innovation.31_{The EU has ambitions for 2020,} 2030 and 2050 to effectuate a long-term impact with consistent policy, addressing sensitive topics such as growing scarcity of fossil fuels, pollution and climate change.

The 2020 Energy Strategy formulated three targets for 2020; lowering greenhouse gas emissions by 20%, raising the percentage of renewable energy consumption to 20% and achieving 20% energy savings. For 2030, these targets are fixed at 40%, 27% and 27%,

25_{European Commission, ‘Energy Strategy’.}

26_{European Commission, ‘Connecting power markets to deliver security of supply, market integration and the}

large-scale uptake of renewables’, http://europa.eu/rapid/press-release_MEMO-15-4486_en.htm, accessed 16 June 2016.

27_Ibid.

28_{European Commission, ‘State of the Energy Union – questions and answers’,}

http://europa.eu/rapid/press-release_MEMO-15-6106_en.htm, accessed 15 June 2016.

29_{European Union, ‘The Investment Plan for Europe and Energy: making the Energy Union a reality’,}

http://europa.eu/rapid/press-release_MEMO-16-2195_en.htm, accessed 16 June 2016.

30_{European Commission, ‘State of the Energy Union – questions and answers’.}

31_{European Commission, ‘Energy Union and Climate’,}

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respectively, with an increased focus on reforming the EU ETS and interconnecting the electricity grids of member states.32_{Moreover, member states must bring about 10% renewable} energy in their transport sector, but they should always aim to exceed.33_{This applies to all} targets, which serve the objective for 2050 to reduce greenhouse gas emissions by 80-95% compared to 1990 levels.34

While the Commission is convinced that its energy and climate policy is able to achieve a more sustainable future, critical comments have been directed at both. For example, the cost-benefit analysis of upholding Europe 2020 turns out to be far from positive.35 In other words, costs related to climate change are not nearly as high as the financial resources that have to be budgeted for lowering greenhouse gas emissions.

This can lead to discussions between member states on how to share the costs, which some are not able to carry since they rely heavily on fossil fuels. The fear for political backlash by taking unpopular measures, such as closing down coal-mines in the case of Ewa Kopacz, the former Prime Minister of Poland, demonstrates the burden is not solely of financial nature.36

Furthermore, it is widely acknowledged that renewable energy sources are not as reliable as traditional energy sources, besides requiring a great deal of investments. Nevertheless, the EU greatly promotes their production, distribution and consumption, while pursuing energy security at the same time.

1.2.2 The Energy Efficiency Directive

The Energy Efficiency Directive, officially called Directive 2012/27/EU, was adopted in 2012 and required member states to transpose its content into national law by 5 June 2014. Developed chiefly in an effort to reach the target of increasing energy efficiency by 20% (compared to 1990 levels) of the 2020 Energy Strategy, the production, distribution and consumption stages of the energy chain were addressed.37 This way European citizens are able to lower their energy bill and reduce their carbon footprint.

32_{European Commission, ‘2030 Energy Strategy’,}

https://ec.europa.eu/energy/en/topics/energy-strategy/2030-energy-strategy, accessed 16 June 2016.

33_{European Commission, ‘2020 Energy Strategy’,}

34_{European Commission, ‘2050 Energy strategy’,}

35_{Richard S.J. Tol, ‘A cost-benefit analysis of the EU 20/20/20 Package’, Energy Policy, no. – (2012), p. 294.} 36_{Barbara Lewis, ‘EU leaders seek climate deal, but are divided over costs’,}

http://www.reuters.com/article/us-eu-summit-climatechange-policy-idUSKCN0IB2QE20141022, accessed 21 June 2016.

37_{European Commission, ‘Energy Efficiency’,}_{https://ec.europa.eu/energy/en/topics/energy-efficiency}_{, accessed}

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Key measures obligate member states to; stimulate behavioural change among their citizens by for example providing them with smart meters offering real-time data where technically possible, financially reasonable and proportionate, public bodies to set the example by renovating their buildings and purchasing only those (also goes for services and products) with high energy-efficiency performance and utilities to help their customers to conserve a predetermined amount of energy as laid down in energy efficiency obligation schemes.38 Member states reserve the right to hand out penalties in case of non-compliance as long as they are effective, proportionate and dissuasive.

The Energy Efficiency Directive was and remains a milestone in the history of the European energy market. Not only member states, but also electric utilities were hereby given responsibility to serve customers with more than the selling of energy, besides being incorporated into the ‘game for efficiency’.39 This rests on the firm belief of the EU that European citizens must be placed central in the Energy Union, which is consolidated in a three-pillar strategy; inform consumers so they can save money, provide consumers with more options when they participate in energy markets and secure the highest level of consumer protection.40

1.2.3 The Energy Performance of Buildings Directive

Directive 2010/31/EU, also referred to as the Energy Performance of Buildings Directive, was implemented in 2010 and replaced Directive 2002/91/EC. It aims to improve the energy performance of buildings in the EU, taking into consideration outdoor climatic and local conditions, besides indoor climatic requirements and cost-effectiveness.41

For this purpose, the Energy Performance of Buildings Directive introduced several requirements for member states. They needed to establish minimum performance requirements for new buildings and create lists of financial measures to increase the energy efficiency of buildings. National energy performance certifications were made mandatory for all advertisements concerning the sale or rental of residential and commercial buildings.

38_{European Parliament and Council of the European Union, ‘DIRECTIVE 2012/27/EU OF THE EUROPEAN}

PARLIAMENT AND OF THE COUNCIL,

http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1399375464230&uri=CELEX:32012L0027, accessed 13 June 2016.

39_{Georgina Crowhurst and Gareth Phillips, ‘The Energy Efficiency Directive’, Environmental Law Review, no.}

4 (2012), p. 300.

40_{European Commission, ‘Commission proposes ‘new deal’ for energy consumers, redesign of electricity}

market and revision of energy label for more clarity’, https://ec.europa.eu/energy/en/news/new-electricity-market-consumers, accessed 14 June 2016.

41_{European Parliament and Council of the European Union, ‘DIRECTIVE 2012/27/EU OF THE EUROPEAN}

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Additionally, all new buildings ought to be practically energy neutral by 31 December 2020 and public buildings by 31 December 2018.42

On 30 November 2016, as part of a package to further foster a ‘consumer centred clean energy transition’, the Commission proposed to update the Energy Performance of Buildings Directive.43 The suggested amendments among others included the incorporation of long-term renovation strategies, clearer requirements for feasibility studies before buildings are commissioned and increasing the data availability of buildings for market actors by collecting actual energy consumption data. Furthermore, a 30% binding EU energy efficiency target for 2030 was put forward.44

1.2.4 Smart meters

According to the Commission, smart meters will be key in executing the 2020 Energy Strategy by empowering European citizens. Illustrative here is the New Deal for Energy Consumers, which is a materialization of the ambition to have a European Energy Union and focuses on the energy consumption process:

‘with citizens at its core, where citizens take ownership of the energy transition, benefit from new technologies to reduce their bills, participate actively in the market, and where vulnerable consumers are protected’.45

As clearly expressed in the Energy Efficiency Directive, the Commission wants to replace at least 80% of traditional electricity meters with smart meters in the EU by 2020, provided that the transition is cost-effective.46 A costly venture, but the idea is that it will pay itself off in the form of higher energy savings. But what exactly are smart meters, and why is the Commission so devoted to widely implement them in member states?

42_{European Commission, ‘Buildings’,}_{https://ec.europa.eu/energy/en/topics/energy-efficiency/buildings}_,

accessed 25 December 2016.

43_{European Commission, ‘Commission proposes new rules for consumer centred clean energy transition’,}

https://ec.europa.eu/energy/en/news/commission-proposes-new-rules-consumer-centred-clean-energy-transition, accessed 25 December 2016.

44_{European Commission, ‘Clean energy for all’,}

https://ec.europa.eu/energy/sites/ener/files/documents/technical_memo_energyefficiency.pdf, accessed 25 December 2016.

45_{European Commission, ‘Delivering a New Deal for Energy Consumers’,}

https://ec.europa.eu/energy/sites/ener/files/documents/1_EN_ACT_part1_v8.pdf, accessed 17 June 2016.

46_{European Commission, ‘Smart grids and meters’,}

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A smart meter is a household meter allowing two-way communication, and is often viewed as the first step of developing a smarter grid.47_{The Commission defines it as:}

‘[…] an electronic system that can measure energy consumption and production, adding more information than a conventional meter, and can transmit and receive data using a form of electronic communication’.48

Figure 2shows what smart meters generally look like, a distinguishing feature being the LCD display. They can be by accompanied by special products and services offering detailed information about the volume and structure of daily consumption patterns.49

Figure 2.An example of a smart meter50

‘Toon’ is an example of such, and was developed by the Dutch electric utility Eneco. It is a smart thermostat allowing consumers to regulate the temperature of their house (also when

47_{Sabine Erlinghagen, Bill Lichensteiger and Jochen Markard, ‘Smart meter communication standards in Europe}

– a comparison’, Renewable and Sustainable Energy Reviews, no. – (2015), p. 1250.

48_{European Commission, ‘Commission Recommendation of 10 October 2014 on the Data Protection Impact}

Assessment Template for Smart Grid and Smart Metering Systems’, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.300.01.0063.01.ENG, accessed 3 December 2016.

49_{Slimmemeters.nl, ‘Wat is een slimme meter?’,}_{http://www.slimmemeters.nl/wat-is-een-slimme-meter-2/}_,

accessed 2 December 2016.

50_Source:_{http://www.networkedenergy.com/uploads/products_messages/ANSI-smart-meter-features.png}_,

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not at home) and gives them an in-depth insight in their energy consumption.51_{There is also} the option to connect home appliances with smart plugs and thereby remotely control them. A matching application accessible from several devices is used as the information and control system. Even though Toon does not require a smart meter to function, having one significantly improves its overall performance.

However, there is little incentive for consumers to install smart plugs, since they require a considerable investment with slow return. Nonintrusive load monitoring or nonintrusive appliance load monitoring (sometimes referred to as load disaggregation) represents a viable alternative. The analysis of changing voltages and currents from a single metering point allows for the detection of individual loads and, therefore, home appliances. Accordingly, the need for physical metering infrastructure is reduced.52

Smappee, a smart and independent energy monitor designed by a Belgian company, can be clipped on the fuse box and uses nonintrusive load monitoring to identify the unique ‘electric signature’ of home appliances.53 This way it becomes possible to identify idle energy consumers in the form of, for example, a computer or television in sleep mode. The corresponding application displays an overview of the accompanying costs. Additionally, smart plugs can be installed to control home appliances from a distance.

Toon and Smappee are two examples of how special products and services attempt to lower urban household energy consumption, also demonstrating that smart meters are not always required to do so. There are many more available options.

Several benefits are associated with smart meters. Above all, this technology can assist consumers in saving money and reducing their carbon footprint. They are able to read their real-time consumption and enquire into price levels that spike during real-times of high demand, to subsequently change their behaviour based on this information. Switching between energy suppliers becomes easier, stimulating the competition in what is generally considered to be an inelastic market. Furthermore, electric utilities can decrease labour costs as physical meter readings by employees are no longer necessary.

51_{Eneco, ‘Toon® thermostaat’,}_{https://www.eneco.nl/toon-thermostaat/}_{, accessed 3 December 2016.} 52_{E.T. Mayhorn et al., ‘Characteristics and Performance of Existing Load Disaggregation Technologies’,}

http://www.pnnl.gov/main/publications/external/technical_reports/PNNL-24230.pdf, accessed 27 December 2016.

53_{Smappee, ‘Ontdek ‘s werelds slimste energiemonitor’,}_{http://www.smappee.com/nl/energiemonitor/}_{, accessed}

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Indirect benefits can be obtained when home appliances, such as air-conditioning, are able to respond to smart meter signals in this case to avoid unnecessary cooling. As a result, non-renewable energy production can be scaled down for there is a lower general demand for energy. Additionally, smart meters can ameliorate operational efficiency and reliability, besides allowing proactive maintenance.54 Figure 3 gives an overview of what consumers can gain from smart meters, according to the JRC.

Figure 3. The possible ways smart meters can benefits consumers, as identified by the JRC55

Yet, there are concerns that need to be addressed. The most often cited subject in this regard is privacy and security. Smart meters generate huge amounts of personal data, which can be misused if it falls into the wrong hands. Electric utilities are able to closely monitor their customers and exploit their data for commercial purposes. With a growing interconnectivity and complexity, hackers potentially can cut of power in urban areas from a distance to create enormous chaos.56_{A summary of these concerns can be found in figure 4.}

54_{Tamar Krishnamurti et al., ‘Preparing for smart grid technologies: A behavioral decision research approach to}

understanding consumer expectations about smart meters’, Energy Policy, no. – (2012), p. 791.

55_{Catalin Felix Covrig et al., ‘Smart Grid Projects Outlook 2014’,}

http://ses.jrc.ec.europa.eu/sites/ses.jrc.ec.europa.eu/files/u24/2014/report/ld-na-26609-en-n_smart_grid_projects_outlook_2014_-_online.pdf, accessed 25 September 2016.

56_{Tamar Krishnamurti et al., ‘Preparing for smart grid technologies: A behavioral decision research approach to}

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Figure 4. Overview of privacy and security concerns related to smart meters57

Related to this is the need for a EU-wide consensus on requirements for smart meters and associated technology, to guarantee cross-border interoperability and maximize consumer’s benefits at minimum risk. With this in mind, the Commission created the Smart Grids Task Force in 2009, consisting of five expert groups each targeting a different issue:

 Expert group 1 – Smart grid standards

 Expert group 2 – Regulatory recommendations for privacy, data protection and cyber-security in the smart grid environment

 Expert group 3 – Regulatory recommendations for smart grid deployment  Expert group 4 – Smart grid infrastructure deployment

 Expert group 5 – Implementation of smart grid industrial policy58

On a side note, only one consumer organization was included in the Smart Grids Task Force, severely limiting their ability to influence the policy making.59 The underlying idea being that policy makers indirectly represent consumer’s interests sufficiently.

57_{Eoghan McKenna, Ian Richardson and Murray Thomson, ‘Smart meter data: Balancing consumer privacy}

concerns with legitimate applications’, Energy Policy, no. – (2012), p. 808.

58_{European Commission, ‘Smart Grids Task Force’,}

https://ec.europa.eu/energy/en/topics/markets-and-consumers/smart-grids-and-meters/smart-grids-task-force, accessed 3 October 2016.

59_{Lucia Vesnić-Alujević, ‘Knowledge assessment and citizen engagement: Smart grids and wearable sensors’,}

http://bookshop.europa.eu/en/knowledge-assessment-and-citizen-engagement-pbKJNA27725/, accessed 21 October 2016.

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The CEN, the CENELEC and the ETSI develop voluntary standards at the European level to ensure a harmonized European Single Market. In 2009, they received mandate M/441 from the Commission to standardize smart meter functionalities for electric, gas, heat and water applications in Europe, drawing on the work conducted by the first expert group.60

The Commission issues standardisation requests or mandates directed at European standardisation organisations. The goal is to create European standards or standardisation deliverables based on input from stakeholders such as industry, businesses and public authorities, ultimately to be used for the development of policy. These remain voluntary until European standards are officially adopted. Subsequently, national standardisation bodies should convert them into identical national standards and abolish the ones causing conflict.61

The SM-CG was jointly established to give advice on how to execute mandate M/441. In December 2012, they published the ‘Introduction and Guide to the work undertaken under the M/441 mandate’ in an attempt to summarize the work carried out between 2009 and 2012.62 This report remarked that there are six functionalities that are essential for smart meters:

 Remote reading of metrological register(s) and provision to designated market organisations

 Two-way communication between the metering system and designated market organisation(s)

 To support advanced tariffing and payment systems

 To allow remote disablement and enablement of supply and flow/power limitation  To provide secure communication enabling the smart meter to export metrological data

for display and potential analysis to the end consumer or a third party designated by the end consumer

 To provide via web portal/gateway to an in-home/building display or auxiliary equipment63

Furthermore, the SM-CG recognised the importance of data protection and produced three reports in 2013 and 2014. These reports mainly addressed definitions for privacy and

60_{CENELEC, ‘Smart metering’,}

https://www.cenelec.eu/aboutcenelec/whatwedo/technologysectors/smartmetering.html, accessed 19 June 2016.

61_{European Commission, ‘Standardisation requests – mandates’,}

https://ec.europa.eu/growth/single-market/european-standards/requests_en, accessed 5 January 2017.

62_{CENELEC, ‘Smart metering’.}

63_{CEN, CENELEC and ETSI, ‘Introduction and Guide to the work undertaken under the M/441 mandate’,}

ftp://ftp.cencenelec.eu/EN/EuropeanStandardization/HotTopics/SmartMeters/CENCLCETSI_SMCG_end2012.p df, accessed 20 June 2016.

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security necessities and different smart meter requirements in member states, besides comparing multiple approaches on security certification schemes and providing recommendations.64_{The SM-CG still delivers input for developing and maintaining smart} meter standards, even though mandate M/441 has been completed.

In March 2012, the Commission issued a recommendation ‘on preparations for the roll-out of smart metering systems’ (2012/148/EU), wherein among others the common minimum smart meter functionalities for customers and metering operators, the commercial aspects of supplying energy and appropriate security and data protection measures were outlined.65 However, two years later member states still had not achieved consensus on these requirements, with the recommendation being of legally non-binding nature.66

64_{CENELEC, ‘Smart metering’.}

65_{European Commission, ‘COMMISSION RECOMMENDATION of 9 March 2012 on preparations for the}

roll-out of smart metering systems’, http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32012H0148, accessed 30 September 2016.

66_{Joint Research Centre, ‘Smart Metering deployment in the EU’,}

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2. Infrastructure, data and behaviour

2.1. Infrastructure

The Commission is ambitious when it comes to the smart meter roll-out. As noted before, the goal is to provide at least 80% of European households and companies with a smart meter by 2020. For this purpose, mandate M/441 was issued and the SM-CG was established to guide the process. An important agenda item they addressed was the standardization of smart meters, which constitutes work in progress, but is deemed necessary to profit from this technology. In November 2016, the Commission proposed to give every consumer the right to request a smart meter with a minimum set of functionalities.67

However, it is not a given that member states are willing to implement the required measures to improve their energy infrastructure. This refers to not only to the physical component, but to the regulatory component as well. If member states have different visions on how smart meters and corresponding technology should function, technical and commercial interoperability will be difficult. Therefore, the rate of success mainly depends on their willingness to cooperate.68

The Science and Policy report ‘Smart Grid Projects Outlook 2014’ from the JRC concluded that sixteen member states (still including the United Kingdom) support the roll-out based on a cost-benefit analysis as described in ‘Guidelines for Cost Benefit Analysis of Smart Metering Deployment’. Finland, Italy and Sweden have already completed the process, and Germany, Latvia and Slovakia have opted for a selective roll-out aimed at a specific group of consumers. Belgium, Czech Republic and Lithuania have decided not to proceed on a large scale for now, because their cost-benefit analyses proved to be negative. Portugal wants to re-evaluate theirs, based on new data and the current economic situation. Bulgaria, Cyprus, Hungary and Slovenia did not conduct cost-benefit analyses and lack national roll-out plans.69 Figure 5 gives an overview of these outcomes.

67_{European Commission, ‘DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL’,}

http://ec.europa.eu/energy/sites/ener/files/documents/1_en_act_part1_v7_864.pdf, accessed 27 December 2016.

68_{Joint Research Centre, ‘Smart Metering deployment in the EU’.} 69_{Catalin Felix Covrig et al., ‘Smart Grid Projects Outlook 2014’.}

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Figure 5. Overview of the outcomes of the cost-benefit analysis in different member states70

It should be noted that not only the methodology, but also the communication infrastructure, smart meter functionalities and local conditions varied considerably per member state, which partially contributed to the diverse results of the cost per metering point.71

Some difficulties remain, even though most member states favour the roll-out. The minimum smart meter functionalities as suggested by the Commission were fully complied with in no more than eight member states. The functionality determining how often consumption data can be updated and made available to consumers or with their consent to third parties, proved to be challenging.72 Furthermore, guidelines are in most cases non-existent on the

70_{Catalin Felix Covrig et al., ‘Smart Grid Projects Outlook 2014’.} 71_Ibid.

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national level, leaving those in charge of the roll-out with the responsibility to decide on this matter.

Nevertheless, the Steering Group of the SM-CG concluded in 2015 that progress has been made on following the recommendation of the Commission on smart meter functionalities. The risk for a lack of interoperability remains, which so far was mainly focused on ensuring that smart meter components from different producers are able to operate together.73 Also, R&D investments are rising steeply and the expectation is that by 2020, 72% of all consumers in the EU will have a smart meter for electricity. This falls 8% short of the goal pursued.74

In sum, there is a lack of harmonization as the EU deters from defining obligatory features for smart meters, and unclarity remains in this respect. The absence of superior smart meter standards increases the complexity of this endeavour.75 Additionally, the negative outcomes of several member states’ cost-benefit analyses causes the roll-out to take place at different speeds in Europe.

2.2. Data

The protest against the initial design of the Smart Meter Bill in the Netherlands, which is discussed in more detail in section 2.4., demonstrated once more that privacy and security concerns constitute a major hurdle for the successful implementation of smart meters in the EU. Consumers are afraid they might be monitored not only by companies with commercial interests, but also family members and friends. The data that smart meters collect plays a crucial role here and is essential to get a better understanding of, because it is the main point of concern, but at the same time determines to a large degree the rate of achieved energy savings.76

In what way and how often data is processed gives an insight to whether these concerns are justified. The time resolution, by defining how often a smart meter is read, is critical in this regard. Eoghan McKenna, Ian Richardson and Murray Thomson explain in a concise way what the consequences are of increasing its intensity:

73_{No author, ‘Minutes of the 20th meeting of the Steering Committee of the Smart Grids Task Force’,}

https://ec.europa.eu/energy/en/topics/markets-and-consumers/smart-grids-and-meters/smart-grids-task-force, accessed 4 December.

74_{Joint Research Centre, ‘Smart Metering deployment in the EU’.}

75_{Sabine Erlinghagen, Bill Lichtensteiger and Jochen Markard, ‘Smart meter communication standards in}

Europe – a comparison’, p. 1259.

76_{Kees Vringer and Ton Dassen, ‘Slimme meter, uitgelezen energie(k)?’,}

http://www.pbl.nl/sites/default/files/cms/publicaties/PBL-2016-de-slimme-meter-uitgelezen-energiek-2122.pdf, accessed 25 November 2016.

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‘For example, quarterly or monthly readings of cumulative energy consumption are unlikely to reveal anything more than the dwelling’s mean energy use and an indication of whether or not it was occupied – a long holiday for example could likely be identified. As the reading intervals are reduced, however, more information could be ascertained. Daily recorded data for example could reveal that residents went away for the weekend or even that they go away every weekend. As the data interval is further reduced, a ‘load profile’ is revealed, and this can then be used to observe the characteristic power consumption patterns associated with the usage of individual appliances and other domestic loads’.77

Even though the time resolution needs to be relatively high to pose a risk of exposure, other factors need to be taken into account. Combining consumption data with data from other sources, such as geo-location and internet data, significantly heightens this risk.78 A realistic future scenario, as increasingly more data generating devices are connected to the internet. This development is also referred to as the ‘Internet of Things’.

The time resolution also defines the amount of data collected. Figure 6 gives an indication of how much data one million smart meters would gather yearly with different collection frequencies.

Figure 6. The amount of data annually collected by one million metering devices79

Smart meters can give local and remote feedback. The data does not leave the home with the former, whereas with the latter it does. Even though remote feedback is riskier with a view

concerns with legitimate applications’, p. 808.

78_{European Commission, ‘Commission Recommendation of 10 October 2014 on the Data Protection Impact}

Assessment Template for Smart Grid and Smart Metering Systems’.

79_{Kaile Zhou, Chao Fu and Shanlin Yang, ‘Big data driven smart energy management: From big data to big}

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to potential data exposures, it allows for more extensive data analysis and presentation possibilities.80

The Commission aims to address these privacy and security concerns. To this end, the Data Protection Directive (95/46/EC) was implemented in October 1995. However, with societies rapidly becoming more complex due to the invention of new technologies, the content of this directive no longer sufficed less than two decades after its implementation. The Commission responded and proposed an extensive reform of the data protection rules in January 2012. Regulation (EU) 2016/679 entered into force on 24 May 2016 and repealed the Data Protection Directive.81 This reform is a key enabler of the Digital Single Market, with the aim to put European citizens back in charge over their personal data and to simplify the regulatory framework for companies. Accordingly, both should be able to profit from the digital economy.82

Regulation (EU) 2016/679 provides a list on how to lawfully process data:

 (a) the data subject has given consent to the processing of his or her personal data for one or more specific purposes

 (b) processing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract

 (c) processing is necessary for compliance with a legal obligation to which the controller is subject

 (d) processing is necessary in order to protect the vital interests of the data subject or of another natural person

 (e) processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller

 (f) processing is necessary for the purposes of the legitimate interests pursued by the controller or by a third party, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of

81_{European Commission, ‘Protection of personal data’,}_{http://ec.europa.eu/justice/data-protection/}_{, accessed 3}

October 2016.

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personal data, in particular where the data subject is a child (does not apply to processing carried out by public authorities in the performance of their tasks)83

However, member states are free to regulate the smart meter roll-out according to their opinion on what is tenable and socially responsible. As a result, they each have different legislation determining, for example, the maximum time resolution.

2.3. Behaviour

According to a study by João Pedro Gouveia and Júlia Seixas, which had the goal to identify, understand and explain annual energy consumption in the Portuguese city Évora, three major groups of energy consumption determinants can be differentiated. These groups are the physical characteristics of buildings, in particular year of construction and total floor area, the presence of heating/cooling devices (including fireplaces) and the profiles of residents, closely related to the number of residents and their monthly income. Thus, social and cultural factors influence behaviour and are essential to understand, for this allows the categorization of consumers on the basis of their motivations for saving energy.

In the case of Évora, four different energy consumption patterns were established, referring to the shape of the graph were the data to be processed; an U shape (soft and sharp), a W shape and a flat shape.84 The U shape was identified at 77% of the sampled houses and illustrated the significant consumption difference between winter and other seasons.

The seasons, which diverge considerably among member states, influence consumer’s behaviour to a large degree. Whereas in Portugal winters are mild, in Scandinavian countries such as Sweden and Finland they can be long-lasting with temperatures well below zero. This is reflected in the households electricity consumption per capita, as shown in figure 7.

83_{European Commission, ‘Protection of personal data’.}

84_{João Pedro Gouveia and Júlia Seixas, ‘Unraveling electricity consumption profiles in households through}

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Figure 7. Households consumption of electricity per capita, MWh per capita (2014)85

On average, European citizens consumed 1.5 MWh per capita in 2014. The Swedes and Finns used about three times more electricity than the Portuguese. Although not a member of the EU, Norway exceeds the parameters of the bar diagram with 7.3 MWh per capita. As demonstrated before, the majority thereof can be attributed to space heating. Furthermore, consumption is also closely linked to the physical characteristics of an area. For example, in dense cities the need for air-conditioning is reduced due to narrow streets with buildings that provide each other with shade.86

Accordingly, member states are bound to various climatic, geological and cultural characteristics when they attempt to increase their energy efficiency by installing smart meters on a large scale. There is not a model or method which guarantees consumers to reassess their lifestyles. Developing such takes time and effort and might never be achieved, because it is

85_{Eurostat, ‘File:Electricity-consumption-of-households-per-capita-2014.png’,}

http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Electricity-consumption-of-households-per-capita-2014.png, accessed 5 November 2016.

86_{Julie Ann Futcher, Tristan Kershaw and Gerald Mills, ‘Urban form and function as building performance}

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complicated to design a product or service taking into account all these characteristics. The PARENT project seeks address this problem by gaining a better understanding of what drives behavioural change in urban household energy consumption.

However, there are also aspects which are less defined by country-specific circumstances and apply more broadly to consumers in the EU.

The notion that every human acts rational in every possible situation and purely out of self-interest, (a concept referred to as the ‘homo economicus’) is no longer tenable. A considerable amount of research has pointed out there are other underlying factors that affect behaviour, as for example explored by Dan Ariely in Predictably Irrational: The Hidden Forces That Shape

Our Decisions. These factors prevent humans from constantly addressing opportunities to

maximize their gains and cause irrational behaviour. This finding is highly relevant for the appropriate approach to be taken by the Commission for the smart meter roll-out.

The non-existence of the homo economicus implies that even when all European households and companies are equipped with smart meters in the future, without the further development and application of ideas on how to change their behaviour, there is a chance that energy consumption in the EU will not be reduced as a result. This is clearly illustrated by a statement of an industry developer in an interview conducted by members of the JRC: ‘The first week I had the smart meter, I looked at the app and saw I had used the same amount of energy as yesterday, and after a couple of weeks I did not look at the app anymore [...]’.87

If this undesired outcome is to be prevented, the roll-out should also address the question in what way to stimulate European consumers to change their consumption patterns, within the existing legal and ethical limits. Already many research projects in Europe are aimed at collecting data to develop an application accessible by different electrical devices, such as computers, tablets and smartphones, with the goal to engage consumers. This obviously failed in the case of the interviewee, which can be partly attributed to the current limited evidence base for behaviour related to energy consumption.

Linda Steg, professor of behavioural and social sciences at the University of Groningen, confirmed that the homo economicus does not exist, for she stated that merely providing

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knowledge for producing behavioural change is not sufficient. This knowledge needs to match value and beliefs of the target group for it is rejected otherwise.88

It is essential to realize that energy consumption generally is not an individual, but social and community-based process wherein for example family, colleagues and neighbours participate.89 Benchmarking behaviour, by for example giving neighbours the opportunity to compare their consumption with each other, has proven to be an effective non-price incentive to lower energy usage.90 OPOWER, an American company designing software for utilities, was able to consistently reduce consumption between 1% and 3% by doing so.91

Thus, peer pressure seems to be an useful tool to stimulate behavioural change, because people generally take into account the decisions of others when they are making their own.92 Gamification, a ‘[…] process of enhancing services with (motivational) affordances in order to invoke gameful experiences and further behavioural outcomes’, is a relatively young tool that has also proven to work in this regard.93 Non-functional motives, such as enjoyment and entertainment, often have a greater effect than merely the practical utility function of a product.94

The Science and Policy report ‘The social dimension of Smart Grids‘ of the JRC identified three motivation factors that are most frequently used by smart grid projects; environmental concerns, reduction of/control over electricity bills and better comfort, respectively. A combination of the first two is deemed an effective way of achieving the pursued outcome.

Furthermore, establishing consumer’s confidence in the party responsible (often utilities or the network operators) for the functioning of smart meters plays a critical role as well, since the former are often not familiar with the technology and overestimate its personal impact. If this does not happen, their perception of risks and benefits associated with its implementation

88_{Anna Maria Mengolini and Julija Vasiljevska, ‘The social dimension of Smart Grids: Consumer, community,}

society’, https://bookshop.europa.eu/en/the-social-dimension-of-smart-grids-pbLDNA26161/, accessed 22 October 2016.

89_{Tom Hargreaves, Michael Nye and Jacquelin Burgess, ‘Making energy visible: A qualitative field study of}

how householders interact with feedback from smart energy monitors’, Energy Policy, no. 10 (2010), p. 6118.

90_{Hunt Allcott,’Social norms and energy conservation’, Journal of Public Economics, no. 9 (2011), p. 1093.} 91_{Eoghan McKenna, Ian Richardson and Murray Thomson, ‘Smart meter data: Balancing consumer privacy}

92_{Patrick Planing, ‘Business Model Innovation in a Circular Economy Reasons for Non-Acceptance of Circular}

Business Models’, Open Journal of Business Model Innovation, no. - (in press), pp. 8-9.

93_{Juho Hamari, Jonna Koivisto and Harri Sarsa, ‘Does Gamification Work? – A Literature Review of Empirical}

Studies on Gamification’, Proceedings of the Annual Hawaii International Conference on System Sciences, p. 3029.

94_{Patrick Planing, ‘Business Model Innovation in a Circular Economy Reasons for Non-Acceptance of Circular}

The power of policy transfer in the European Union: exchanging knowledge on urban household energy consumption