Other legal requirements

Measures subsumed here under “Other legal requirements”, primarily aim at reducing the energy consumption of appliances. After having received feed-back from the energy bill or the energy manager, end-users might, first, try to change energy consumption habits, like switching off the TV completely instead of only using the stand-by mode or washing only if the machine is full. Another way to save energy is the exchange of energy-wasting appliances, e.g. buying a new energy-efficient refrigerator with the most energy-efficient class of the mandatory or voluntary energy label. If such purchases increase due to these other legal requirements, market transformation effects are sustained.

Worldwide implementation status
In recent decades, governments and parliaments have increasingly recognised the relevance of individual metering, informative billing, and energy managers, and have created the respective legal requirements.
For example, in the European Union the Member States are working together for the roll-out of smart meters to equip at least 80% of users with smart meters by 2020. Many countries , especially in North America and Europe have thus legally mandated energy companies to install these meters for all or some of their customers. Countries like China and Japan have an increasing number of smart metering roll outs. In other countries major utilities are still in the early phases. According to Navigant Research (2013) worldwide shipment for the first half of 2013 reached more than 50 million (Navigant 2013).
However, feedback action based on the meter has rarely been added as a legal requirement.
Italy and Singapore are among the countries requiring energy managers for larger companies.

Governance level
Legislation on the installation of individual meters, informative billing, and the appointment of energy managers will usually best be passed at the national level but may also be promoted at the regional or local level. However, cost-effectiveness considerations can pose a limiting factor for managers and inspectors, both of which require proper training. Establishing curricula and training centres may be less costly if implemented at the regional or national level.

Related sectors

• residential: Relevant policies for this sector: individual metering, and smart meters
• services: Relevant policy for this sector: energy management

• Refrigerators and freezers
• Clothes Washers
• Clothes Dryers
• Kitchen stoves and ovens 
• Coffee machine
• Microwave
• Dishwasher
• Home Audio 
• Television
• Monitors
• Computer
• Office equipment (Copiers, Fax machines, Printer, Server etc.)
• Data centres
• Commercial Food Cooling Equipment
• Commercial Laundry equipment

The policy primary targets the user behaviour of end-users. This can concern any type of appliance.

Related target groups

• Investor: Investor-users of appliances are interested in reducing their energy costs. Individual meters are beneficial to them. Residential appliance owners are likely to react to informative bills, especially, if the bills include benchmark values that enable them to compare their consumption with other users. Likewise, the service sector is considered to react to recommendations of energy managers. Both kinds of actors can change their behaviour and/or exchange inefficient appliances with highly-efficient ones.
• User: Users of appliances are interested in reducing their energy costs. Individual meters are beneficial to end-users. Members of residential households are likely to react to informative bills, especially, if the bills include benchmark values that enable them to compare their consumption with other users. Likewise, the service sector is considered to react to recommendations of energy managers. Both kinds of actors can change their behaviour and/or exchange inefficient appliances with high-efficient ones.
• Energy agency: Depending on the governance structure and on the level of implementation, regional or national energy agencies can become points of information for the residential and service sector. Moreover, such agencies may also deploy lists of (not necessarily state-certified) energy inspectors.
• Energy consultant: Energy consultants are the most likely actors becoming energy managers or inspectors.
• Energy company: For the installation of individual meters, co-operation with energy companies is crucial. Because of their relation with end-users (e.g. building unit owners, tenants), such companies are best suited to informing clients about the legislation, costs incurred and potential cost savings.

Direct beneficiaries

• Installation contractor

  With regard to the installation of individual meters, installation contractors can benefit due to contracts and the resulting income and employment.

• Manufacturer

  Manufacturers of meters benefit from increased demand of such equipment.

• Investor

  Property owners or housing companies may benefit from investing in individual meters, which serve as an asset in contrast to non-individually metered homes.

• User

  Individual meters show end-users their monthly energy consumption habits and costs. Master meters disguise both these aspects. As owners become responsible for (and aware of) their own consumption, they have an incentive to change their behaviour utilising energy more efficiently, which, in turn, drives down costs. Energy managers and inspectors identify energy-inefficient conditions of service-sector actors, which can implement recommendations for a more efficient energy use.

Relevant barriers

• Knowledge and information barriers: End-users living in building units, where information on the individual energy consumption is not available, are less likely to use energy efficient appliances and to use appliances in an energy-efficient way. Individual meters address this knowledge gap and create an incentive to change end-user behaviour. Similarly, service sector end-users receiving feed-back from energy managers or inspectors will react to recommendations given in order to reduce energy consumption costs.
• Lack of interest and motivation in energy efficiency-improvement: The lack of interest in energy-efficiency improvements may be a result of master meters that accumulate consumption of an individual building. Individual meters as well as energy managers can increase the interest in energy-efficiency.

Relevant incentives

• Increased (re-sale) value of the property: Individual meters might be considered as an improvement of the building.
• Saved energy costs: Both requirements, the installation of individual meters and the appointment of energy managers/inspectors in the service sector, address electricity costs, in particular within the context of rising energy prices.
• Directly increasing earnings or profits for actors on the supply side: With metering and energy managers/inspectors end-users are aware of their energy consumption and might be motivated to replace an old inefficient device with new products.

• Feedback measures targeting user behaviour: The more detailed energy bills are, the greater the impact of sub-metering. For example: energy bills could include times of peak consumption during the week. Financial incentives to upgrade sub-meters with smart meters might increase the impact of the measure as feed-back possibilities through smart-meters are more comprehensive. Benchmarking with similar consumers and tips for energy-efficient user behaviour are essential to enable consumers to save energy based on the metering. Therefore, legal requirements for individual metering should be implemented in conjunction with feedback measures targeting user behaviour and the related provision of information. 
• Energy advice: After having become aware of their energy consumption, consumers might be interested in finding out, how they can change their behaviour. Energy agencies, energy companies, consumer organisations and (other) non-governmental organisations should promote behavioural changes through the provision of individual advice and information material.
• Mandatory comparative energy labelling: The exchange of energy-inefficient appliances might be considered by end-users as an option to save energy costs. Labels, such as the EU Energy Label, can help consumers with finding their ideal product.

• It is important that a workforce is trained to install individual meters and/or to manage the energy consumption of a company properly. Regarding the latter, education & training programmes or capacity building measures are especially essential so that energy managers and inspectors can provide companies with adequate information.
• Removal of subsidies on end-user energy prices: subsidies distort the price for energy. Thus, behavioural changes or the exchange of energy-inefficient equipment becomes less likely. 
• Financial incentives and Financing schemes: Incentivising the purchase of highly energy-efficient appliances can result in even more energy savings. Cost-sharing options might be considered for the installation of individual meters and of smart meters, in particular.

• Certification of qualified actors: State-certification of energy inspectors, in particular, has two advantages. End-users (in the service sector) are more likely to consider energy managers as trustworthy, which will result in less non-complying businesses. On the other hand, by establishing a certification system with key requirements for energy managers, the government can be convinced that the policy is implemented properly.
• Mandatory comparative energy labelling: Labels and other information tools can help energy managers to identify energy-efficient appliances.

The following pre-conditions are necessary to implement other legal requirements:
Agencies or other actors responsible for implementation
For the installation of individual meters, energy companies should guide the process instead of having end-users individually contract installers. Utility companies should develop a roll-out plan and submit reporting documents to the governmental actor that is going to supervise the policy (e.g. an energy agency).
Regarding energy managers, implementation is to be left to the organisations. However, in order to safeguard that the policy functions properly, it is necessary that governmental agencies establish criteria for those managers (e.g. participation in training courses).

Funding
Cost-sharing among various actors might be an option for the installation of meters. The building owner or occupier usually pays for the individual meter, directly or, more frequently, via the energy bill.
For the training and education (as well as certification) measures of energy managers, the government should allocate sufficient funds. Further costs for energy management activities can be funded by the companies alone or subsidised.

At first, all relevant stakeholders should be identified and a cost-benefit analysis should be carried out. For example, it needs to be clarified that smart meters can indeed be considered as more effective than ordinary meters because their ‘feedback’ is more comprehensive. This means a pre-study (including a cost-benefit analysis) should balance advantages and disadvantages of just installing individual meters against those of installing smart individual meters.
Companies, consumer organisations and governmental actors must agree on a funding scheme and discuss further policy measures necessary to achieve the greatest impact possible.
A pilot project may help proving that energy savings are going to be delivered.

Quantified target
Regarding individual meters, for the initial phase a precise target should be set (e.g. 75% of the population in a particular region has been equipped with individual meters). In terms of energy savings, metering systems and energy managers usually do not have a quantified target.

International co-operations
Policy makers can benefit from international co-operations that share the roll-out experiences of meters. Co-operations can be helpful for overcoming technical barriers and reducing costs.

Monitoring
Energy companies are in the position of monitoring how many of their customers have opted for individual meters. If legislation requires end-users or building owners to implement such equipment, the installation should be checked.
Regarding energy savings, individual meters are themselves tools that track energy consumption. Monitoring should include the number of consumers having installed metering systems and the behaviour changes of the end-users and the resulting energy savings.
For service sector companies, energy managers are best suited to track relevant information and report the results to responsible authorities (like an energy agency).

Evaluation
In order to track progress of individual meters, evaluation should cover a target group and a control group (without individual meters). Relative changes in the energy consumption and cost savings can become an impact indicator. An independent research institute can be employed to ask for information regarding such energy and cost savings.
Energy managers and inspectors can submit regular reports to an energy agency. Reports should include information regarding energy and costs savings since the implementation of the policy as well as further actions implemented (e.g. purchase of new, energy-efficient equipment). Moreover, costs for the appointment of the energy manager or inspector should be included, as well. Last but not least, the government should transparently state, how much it spends on training and education measures.

Relevant individual dynamics and side-effects

• Avoiding lost opportunities: Progress of individual metering and the employment of energy managers build on sustainable behavioural changes. While this prevents the loss of opportunities, purchases of new, energy-efficient appliances might result in insufficient savings if consumers do not buy very energy-efficient products.
• Minimising rebound effects: Both described measures aim at sustainable behavioural changes towards a more efficient use of energy. This may reduce rebound effects that could occur from other measures that aim to advance the purchase of highly energy-efficient appliances.
• Dynamic market transformation and/or innovation: The policies described above can indirectly initiate market transformation processes. While changing habits towards a more efficient use of energy can be regarded as the first consequence, end-users may also want to further decrease energy costs by purchasing highly efficient appliances.
• Minimising snap-back effects: If the legal requirement to implement individual meters ends, it is unlikely that individual meters are removed. Removing the requirement or supplementary incentives (e.g. financial support) to appoint energy managers may risk that the company falls back into its old ways, especially if the requirement has not been implemented long enough.
• Minimising free-rider effects: If building-unit occupiers or service-sector actors use appliances in an energy-efficient manner anyway, free-rider effects will occur and can hardly be prevented. However, these effects have little relevance because the cost of legislation is small and even these appliance users may achieve further savings.
• Creating Spill-over effects: Both described measures attempt to change end-user behaviour sustainably. Thus, it is likely, that end-users will consider energy-efficient options in various situations, e.g. when purchasing a new refrigerator etc.

Design for sustainability aspects
Training courses for energy managers and inspectors can contain sustainability aspects. Apart from identifying pure energy efficiency gaps only, managers and inspectors should become aware of topics such as resource efficiency (such as water and detergent use of appliances), health aspects (e.g. noise level of appliances) and the like.

Co-benefits
Installation companies for meters will benefit from increased demand. Moreover, positive employment effects will also be beneficial to energy managers.

• Resistance from building owners and end-users to cover the costs for the installation of individual meters
• Resistance by utility companies to collect more information as well as to provide end-users with more in-depth information with regard to informative billing
• Low energy prices may prevent the success of smart/individual metering systems.

• If end-users are to cover the full implementation costs, they should be transparently and comprehensively informed about costs and benefits. Low-income households should be supported.

Navigant Consulting (2012) conducted an impact evaluation of individual meters on multi-residential electricity consumption in the region of Ontario, Canada. The study found that annual energy savings range between 27 % or 1,272 KWh (electrically heated homes) and 34% or 1,344 KWh (non-electrically heated homes) per household.
Experience in many countries, including recent reviews of feedback programmes in the USA and Canada, show savings in the range of 5% and sometimes up to 15% for direct and indirect feedback (Darby 2006). These would come in addition to savings from individual metering. Darby (2006) claims that direct feedback (i.e. immediate feedbacks from the meter or display monitors) can lead to more energy saving than indirect feedback (i.e. feedback that has been processed before reaching users, e.g. billing). However, sometimes, a good informative billing programme can result in higher savings than direct feedbacks, given certain socio-economic factors and consumption patterns (Stromback et al. 2011). Furthermore, the potential additional savings from investment induced by feedback measures are still limited. Ehrhardt-Martinez’s (2011) study shows that users mostly decide to adjust their behaviour in response to the feedback rather than investing in energy-efficient technologies.
The following example may illustrate the potential energy savings from a legal obligation to employ an energy manager: The so called “Dollars to $ense” workshops in Canada are designed to achieve energy savings in organisations. Estimated savings attributed to 825 workshops held from 1997 to 2008 resulted in 13,000 TJ of energy savings and 1400 kT of GHG emission reductions (NRCan NA). Although these are mostly due to implementing building-related energy efficiency actions, a more energy-efficient use of office equipment and other appliances may also have contributed to these results.

For individual meters, major costs are the purchasing thereof, installation and operating costs as well as the investment in advanced data collection and data communication infrastructure (relevant for smart metes). In terms of the cost for society as a whole, the roll-out of metering system will potentially result in an increase of the energy price to cover the costs of deploying the technology (Balmert et al. 2012). However, the energy bills may reduce if the energy savings outweigh this increase, which is very likely for individual metering (given potential savings as in the example from Ontario, Canada) but yet to be proven for smart metering.
In general, the cost depends on a number of country specific factors, for example, the features of the existing local electricity and communication system, customer density, etc. (Balmert et al. 2012; Giordano et al. 2012).

Expected cost savings for the comprehensive introduction of individual metering systems in Ontario, Canada amount to over EUR 500 million for the period between 2013 until the end of 2017. This method is based on avoided costs, ‘marginal costs to society of generating, transmitting and delivering incremental amounts of electricity and typically represent the costs of building and running generation assets and the transmission and distribution infrastructure’ (Navigant Consulting 2012, p.24).
The following examples may illustrate the potential energy and cost savings from a legal obligation to employ an energy manager: In 11 years (between 1997 and 2008) there were 825 “Dollars to $ense” workshops in Canada with 14,700 participants attending. 13,000 TJ in energy savings did not only result in GHG reductions but also in considerable monetary savings of roundabout EUR 130 million (NRCan NA). Although these are mostly due to implementing building-related energy efficiency actions, a more energy-efficient use of office equipment and other appliances may also have contributed to these results.
Usually, energy and water cost savings are three to five times the costs of energy management according to the experiences of German medium-sized to larger cities (Borg et al. 2006).