$It is not as if the grid has been stupid so far,$ he noted,

explaining that the upgrade to a smart grid is a change of concept that

will allow the grid to effectively function as a whole, incorporating both

traditional elements and new ones like dispersed renewable sources, virtual

power plants and energy storage.

The main requirements for a

successful upgrade to smart grids are introducing smart meters and reducing

investment costs of connecting producers of renewables to the grid, he

said.

Based on a directive from 2009, EU members are obliged to

prepare a smart grid cost-benefit analysis by September 2012, and to

install smart metering systems with at least 80% of the consumers where it

is economically reasonable by 2020.

Deriving from a 2010 assessment,

which was updated in 2011 to the newest technological standards, the

upgrade would be reasonable for the entire Slovenian electricity market,

Šmon said, adding that SODO proposes a massive roll-out of smart meters in

the 2014-2019 period with two years of preparations.

The grid

operator is now waiting for a green light from the government, which

received the proposal in 2011. Šmon hopes a response will come soon, since

simply letting progress take its own pace would mean that only 30% of

consumers would have smart metres by 2020.

According to Šmon,

several electricity distributors in Slovenia have been running pilot

projects for smart metering systems and some 13% of retail consumers

already had smart meters in 2010. However, only 6% of these fully met the

functional requirements.

$Harmonised activity in the

technological, regulatory, economic and sociological area is crucial for an

effective introduction of a smart grid,$ Šmon pointed

out.

Regulation must go hand in hand with the development of

innovative and economically attractive solutions, which must be

appropriately supported through communication with the general public, he

elaborated, adding that consumers must be told that their costs would be

reduced.

Starting the project as soon as possible will allow

Slovenian industry to take part and stay competitive, he stressed and added

that information and communication technology would play a major role

technically in connecting together the entire system.

If any of the

aspects are neglected, the upgrade may be unsuccessful and Slovenia may

consequently also fail to meet the EU's 20-20-20 energy and environment

targets, he pointed out.

One of the main difficulties in the upgrade

to a smart grid may prove to be funding, as Šmon said SODO and

distribution companies were already unable to secure the funding according

to the current national ten-year energy network development plan.

The

current development plan, which will be revised for 2013-2022 at the end of

the year, envisages EUR 1.7bn investments needed in the grid until 2020, he

noted.

However, in the difficult economic situation, the planned

investments by SODO and distribution companies this year only cover EUR

97.6m of the envisaged EUR 164.1m.

The upgrade is estimated to cost

an additional EUR 320m by 2020, with 60% of the total planned for the

introduction of smart metering systems, Šmon explained.

He proposed

several ways of collecting funds, ranging from higher fees for encouraging

efficient energy use to a special surcharge on the electricity bill. This

would increase the monthly bill of an average household by 75 cents for the

next five years.