Smart Metering
significantmoneyindeployingconventionalmetering,orvery companies can be doing irrespective of market model, and
basic AMR metering, when the opportunity for synergies with indeedanumberofkeybusinessstrategyresponsechoiceswill
the electric and gas roll-out is so clear. be common irrespective of the model which emerges.
The mandatory introduction of smart metering brings as On top of all the substantial internal changes to people,
many challenges as it does opportunities for utilities. First of processes and systems, utilities need to assess what the effect
all, the ten year roll-out period means that there will be a ofsmartmeteringwillbeoncustomers.Themediaisdoingits
parallel cost of running legacy and smart operations for a besttoexciteconsumersabouttheideaofsmartmeteringand
substantialperiodoftime.Effectiveplanningofadeployment the roll-out will almost certainly make a big impact on
strategy can help mitigate this to a degree, but there is no people’s attitude and behaviour when it comes to energy
question that there will be some difficult choices to make management in the home. On the flip side of this, all parties
when it comes to developing new operating models for a involvedinsupplyingsmartmeteringsolutionswillneedtobe
smart world while not starving investment from the core, aware of the risk of negative customer perceptions, and plan
legacy, business while this remains. communications and implementations in such a way as to
Second, there is a significant technical roll-out challenge for ensure a positive customer experience.
the actual deployment of smart metering systems. From As already mentioned, the sometimes rocky relationship
choosingtherightmeteringandcommunicationcomponents, between consumers and utilities is made even harder by the
to engagement with the customer to smooth the installation lack of real-time intelligence about energy usage. Utilities will
process, through to managing the back-office impact of so nowhavetheopportunitytowinthesupportofcustomers.For
many meter exchanges – there is no getting away from this the first time people will have an up to date and accurate
being one of the largest programmes of work that many picture of what they are spending, and will be able to control
energy and utility companies have undertaken for some time. their costs. This offers the chance for energy suppliers to
Beyond this, there is a debate about completely re-engineer their
how far energy and utility companies
The mandatory introduction
relationships with consumers. It means
want to go in allowing the new smart
metering platform to be a trigger for
of smart metering brings as
that utilities will at last be able to
provide much greater visibility and
major business transformation. There is
many challenges as it does
brings them in line with the levels of
little doubt that almost all parts of the opportunities for utilities transparency offered in so many other
industrylandscapewillbefundamentally areassuchasonlinebanking,creditcard
differentoverthisperiod.Thecompaniesthatwillsucceedwillbe bills, savings accounts and so on.
thosethatbalancetheapproachoftakingthisonestepatatime Suddenly people will have a detailed breakdown of their
with the opportunity of step-change. Success will be about energy usage and its cost on a real-time basis. Furthermore,
making the right choices to achieve the end goal more rapidly, they will be able to implement advice about how to
or more effectively, than their competitors, and having a clear minimise energy costs and see the impact immediately,
visionofhowthebusinessshouldlookin2020. transforming the customer/supplier relationship.
Thirdly, within the competitive gas and electricity market, But perhaps the biggest benefit for consumers is that, for
there is the issue of who owns what and who is responsible for the first time in any meaningful way, they will be able to
what when customers change suppliers. There is a very tricky make a measurable, personal contribution to the fight
balance to strike here between the desire to allow freedom of against climate change. This may precipitate a much more
choice and innovation in the deployment of smart meters, positive attitude to lifestyle changes that could also reduce
balanced with the need for interoperability of metering systems emissions. As electric cars and microgeneration systems
atchangeofsupplier.Theverylastthingtheindustryneedsisto become much more widely available, perhaps the sense of
bereplacingnewlyinstalledsmartmeterswithalternativesmart personalresponsibility(sweetenedofcoursebyreducedcosts)
meters during the period of initial roll-out, the scale of which is on the issue of climate change will gather momentum. Who
challenging enough with 45 million plus meters to install. All knows, the pariahs of the future may be the people who
agreethatinteroperabilityiscriticalirrespectiveofmarketmodel don’t drive electric cars and don’t invest in their own
chosen.Ofcourse,howinteroperabilityisbestachievedremains microgeneration systems at home. We may have smart
a debate, but industry pressures combined with customer metering – in no small part – to thank for that.
•
perceptionswillbestrongdriversinensuringthatitis.
Of course, until the Department of Energy and Climate
Jim Hayward is Senior Partner with Baringa Partners, who
Change publishes its recommendations on the roll-out of
are key advisors to the Department of Energy and Climate
smart metering and the market model it favours, energy
Change (DECC) and were commissioned to assess the
companies cannot finalise business plans for response.
most appropriate market model for the roll-out of smart
However, there is clearly a lot of preparation work that these
metering in Great Britain.
www.baringa.com
96 worldPower2009
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