With the global trend towards deregulation continuing apace, the pressure on utilities to differentiate themselves from their competitors is building up. The dilemma that utility executives face is how to accomplish this without putting millions in shareholder capital at risk.
AMR isn't enough
Despite impressive growth in automated meter reading over the past couple of years, most utilities realise that it is tough to show a return on investment (ROI) on a system that can only do AMR. Why else would a technology that has been around for over 20 years have been deployed by only 10% of US electricity and gas utilities? Falling unit and telecommunications costs are helping to drive the pure-AMR market – but this is just a stepping stone to offering the types of service that will truly differentiate utilities.
Most utilities are familiar with the benefits that basic AMR (monthly reads) can bring:
- Greatly reduce estimated reads, leading to fewer customer complaints and enquiries.
- Faster bill settlement process, improving cash flow.
- Reduction in revenue loss.
- Outage management.
- Asset optimisation – maximise use of assets by identifying improperly sized or rated distribution equipment.
Some utilities are taking the next step to gather daily and hourly AMR data. This sometimes requires a greater investment in equipment, as drive-by readings are rarely capable of gathering 15-minute interval data. It always requires a greater back-end investment in order to store and analyse the data, as 15-minute reads require about 3,000 times as much storage space as monthly reads. The benefits that can be gained from this greater investment include:
- Customer load profiling for more accurate (often weather-based) consumption predictions, enabling an improved pricing model.
- Remote connect/disconnect.
- Stepping-stone to additional services, such as real-time pricing and load shedding.
While they'd like to have more detailed information about their customers' electricity usage patterns, most utilities have discovered that it is hard to convert this knowledge into a positive impact on their bottom line. This is especially true since the collapse of Enron, and the subsequent lack of liquidity and development in the energy-trading markets. What's the point of having all this customer information if there is no clear way to profit from it?
Enter the dragon
No, not Bruce Lee, but the chimera that has been plaguing the utility industry ever since it was first proposed – residential services. How many times have utility executives heard this pipe-dream of becoming a service provider, and gaining a new source of revenue from their captive audience?
Some possible value-added services include:
- Load shedding/demand-side management for a lower electricity bill.
- Residential messaging (outage notices, community messaging, advertising).
- Bill presentation and payment.
- Home automation and security.
- Appliance monitoring, preventive maintenance.
There are many reasons why residential services have not yet gained a lot of traction in the market: unproven demand, ROI difficult to justify, and uncertainty about which services customers will actually find useful (and, more important, pay for!) However, the primary reason that residential services have not taken off is that no off-the-shelf solutions are available.
Weak link between OEMs and service providers
The current business model for technology providers usually consists of selling their technology to OEMs. Unfortunately, OEMs often hit a roadblock when trying to sell their products to service providers such as utilities. The problem is that utilities rarely have the expertise, time or contacts required to integrate all the products on offer into a complete system that they can bundle and sell to their customers. OEMs do not readily promote technologies that transform their existing business models. Few off-the-shelf products exist for system integrators to work with. System integrators have little to no expertise in the core control networking technologies, and service providers are looking for solutions that no OEM alone can provide.
Ménage à trois
At Domosys, we have found it is often more efficient for the technology provider to deal directly with the service provider (utilities). With a profound knowledge of the base technology, it is relatively easy to come up with product specifications that meet the utility's needs. Once the system specs have been defined, it is easy to convince OEMs to come on board and create the products, since they now have a guaranteed market.
This brings advantages to all concerned:
- Core technology providers – selection of their technology.
- OEMs – the opening of markets for networked versions of their products, interoperable with those of other OEMs. This fosters their development.
- Systems integrators – system integration opportunities in multiple markets through the availability of off-the-shelf/interoperable networked products.
- Service providers – a one-stop delivery of the technology platform (products and networking technology) upon which applications and service bundles are created.
- End users – the availability of oft-promised, rarely delivered services.
In order for the technology provider to be able to make the leap to working directly with the service provider, they need to be able to offer a complete bundle of products and services. This is why Domosys provides the following: support for multiple communications media, chipsets and modules, control networking protocol, high-level interface bundles (OSGi, OPC, UPnP, etc), development tools, speciality products, and services like support, training and design.
Domosys has multiple on-going projects with utilities using our recently released PowerBus control networking technology. These projects are still at early trial stages, with promising feedback. Products include a communicating thermostat, a sub-metering and load shedding module, communicating switches and dimmers, a communicating meter and collector, and a thin residential gateway. Initial applications are focused on load shedding (via appliance control and thermostat setbacks) home automation, and AMR. Future applications planned include more automation, appliance monitoring, messaging services and security applications (networked flood detector, for example.)
By working directly with the service provider, we have ensured that the system needs are clearly defined, and that products that meet these needs are available from OEMs on a timely basis. The growing availability of networked products makes it easier for other utilities to follow this same system development model, with very little risk. As the rules for intra-utility competition are becoming clearer, it seems that the days where utilities did nothing but sell electricity are numbered. These are exciting times, and innovative utilities have a rare chance to gain a meaningful advantage over the competition by offering additional services to their clients. Don't be left behind!