John Peters,
Managing Director,
Engage Consulting
By John Peters, Managing Director, Engage Consulting Limited

The British government wants to see smart meters in all homes nationwide by the end of 2019. This is a huge challenge for the energy industry and all of us who work in it. So how are we approaching this major program of work? How are we going to meet the timescales and deliver the benefits of £7.5 billion foreseen in the government’s Impact Assessment? With only 6 years (about the same as the preparation for the 2012 Olympics) to replace every gas and electricity meter in all GB homes from 2014, this is not exactly an easy task.

What about the challenges facing suppliers? Smart metering deployment in GB is unusual in global terms as the government has made the suppliers responsible for fitting smart meters. In many other countries, the roll out of smart metering has mainly been the responsibility of the network operators. Throughout the world, the drivers have varied from a desire to reduce peak time energy consumption, as in California, to improved billing accuracy as seen in Sweden.

Our smart metering solution is also distinguished as it attempts to meet the needs of just about everyone who operates in the sector. That includes suppliers, network operators, consumers and environmentalists. It also needs to become the springboard from which smart grids can successfully start. Collectively can we meet all of these requirements?   

The DECC Smart Metering Implementation Program is in the process of working through a major phase. It has recently released the procurement for the pre-Data Communication Company (DCC) and is in the process of defining the scope for the DCC, which in turn will enable potential service providers to detail their secure communication, access control, data retrieval and translation service solutions. This is a critical part of the development of the agreed smart metering infrastructure in GB. At the same time, the Smart Metering Systems (SMS) technical specifications are being drafted for approval within the EU and to provide manufacturers with the functional requirements of the SMS components. On top of all of this, there are still lots of business processes to support smart metering that need to be designed, developed and thoroughly tested. This is all very tricky and technical but it is vital that we get it right and ensure everything is coordinated and compatible.

The success of smart metering will ultimately be determined by the delivery of the stated benefits, a not so trivial £7.5 billion. Paying for all this new technology, infrastructure, governance and new business processes, especially when energy prices are at an all time high with no respite in sight, will be especially challenging. To say the least, consumers and government bodies are very sceptical about retail price rises, which some deem to be unfair and unnecessary when compared to the perceived large corporate profits.

The danger is that the sector has lost consumer trust, and if so, there is a risk that consumers will perceive smart metering to be another way in which large energy companies can make further profits. Or it will be seen as a mechanism to spy on their homes or disconnect their supply at a push of a button! How do we manage this critical consumer engagement, to maximize their buy-in and ensure the solutions meet the requirements of all stakeholders? We cannot lose sight of the fact that energy conservation action by consumers will deliver a significant proportion of the prize. All these questions need to addressed, and carefully thought through. It is not sufficient just to deliver the amazing benefits of smart meters; the industry must articulate and explain to the consumers why this technology is a vital part of our armoury to address the energy issues coming our way.   

We must do more than just pay lip service to some of the frequently cited lessons from around the world. For example, The Netherlands in 2009, when the then ahead of the game government had to back down on their mandatory rollout due to data privacy concerns. Or PG&E in California where a perceived lack of engagement has left consumers demonstrating against perceived inaccurate meters, health concerns and in some counties trying to ban smart meters altogether.

Our government has listened to these concerns and has stated that consumers will have a choice over how their consumption data is used and by whom, except where data is required to fulfil regulated duties. Having said that, what “regulated duties” actually means has yet to be agreed. For example, will network operators need half hourly consumer data to enable them to maximize network benefits and enable a transition to a smart grid? This data could be anonymous, but how will suppliers be able to do this and what does all this mean for the stated benefits of £7.5 billion? Will less data mean that suppliers are unable to offer accurate time-of-use tariffs to consumers? All of these questions need to be carefully considered.
What about the consumers view? What is the incentive for consumers to have time off work so the meter can be changed? Can we manage the roll out in a more modern fashion? There needs to be a positive understanding of what consumers will get from this new technology. Not everyone will be motivated by potential energy and cost savings. The health and safety lobby will continue to be vocal, an area where one hiccup could create a hurricane of issues.

Needless to say, even though there are many challenges for smart metering, once implemented it provides an amazing opportunity to transform the way we measure, manage, sell and consume our energy – from simply informing consumers of how to save themselves money, to protecting and optimising the entire national network as key smart grid developments become realities.