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UTILITY WeeK | 24TH - 30TH OcTOber 2014 | 13 Beyond smart metering It is an altogether more dynamic scenario than today's model in which customers pay for a product they oen do not value much and which they believe – however mistak- enly – is delivered by profiteering corporates. The shake-up smart meters will precipi- tate is not just looming for energy suppliers. Colin Henry, business development manager for Siemens' Smart Grids division, sees a new strata of network management emerging on the far side of smart meter deployment, par- ticularly in urban environments. "I can foresee an increasing number of independent networks with private operators as communities, and especially cities, seek to deliver local low-carbon energy plans," he says. "A few years ago, I think the networks were almost in denial about this and, when it was considered, there was a feeling that an increase in IDNOs [independent distribution network operators] would erode their role. "Today, there is an acceptance that an increase in independent networks is sup- ported by Decc [the Department of Energy and Climate Change] and is going to happen. The question that remains is what the rela- tionship between the regulated DNOs and the new private entrants will be. The oppor- tunity perhaps lies in developing a range of balancing services." The advent of smart metering could act as a trigger for these kinds of business model transformations. The government has set a target for the roll out of 53 million gas and electricity smart meters in domestic proper- ties by 2020, at a cost of £11 billion. These meters are designed to be the pri- mary hub for energy management in the home, with the specifications mandating a user interfaces on the meter itself and also for "consumer access devices" linked to the home area network to be able to access meter information. Consumers will have the option to choose monthly, daily or half-hourly meter read- ings, carried out automatically and remotely by suppliers via the Data Communications Company, or DCC which has been licensed to manage the UK's smart data infrastructure. figure 1: connectivity is the critical ingredient that creates the smart world Potential obstacles to the brave neW smart World Utilities may not be the ones to deliver the best customer experience New entrants: in-home displays will not be the only way to access usage data. Tech-savvy firms with substitute services the customer cornerstone Will customers co-operate with the smart revolution? Once smart meters are in place across the UK, their ability to transform the way energy is sold and consumed will hinge on what permissions consum- ers give for their data to be accessed. This will be determined to a large extent on campaigns to educate people about the smart meter programme, as well as utilities regaining consumers' trust. However, as Nicola Eaton Sawford pointed out in last week's issue of this magazine, could steal a march on utilities by offering energy and data management services direct. Unforeseen gaps in technical specifications: the technical specifications for smart meters are being iteratively updated to try and ensure they are future proof against rapidly evolving technologies. It is possible, however, that a new innovation post-rollout might render them obsolete before their return on investment period is complete. Lack of customer trust: many of the biggest industry transfor- mations considered possible as a consequence of smart metering rely on additional consumer permissions for data harvest- ing. With trust in utilities at an all-time low, the likelihood of gaining these permissions is compromised (see "The cus- tomer cornerstone", above). Multiple dwelling units: we live in a rapidly urbanising so- ciety, yet one of the smart meter programme's major weaknesses is its limitation in multiple dwelling units, that is, blocks of flats. In a survey carried out by Utility Week and Ordnance Sur- vey, just 20 per cent of respond- ing energy suppliers said they had systems in place to deal with the difficulties posed by multiple occupancy dwelling. Inability to change: for large institutions, change is almost always difficult to manage – par- ticularly change at pace. Seizing the initiative to reorient utilities' business will require nimble pro- cesses and rapid time to market for new offerings. Regulation: utilities are overseen by a regulator that has been widely criticised as outdated and slow to respond to changes in technology. an education campaign has yet take shape and the issue of trust could be exacerbated by the rollout itself. Furthermore, recent research by consultancy firm KPMG into attitudes toward the internet of things found that people need a lot of reassurance about the se- curity of their data in an increas- ingly interconnected world. The survey revealed that 70 per cent of consumers think it is "too easy for things to go wrong" as interconnected devices flood the marketplace. Sixty-two per cent feel there is insufficient concern about the way in which increasing connectivity will af- fect security and privacy. More positively, KPMG found that smart meters were among the most welcome technologies. Forty-eight per cent of respond- ent thought they could save energy and money. Smart Meters E G CH IHD 1 light heat wash clean chill cook fun CAD ADSL scope of smart programme scope of smart innovation products, services and partners to help customers understand and control their energy usage 3 2 use customers preferred display real time 4 5 secure safe 3rd party service providers energy suppliers DCC internet energy suppliers D +1 1 The mandated smart architectures provide customers with aggregated information on energy in real time in the home and at D+1 or later via web or apps 2 New smart products will enable customers to interact with their energy use in a new way - At device/circuit level - Hardware, plugs, sensors - Rules-based, binary, scheduled actions applied to the controls - Outcomes for individuals 3 The link to smart is not mandatory, but it is the unique link opportunity for energy retailers to own this space 4 Customers to providing their data to third party service providers 5 Opportunity for energy suppliers to provide products and services to non-energy customers