Utility Week

Utility Week 7th August 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/551405

Contents of this Issue


Page 17 of 31

18 | 7TH - 13TH AUGUST 2015 | UTILITY WEEK Operations & Assets Market view U tilities across Europe oen look envi- ously at British Gas's residential mar- gins. Parent company Centrica's 2014 annual report reveals that British Gas's £439 million operating margin from residential energy was achieved with the help of a £270 million contribution from services, mostly related to gas boilers (See more on Centrica's annual report and new strategy on p14). This is a business that benefits from scale. Many utilities have tried to enter but have withdrawn partially (such as RWE Npower) or completely (such as Eon). Several that tried to use an internal field force could not scale fast enough, while several that out- sourced could not maintain sufficient quality control. However, utility boards should re-evalu- ate the opportunity because connectivity can now fundamentally change the economics of the energy services business. Those utilities still in heat services such as SSE (UK), EDF Luminus (Belgium) and Eneco (Netherlands) are also strongly focusing on connectivity. Smart connectivity can transform the effi- ciency of the quote, installation and repair processes. It can also facilitate the aggrega- tion of a network of high quality field force agents with deep quality assurance. Further- more, the data and relationship enabled by the connectivity can be used to build rela- tionships, and to up-sell. Several companies are eliminating the field force from the heating system quote process, removing a significant cost of sale. British Gas has been trialing a final bind- ing online quote system for replacement of a condensing boiler. Thermondo, a German start-up, goes further and is able to provide a binding online quote for any heating system configuration. Cost is also being taken out of the mainte- nance and repair processes. Boiler company Remhea (part of BDR Group, which owns Baxi), can alert an engineer of a heat pump problem automatically, tell them what part to order and place the order. Several pan- European boiler manufacturers, such as Vail- lant and Bosch in Germany, are starting to offer these services. Such automation presumably improves customer satisfaction, reduces the callout frequency needed on a boiler insurance or warranty service, and increases the number of jobs per man per day. It is also possible for utilities to mitigate high level problems with a heating system by partnering with companies like Netatmo and Quby, which have developed analytics of fre- quently sampled temperature. Detailed fault monitoring, however, requires access to the boiler data and error codes. In the Netherlands, third parties can access the data over the Opentherm stand- ard. In the UK, most data and error codes are still transmitted over the boiler manu- facturers' proprietary data buses but this barrier can be overcome through partner- ship. For example, Vaillant has partnered with Netatmo to develop a smart thermostat able to communicate with Vaillant boilers through its proprietary bus. Alternatively, smart thermostat provider Tado claims it is compatible with the data bus interfaces of nearly every boiler manu- facturer and that a utility which partners with it can have manufacturer-independent diagnostics – though it is not clear what degree of support this has from the boiler manufacturers. It is fairly well known that UK installer quality is reliable for "standard" boiler installations but is less consistent across engineers when it comes to optimising the whole heating system and ensuring maxi- mum efficiency. This is a challenge for UK utilities that want to outsource heating ser- vices to an external field force. Heat and the connected home In the second of a series of connected home insights, Susan Furnell explains how energy services businesses can be much more profitable if they are redesigned for a connected world. Key points Until now, utilities have struggled to emu- late the large upli in operating margin that British Gas has achieved through the services it offers, mostly around gas boilers. Technology now offers the opportunity to rethink the economics of this business and to bring benefits to field force efficiency, quotes, installation and repair. Technology developments could disrupt competition in the heating market and open up opportunities for new revenue streams. Technology is also encouraging the growth of networks of independent heating engineers, offering utilities new options for outsourcing services to an external field force while retaining quality. The Navigant Research Leaderboard for 12 smart thermostat manufacturers and software providers Execution Challengers Followers Contenders Leaders Honeywell Nest Schneider Energy Hub Comverge ecobee Tado Energate Eco Factor Emerson Carrier RTA

Articles in this issue

Archives of this issue

view archives of Utility Week - Utility Week 7th August 2015