Smarter metering for more sustainable energy use

Smart Metering

With the compliments of

CGI Limited Second Edition

A John Wiley and Sons, Ltd, Publication

By Chris Beard, CGI

Smart MeteringFOR

DUMmIES‰

2ND EDITION

Smart Metering For Dummies®

Published byJohn Wiley & Sons, LtdThe AtriumSouthern GateChichesterWest SussexPO19 8SQEngland

E-mail (for orders and customer service enquiries): cs-books@wiley.co.uk

Visit our Home Page on www.wiley.com

Copyright © 2010 by John Wiley & Sons Ltd, Chichester, West Sussex, England

All Rights Reserved. No part of this publication may be reproduced, stored in aretrieval system or transmitted in any form or by any means, electronic, mechani-cal, photocopying, recording, scanning or otherwise, except under the terms of theCopyright, Designs and Patents Act 1988 or under the terms of a licence issued bythe Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, W1T 4LP,UK, without the permission in writing of the Publisher. Requests to the Publisherfor permission should be addressed to the Permissions Department, John Wiley &Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, England,or emailed to permreq@wiley.co.uk, or faxed to (44) 1243 770620.

Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Manlogo, A Reference for the Rest of Us!, The Dummies Way, Dummies Daily, The Funand Easy Way, Dummies.com and related trade dress are trademarks or registeredtrademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States andother countries, and may not be used without written permission. All other trade-marks are the property of their respective owners. Wiley Publishing, Inc., is notassociated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER, THE AUTHOR, ANDANYONE ELSE INVOLVED IN PREPARING THIS WORK MAKE NO REPRESENTATIONS OR WAR-RANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THISWORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATIONWARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATEDOR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CON-TAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITHTHE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL,ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE ISREQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT.NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HERE-FROM. THE FACT THAT AN ORGANIZATION OR WEBSITE IS REFERRED TO IN THIS WORK ASA CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEANTHAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATIONOR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERSSHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGEDOR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.

Wiley also publishes its books in a variety of electronic formats. Some content thatappears in print may not be available in electronic books.

ISBN: 978-0-470-74164-1

Printed and bound in Great Britain by Page Bros, Norwich

10 9 8 7 6 5 4 3

Introduction

Welcome to Smart Metering For Dummies, yourguide to the exciting new world of smart meter-

ing and the impact that it’s likely to have on the utilitiesmarket and beyond.

About This BookThe words ‘exciting’ and ‘metering’ rarely make it intothe same sentence – but all that’s about to change. Smartmetering is not only set to revolutionise the meteringservices sector, it’s also the catalyst for the singlebiggest wave of change to hit the utilities industrysince the introduction of retail competition. This bookexplains the why, how, and when of smart metering andits effects on customers, suppliers, and distributors.

To keep things simple, we use the term ‘smart’ to referto smart meters and ‘conventional’ to refer to existingmeters.

Foolish AssumptionsIn writing this book, we’ve made some assumptionsabout you. We assume that:

� You work in the utilities sector and understand thebasics of how the electricity and gas markets work.

� You want to know more about smart metering and how it will affect suppliers, distributors, andcustomers.

� You understand some of the utilities and meteringjargon (we include a glossary at the back of thebook, just in case).

How This Book is OrganisedSmart Metering For Dummies is divided into six conciseand informative sections:

� Part I: Get Smart. We discuss the business driv-ers behind the move from conventional to smartmetering and the benefits to be realised by thekey stakeholders.

� Part II: What is a ‘Smart’ Meter? We explain whatmakes a meter smart and how it differs from itsconventional cousin.

� Part III: The Anatomy of an Advanced MeteringInfrastructure. We describe the key componentsof the infrastructure required to support smartmetering and attempt to demystify some of theassociated smart jargon.

� Part IV: Feeling the Impact of Smart Metering. Inthis section we take a look at how the key stake-holders will be affected by the smart revolution.

� Part V: Looking to the Future. Smart meteringwon’t happen overnight. In this part we examinesome of the long-term parallel activities that willinfluence, or be influenced by, a smart meteringrollout.

� Part VI: Top Ten Smart Tips. This nifty part is alist of the essential things to remember aboutsmart metering.

2

Icons Used in This BookTo make navigating to particular information eveneasier, these icons highlight key text:

The knotted string highlights important infor-mation to bear in mind.

The Dummies man indicates real-life anec-dotes to illustrate a point.

Where to Go from HereAs with all For Dummies books, you can dip in and outof this book as you like, or read it from cover to cover –it won’t take you long!

Use the headings to guide you to the information youneed. If you require any more information, feel free tovisit us at www.cgi-group.co.uk/utilities.

3

Part I

Get Smart

In This Part� Exploring the move towards smart metering

� Discovering the benefits for the customer, supplierand distributor

We’re all responsible for climate change. Forexample, UK residents contribute over 40% of

the country’s carbon dioxide (CO2) emissions andenergy usage. In this country alone, leaving domesticappliances on standby when not in use cost over £900million in 2008! To address this, everyone needs tobecome more energy savvy. With soaring fuel pricesand more and more families falling into fuel poverty,the motivation for a change in behaviour is growing.What’s missing is the information required to makesmarter decisions.

This part looks at the drivers for introducing smartmetering and examines the benefits for some of the keystakeholders.

Driving towards Smart MeteringSmart metering provides:

� Customers with the information they require tobecome energy savvy and make smarter decisionsabout their energy usage.

� Suppliers with the means to better understandand service their customers.

� Distributors with an effective tool to better moni-tor and manage their networks.

In addition, smart metering enables those cus-tomers who choose to produce their own elec-tricity from microgeneration in addition toconsuming from the grid (so called “pro-sumers”) to be financially rewarded for theircontribution . It also helps distributors tobetter manage this contribution.

What’s in it for the customer?Individuals need to understand their energy consump-tion in order to make intelligent decisions about it.Currently, customers are informed of their energy usevia a bill that arrives months after they’ve used the gasor electricity. The bill typically only tells the customerthe cumulative consumption since the last bill and,more often than not, even this is estimated. It isn’t sur-prising that customers don’t feel empowered tomanage their energy use.

But providing individuals with the timely, accurate, anddetailed information they require to take control oftheir energy use is only one of the benefits that smartmetering can bring. Other benefits include:

5

6

� Estimated bills will become a thing of the past.Customers will know what they owe and will beable to budget better.

� New, innovative tariffs will appear, tailored tomeet the needs of specific customers’ lifestyles.

� Customers will get better service such as on-demand readings (for example, on changing sup-plier or moving home).

� Smart meters will measure electricity generatedfrom domestic microgeneration, enabling so-called “prosumers” to be financially rewarded fortheir contribution.

What’s in it for the supplier?For the energy supplier, smart metering will enable thetransformation from an energy supply company to anenergy services company. Smart metering will allow asupplier to get closer to its customers, to better under-stand and service their needs, and, at the same time,allow the supplier to reduce its operating costs:

� The cost to service customers will reduce withincreased customer self-service. Suppliers willhave fewer bill queries, complaints, and site visits.Call centre staff will become more productive.

� Meter reading costs will reduce dramatically asmeters are read remotely.

� Suppliers will be able to differentiate themselvesthrough an extended range of products and serv-ices offered into the home.

� Timely consumption information will allow suppli-ers to better manage customer debt.

� Energy theft will be reduced through smarttamper alarms.

� Improved visibility and control of customers’ con-sumption behaviour will enable suppliers tobetter balance their wholesale positions.

But in addition to ‘smartening’ up their existing opera-tions, smart metering also presents suppliers with ameans to differentiate through pioneering new prod-ucts and services, thus creating a new battleground forretail competition where the customer-savvy and inno-vative supplier will triumph.

What’s in it for the distributor?Smart metering offers distributors the opportunity toextend their much heralded ‘smart grids’ to individualcustomers on the low voltage networks. Indeed, inmany countries, the desire for smarter grids is the keydriver for the introduction of smart metering (checkout Part VI).

Here are some of the benefits that smart metering willbring to distributors:

� Smart metering will provide distributors with theability to more accurately bill suppliers for use ofthe distribution networks in delivering electricityto their customers.

� Functionality within smart meters will enablesystem faults to be notified and located morequickly following power cuts and interruptions.

7

� Smart metering will give distributors better visibil-ity of their networks, enabling more cost-effectivemaintenance regimes.

� More detailed consumption data will enable dis-tributors to measure, rather than model, networklosses, reducing the need for reconciliations andproviding greater revenue certainty.

� As with suppliers, distributors will benefit fromreduced theft through smart tamper alerts.

� Smart metering presents the opportunity of activedemand management, controlling load at individ-ual premises to better manage the network.

Who else stands to benefit?Everyone stands to benefit from smart metering:

� The increased use of remotely managed Time ofUse (ToU) and block tariffs (see Part II) will helpspread energy consumption more evenly acrossthe day, easing the stress on distribution net-works and reducing the need for costly generatingplant to meet the peak demand.

� An overall reduction in energy consumption insti-gated by an energy-savvy public will reduceimpending gaps between forecast demand andgeneration and help restore security of supply.

� Less consumption means less CO2 emissions andless climate change.

8

Part II

What is a Smart Meter?

In This Part� Discovering what makes a meter smart

� Unearthing the smart impostors

What exactly is a smart meter and why is it clev-erer than the little box currently stuck on the

wall? This part looks at what makes a meter smart andhow it differs from its conventional predecessors.

Smarter than Your Average Meter ...So what makes a meter smart? Traditionally, meters situnder your stairs or in the garage and are only dis-turbed when the meter reader comes to take a reading.Well, at first sight, smart meters don’t look a whole lotdifferent as you can see in Figure 2-1. Like their conven-tional cousins, they still sit in infrequently visited loca-tions, but now they’re not even disturbed by meterreaders.

Figure 2-1: These meters look similar but are a world apart.

Surprisingly, there’s no absolute definition of what asmart meter is and this lack of a universal standard isan obstacle to many national smart meter rollouts(which we talk about in Part IV).

However, this section delves into the widely-acceptedcharacteristics of a smart meter.

Two-way communicationIn addition to being remotely read, smart meters canbe remotely instructed and re-configured. Actionswhich, in the case of conventional meters, necessitatelengthy site visits and meter changes, can now be per-formed remotely in near-real time.

Actions that can be remotely performed with a smartmeter include:

10

� On-demand meter readings. For example, readinga meter in near-real time in response to a cus-tomer phoning the call centre.

� Change of tariff. Changing tariff rates and tariffstructures in response to a supplier-instigatedprice change or a customer electing to move to anew, innovative smart tariff, for example.

� Change of payment method. Switching betweencredit and pre-payment modes.

� Change in read frequency. Changing the con-sumption read interval from, say, monthly to dailyor even sub-hourly.

� Load limiting/shedding. Remotely controlling anagreed portion of a customer’s consumption inorder to help balance generation and demand or asa means for preventing customers from running upmassive debts while still having access to energy.

� Tamper alerts. Automatically detecting, notifying,and responding to attempts to tamper with themeter.

� Disablement/enablement. Turning supply on andoff in response to, say, a tamper alert.

� Messaging. Communicating directly with the cus-tomer via the smart meter and Home Display Unit(HDU – described in Part III).

� Firmware updates. Remotely updating the soft-ware embedded within the smart meter in orderto fix bugs or add new functionality.

11

Detailed consumptionSmart meters are capable of recording consumption in far more detail than their less sophisticated, con-ventional cousins. Meter readers typically visit everyquarter but not always when you’re at home! So thelevel of consumption information available to cus-tomers and suppliers is pitiful. Suppliers have no meansof encouraging people to change consumption behav-iour and customers have no means of knowing whattheir consumption behaviour is!

Smart meters can record very detailed Time ofUse (ToU) consumption down to sub-hourly.ToU refers to a meter’s ability to record whenconsumption takes place rather than just howmuch is consumed. Customers can see howtheir consumption varies during the day andrespond to new ToU-based lifestyle tariffs thatencourage them to use cheaper energy. Changesin behaviour can have the effect of flatteningconsumption peaks which, in turn, reduce theneed for expensive, carbon-polluting peakingplant and network reinforcement.

Not just electricitySmart meters exist for commodities such as gas andwater as well as electricity. Given that electricity doesn’tmix well with either gas or water, gas and water smartmeters tend to be battery-powered. Battery technologyis constantly improving but, to avoid the costs of sitevisits to replace batteries, these meters tend to spend alot of the time asleep, waking up according to a scheduleto take and transmit readings.

12

Smart electricity meters, on the other hand, have readyaccess to a power supply and are therefore frequentlyused as the means of communicating data from gas andwater smart meters. The gas and water smart meters‘piggy-back’, by communicating via low-power radio tothe electricity smart meter, which stores and forwardsthe data as additional registers within its own meter.

Export as well as importWhereas conventional domestic meters only recordconsumption, most smart meters are also capable ofrecording electricity generated from domestic micro-generation plants and exported to the distribution grid.The ability to measure the output from microgenera-tion means that “prosumers” can be fairly rewarded fortheir contributions, which makes smart meters one ofthe key enablers for the widespread adoption of micro-generation.

13

Time to find out about Time of Use (ToU)A meter that can record ToU is called a ‘restricted’ meter andrecords consumption by having different registers active atdifferent times. For example, a restricted two-rate meter mayhave one register that records consumption overnight andanother that does so during the day. This enables the supplierto apply different tariff rates that reflect the differential between the wholesale cost of day-time and night-time electricity.

Not quite smart enough ...The following technologies often arise in smart meterconversation but shouldn’t be confused with the realthing.

� Automatic Meter Reading (AMR). An AMR metercan be read remotely but reading the meter is theonly remote function supported. The benefits ofAMR metering are restricted to reducing meterreading costs to the supplier and the ability to billthe customer based on actual meter readings.

� Clip-on electricity monitors. These little devicesare sensors that clip onto the cables feeding con-ventional electricity meters and wirelessly trans-mit near-real time consumption information to aportable display unit located elsewhere in thehouse. The display unit shows how much electric-ity is being consumed and how much CO2 this represents.

However, clip-on electricity monitors have signifi-cant limitations when compared to smart meters.There’s no equivalent clip-on monitor for gas orwater meters, no remote supplier access (so noneof the supplier or distributor benefits of smartmetering can be realised), and no improvement inbilling because the supplier still has to manuallyread the meter.

14

Part III

The Anatomy of an AdvancedMetering Infrastructure

In This Part� Thinking about what’s needed to support smart

metering

� Communicating with a smart meter

Smart meters require different bits and pieces tosupport them and this part describes the major

components required.

Home Display Units (HDUs)Home Display Units (HDUs; referred to as In-HomeDisplay Units) (IHUs) or Customer Display Units (CDUs)are the devices that you put on your wall or fridge toinform you about your energy consumption.Communicating wirelessly with the smart meter (eitherdirectly or via the Home Area Network which weexplain in the following section), the HDU displaysnear-real time information on energy usage, cost andgreenhouse gas generation for both gas and electricity.A common feature is a coloured light indicator to tellyou when to run around switching things off!

It’s fair to say that HDUs have a way to go to becomingthe must-have stylish home accessory but it’s only amatter of time . . .

Home Area Networks (HANs)The Home Area Network enables devices and appli-ances to communicate with each other. The obviousexample is the smart meter and the HDU. However,appliance manufacturers are becoming more and moresavvy to the idea of home networking. The vision of a‘smart home’, in which appliances, lighting, heatingand security are connected and automatically con-trolled to save energy and improve occupant well-being, isn’t far away.

Wide Area Networks (WANs)What makes a meter smart is its ability to hold a two-way conversation with a data communication (or‘head-end’) system. The medium over which this communication occurs is called the Wide Area Network (WAN).

Although, in principle, smart meters couldhave their own dedicated WAN, a number ofcommunication infrastructures are already inplace that are capable of fulfilling the WANrole. These include the copper and fibre net-works of fixed line telephony providers, thecellular networks of the mobile phone opera-tors, and the power lines of the electricity dis-tribution networks.

16

Data Communication systemThe data communication, or ‘head-end’, system isresponsible for pulling together data from a large anddisparate set of smart meters. It handles two-way communication, sending service requests to the meterand receiving messages such as scheduled meter read-ings. In order to communicate with a smart meter, a head-end system must ‘speak’ that meter’s protocol.Unfortunately, there’s currently no smart meter equiva-lent of Esperanto, so head-end systems need to be multi-lingual. Alternatively, a smart metering solution can usemultiple head-end systems or stick with one meter man-ufacturer to standardise on a single protocol.

Meter Data Management (MDM) systemsSmart meters can produce a prodigious amount of datacompared to their conventional cousins, which typi-cally only record non-interval data (meaning dataobtained only when someone manually reads it, usuallyonce every three months). Smart meters, however, arecapable of recording interval consumption (meaningconsumption data automatically recorded at a pre-defined interval, typically every 30 minutes (in theUK).) So a smart meter can produce over 4,000 times asmuch data a year as its conventional counterpart.

An MDM system is a single repository capable ofreceiving, validating and storing the vast quantities ofmeter readings and other data associated with smartmeters. It typically gathers data from one or morehead-end systems.

17

Data portalGathering vast quantities of metering data is all verywell but has little benefit unless that data can be trans-formed into valuable information and made available tothose who will act on it. A data portal is the means bywhich the data collected in the MDM system is madeavailable to whoever needs it – the customer, supplier,or distributor. Some MDM products also include dataportal functionality.

How Do I Talk to a Smart Meter?When industry types start talking about smart meters,the conversation inevitably turns to communicationtechnologies. So here’s a quick primer so that you canhold your own at the coffee machine.

You can communicate with a smart meter in a number of ways, each having its own advantages and disadvantages:

� Power Line Carrier (PLC): Also known as PowerLine Communication, PLC technology carries dataacross the same power line that’s used to deliverelectricity. Meters talk to a smaller number of con-centrators (communication devices) across thepower lines. The concentrators then talk to thecentral head-end system via another communica-tion technology such as GPRS (explained in amoment).

The major advantage of PLC is that it’s effectivelyfree. Disadvantages are the need for concentra-

18

tors and the fact that, due to power lines beinginherently noisy environments, communicationsoften need to be repeated, leading to slowerresponse times.

� Broadband over Power Line (BPL): Also knownas Power Line Internet, BPL is the use of PLC tech-nology to provide broadband through ordinarypower lines. Using BPL, a smart meter can enjoy avirtually free, always-on connection to the centralhead-end system. However, as with PLC, BPLrequires concentrators and is subject to line noisewhich often requires a large number of repeatersto boost the signal.

� General Packet Radio Service (GPRS): GPRS is apacket-orientated mobile data service that can beused to provide an always-on wireless connectionbetween a smart meter and a central head-endsystem. GPRS uses a mobile operator’s WAN andrequires the smart meter to be fitted with a pro-prietary SIM card. Unlike BPL, the connection isn’tfree but is typically charged per megabyte of datamoved. However, it can cope with large volumesof data (for example, when updating a smartmeter’s firmware).

� Short Message Service (SMS): Also known as textmessaging, SMS involves sending fixed size textmessages via a mobile operator’s WAN using a SIM card installed within the smart meter. WhileSMS can have a broader coverage than GPRS, thefixed “short” nature of the message means that itis less suited to the transfer of large data volumes.

� Radio: Radio waves can be used to communicatewith smart meters either locally (low power radio)

19

or long range (licensed or private frequency). Bothrequire additional infrastructure (for example, con-centrators and/or dedicated radio masts).

� Wi-Fi: Wi-Fi is the trade name for a popular wire-less technology that enables a device to make awireless connection to the Internet via an accesspoint (or hot spot). The advantage of Wi-Fi is thatit’s relatively cheap to Wi-Fi-enable a smart meter.The disadvantage is the limited coverage of hotspots due to the fairly high power requirements.

� ZigBee: ZigBee is a low-cost, low-power wirelessmesh networking standard. Like Wi-Fi, communica-tion via ZigBee is cheap. However, it’s best suitedfor local coverage such as Home Area Networks(HANs).

Keeping Smart SecureThe end-to-end security of the smart metering infra-structure, from smart appliances in the home to anenergy company's IT systems, is a vital considerationin its design. Maintaining the public's confidence thattheir uninterrupted access to energy will not beaffected and that their personal data remains secure iscrucial.

Different parts of the end-to-end smart metering infra-structure have different types and levels of risk associ-ated to them. The good news is that similar risks arefaced and are effectively managed in other sectorstoday.

In many sectors, access to individuals' personal dataheld in IT systems is kept secure through a combina-tion of technical and procedural measures. Thetelecommunications sector maintains the security of its

20

networks through controlling the types of devices thatcan be connected to their infrastructure through thedefinition of standards in Codes of Connection(CoCos). Devices are identified and securely connectedwith communication gateways or routers through theentry of security keys or codes. Many connecteddevices receive regular updates based on the pro-active identification of new threats.

A secure smart metering infrastructure will build onthe learning of other sectors. CGI is drawing on theknowledge and experience of our Security practice toensure that our clients and their customers can haveconfidence in the security of their smart metering solutions.

21

22

Part IV

Feeling the Impact of Smart Metering

In This Part� Looking at the effect of smart metering on cus-

tomers, suppliers and distributors

� Sharing success stories

Smart metering will have a profound effect on cus-tomers and the utilities that service them. Here,

we consider some of these impacts through referenceto real-life examples.

Impact on CustomersSo, what impact will a smart meter have on your aver-age customer?

Better informedA key objective of smart metering is to make customersmore energy savvy. The timely provision of detailedconsumption information will empower customers tomake smarter choices about how and when they useenergy. Given the continued upward trend in world

24

Energy savvy SwedesThe 22,000 inhabitants of Växjö, a city in Sweden, are nowmore energy savvy thanks to an energy-efficient urban devel-opment project sponsored by the European Union (EU).Householders are now able to analyse their energy usage viaa web-based system developed by CGI. The purpose of thesystem is to increase customers’ energy awareness by makinganalysis simple and informative. The system includes a com-petitive element, enabling householders to compare con-sumption with peers and compete for prizes based onreductions in their energy consumption.

Ann-Mari Ståhlberg, President of Växjö Energi AB, said: ‘Withthis solution, we’re able to offer our customers something wealways aim for, namely, the opportunity to influence andincrease the efficiency of electricity consumption.’

(The project referenced in this example, and all examples inthis book, was delivered by Logica, which CGI acquired inAugust 2012.)

energy prices, this empowerment is bound to appeal tocustomers and increase their expectations of the serv-ice they receive from their energy suppliers.

Better billedA welcome customer benefit of smart metering is thedemise of the estimated bill. Infrequent meter readingsand poor access rates mean that many customers aremore than often not billed on estimated, rather thanactual, consumption. This can result in customersunknowingly running up significant debts and exacer-bating the problem of fuel poverty.

25

With smart meters, readings are available on-demand.Smart meters are typically read more frequently than acustomer is billed. However, on-demand meter readingscan also be taken in-line with a customer’s billing cycleor a price change to ensure that every bill is based onactual consumption.

With smart meters, the only excuse for billingon estimated consumption is a faulty meter.

Getting the bills rightSwedish legislation demands that all electricity meters mustbe read once every month. Energy company Vattenfall’s solu-tion to this challenge was to deploy smart meters to its cus-tomers and, with CGI as a key partner providing the AdvancedMetering Infrastructure, has now installed over 150,000 smartmeters.

Hundreds of thousands of meters reporting daily creates veryhigh volumes of data. Despite these volumes, the system hasexceeded its reliability targets, consistently running at levelswell above 99.5 per cent of collected values in a 24-hourperiod. As a result, Vattenfall experiences higher levels of sat-isfaction among its customers and fewer calls querying bills,because the bills are based on up-to-date information.Furthermore, the system provides information about poweroutages and power return for each customer, creating a valu-able quality control resource.

Erik Nordgren, Head of AMR Project Vattenfall EldistributionAN Sweden said: ‘There’s no question that automated meter-ing has helped us deliver better customer service.’

26

Better servicedSmart metering provides suppliers with the tools nec-essary to better service their customers. With improvedvisibility of a customer’s consumption behaviour, sup-pliers are able to deliver innovative service offerings,tailored to the needs of individual customer types. It’sno longer a case of ‘one size fits all’.

Bringing prepayment metering into the 21st century

Mention ‘prepayment’ to most energy retailers and they gopale. Prepayment meters are typically installed for customerswho’ve had debt problems in the past. Unlike credit meters,prepayment meters require the customer to pay up frontbefore consuming energy and can also be used to recover out-standing debts over a period of time. As such, prepaymentcustomers are often perceived to be high cost, low value, andlabour intensive - why would you want that type of customer?

Instant Energy, an innovative application of mobile technologyto the prepayment market, has transformed prepayment cus-tomers into a profitable and desirable market segment.

Developed by CGI, Instant Energy is designed to replace exist-ing prepayment metering technology, leading to reduced costsin serving prepayment customers, improved customer experi-ence, and reduced fraud. The solution is an electricity and gasprepayment service based on SMS messaging and the Pay AsYou Go (PAYG) concept. The technology enables customers toadd credit to their prepayment meter without needing smart-

(continued)

27

With smart metering, existing service offerings such ascall handling, are improved. Call centre staff are able tocommunicate with the meter while the customer is on the phone and see the same information that thecustomer sees. This leads to faster calls and a higherproportion of first-time call resolution.

Impact on SuppliersThe impact of smart metering on suppliers will be mas-sive. It will not only change the way suppliers view andengage with their customers, but it will also open a newbattleground for retail competition.

Smarter processesIn 1998, customers could choose who they bought theirenergy from for the first time. While this new-foundfreedom passed many people by, the impact on suppli-ers was profound. Retail competition required a wholenew set of industry processes, data flows, and IT sys-tems. The change to the industry was monumental and,a decade later, many suppliers are still catching theirbreath.

cards, keys, or tokens - and without necessitating the cus-tomer to leave their home.

Instant Energy won the British Computing Society 2005 ITProfessional Award for Social Contribution in recognition ofthe increased flexibility and control it grants customers.

28

The advent of smart metering represents the nextmajor disruptive transformation to the retail market.Processes that previously took days or weeks to complete and involved many people from differentorganisations can now happen in near-real time via aself-service customer web portal. The potential forchange is breath-taking and, many would argue, longoverdue.

Smarter competitionSmart metering will create a new battleground for retailcompetition.

If a new supplier is unable to communicate with thesmart meter of a newly acquired customer and isforced to replace it smart meters will represent aninsurmountable barrier to retail competition. So theneed to preserve retail competition is likely to force theadoption of interoperability standards and provide alevel playing field in which all suppliers have access tothe same basic smart meter functionality.

The vastly increased detail of consumptiondata available from smart metering will enablesuppliers to understand their customers’behaviour far better. They’ll be able to distin-guish the ‘early birds’ from the ‘night hawks’,the students from the OAPs, and the couchpotatoes from the socialites, just from theirenergy use. Having segmented their customerbase as never before, successful suppliers will be those that can rapidly develop newinnovative products tailored to specific typesof customers.

29

Innovative product offerings are likely to combine anumber of elements such as:

� ToU tariffs.

� Block tariffs that have varying rates depending onthe level of demand over a defined period.

� Working capital tariffs that have different ratesdepending on the level of credit or debt betweenthe supplier and the customer.

Given that every supplier is likely to haveaccess to the same basic smart metering func-tionality, differentiation will be done in theback office and will depend on a supplier’sability to assemble modular smart meter and

A smarter way to change your tariffAs an example of the scale of process transformation likely tocome about through smart metering, consider the humble tariffchange. Today, changing your tariff almost certainly involveschanging your meter. You call your supplier who calls themeter operator to make an appointment for the meter changeand calls you back to confirm the appointment date. Aftergoing round this circle a few times, the meter operator turns upto change the meter and, if you’re lucky enough to be in, youget a shiny new meter. The meter operator then informs every-one and his dog about your new meter and, if the gods aresmiling, you start receiving bills based on your new tariff.

This process takes days, if not weeks, to complete, involves atleast half a dozen parties, dozens of data flows, and is highlyprone to errors. In the new world of smart, you could completethis process yourself, online, in minutes.

30

back office functions into a coherent, innova-tive product offering. However, a level playingfield means innovations can be copied so suc-cess will hinge on speed to market.

The Smart OfficeIn order to compete in the smart retail market, CGIbelieves that suppliers will need a new ServiceOriented Architecture (SOA)-based environment inwhich innovative products can be rapidly developed,deployed and managed by combining smart meterservices, best-of-breed Off The Shelf (OTS) componentsand existing back office functionality. This environ-ment, termed the ‘Smart Office’, will sit between a sup-plier’s legacy systems and the Advanced MeteringInfrastructure (AMI) used to communicate with thenewly installed smart meters and will utilise businessprocess management (BPM) to orchestrate theprocesses required to deliver new smart-enabled retailproducts.

Believing this environment essential to compete in asmart retail market, CGI has launched a Smart Officeservice in which suppliers can rent a ‘hot desk’ in a vir-tual Smart Office via a software as a service (SaaS)offering. Rented on a per meter/per month basis thusavoiding the need for CAPEX investment, the SmartOffice service allows suppliers to get to grips with thisnew way of working and the technology that underpinsit.

Coping with the transitionA smart metering rollout won’t happen overnight. Eventhe most optimistic, aggressive rollout models will takea decade or more. During that time, suppliers will befaced with the prospect of supporting two distinct setsof processes – conventional and smart – and the asso-ciated IT that goes with them.

31

Although the number of smart meters will initially besmall, a complete set of new, smart processes and sup-porting IT will be required from day one to servicethem. In the case of the conventional processes, it maywell be a case of letting them wither on the vine.Alternatively, suppliers may look for ‘sunset’ optionsfrom niche providers willing to take on processing ofconventional customers until such times as theysmarten up.

Impact on DistributorsIn common with suppliers, a significant proportion ofprocesses currently performed by distributors will beimpacted by smart metering.

Smarter processesEarly notification of network faults via ‘last gasp’ smartmetering functionality (that is, the ability of a meter tosend an alert on battery power following a power cut),should enable network faults to be located and resolvedmore quickly. However, this functionality may have anadverse effect on a distributor’s Customer Minutes Lost(CML) performance (an industry measure of the scaleof electricity outages) because the clock will start run-ning at the time of the fault rather than the time thatthe fault is first reported by a member of the public.

Smart meters may also improve the resolution of inter-ruptions by providing the ability to communicate withindividual meters to determine their state. Similarly,the ability to read meters on-demand will help toresolve erroneous customer calls (where a house fusehas blown, for example).

A distributor’s role in identifying and stopping energytheft is likely to be significantly improved through thereceipt of unsolicited tamper alerts from smart meters.

32

Similarly, more detailed consumption data will ulti-mately enable distributors to measure energy lostduring distribution rather than estimating losses usingcomplex models. A more accurate understanding oflosses will lead to more accurate bills, reduced recon-ciliation wash-ups, and greater revenue certainty.

Smarter billingAs with suppliers, distributors will have the ability tooffer more innovative Distribution Use of System(DUoS) tariffs based on the greater detail of consump-tion data available from a smart meter. An increase indistributed energy may force a major re-think of theway in which distributors charge suppliers for use oftheir networks. DUoS tariffs are typically related to theamount of energy consumed by customers. However,an increase in microgeneration and heat technologiesmeans customers will import less energy, resulting inlower revenues for the distributors. However, invest-ment in new systems to control the two-way flow ofenergy is likely to increase the cost of maintaining a dis-tribution network. So distributors’ current cost recov-ery mechanisms are likely to require a major overhaul.

The smart gridA smart grid is a transformed electricity transmissionand distribution network that uses robust two-way com-munications, advanced sensors, and distributed com-puters to improve the efficiency, reliability, and safety ofpower delivery and use. Smart grids are increasinglybeing seen as essential to cope with disturbed genera-tion, greater proportions of renewable generation,active networks and the increased loads associatedwith electric cars.

33

Energy networks need to become intelli-gent. Additional remote monitoring acrossthe network will be required to feed datainto predictive modelling that will enabledistributors to actively manage two-wayelectricity flows (that is, electricity flowingboth to and from a household) across thenetwork. Two-way energy flows mean thatisolating parts of the network for mainte-nance will become more complicated. Newsafety procedures will be required toensure that field staff are protected fromelectrocution.

Smart down underSP AusNet is an Australian electricity distributor with a net-work covering more than 600,000 meters across 800,000square kilometres. SP AusNet has engaged CGI as the sys-tems integrator across a number of its Advanced MeteringInfrastructure (AMI) systems including SP AusNet’s chosenMeter Data Management (MDM) system, EnergyIP fromeMeter. Having proven its capability in the MDM space, CGI’s systems integration role was later expanded to includethe program management of upstream AMI componentsincluding the meter provision, meter installation, meter com-munications, communication network management systems(CNMS) and finally the meter management systems (MMS).

The depth and strength of CGI’s AMI and smart grid capabilityis helping SP AusNet transform to a full smart meter network,which itself is a key foundation for a smart grid.

Smart metering will be an essential component of thesmart grid, providing the distributor with detailed visi-bility of the low voltage network and providing theinformation required to enable distributors to managethe network effectively and support investment deci-sions.

In 2005, the SmartGrids European Technology Platform(ETP) for Electricity Networks of the Future wasformed. SmartGrids (as it’s known to its friends) aimsto provide a shared vision for a European electricitynetwork for 2020 and beyond. The SmartGrid must beflexible, accessible, reliable, and sustainable whileremaining responsive to the rapidly evolving needs ofits customers. SmartGrid’s goal is to change the mind-set of the industry into adopting new technologies,addressing real concerns over security and reliabilityand embracing the SmartGrid vision.

SmartGrids is backed by the work of IRED (Integrationof Renewable Distributed Generation), a cluster ofEuropean projects with €35 million of EU funding andover 100 stakeholders from research, industry, and theutilities sector. CGI is an active participant in ETP.

Impact on OthersThe impact of smart metering will extend beyond cus-tomers, suppliers, and distributors. Here are a fewother parties who are likely to feel the effects of thetransformation:

34

� Meter manufacturers will need to produce thetens of millions of meters required to smarten upthe conventional metering infrastructure.However, suppliers will need to agree on a mini-mal level of smart meter functionality before theproduction lines can begin in earnest.

� Meter operator numbers will double or treble to achieve the aggressive timescales being set forsmart metering rollouts. Dual-fuel sites willrequire either a new breed of multi-skilled meteroperator or close co-operation between existinggas and electricity meter operators.

� Data collection will become a virtual activity asincreasing numbers of smart meters are readremotely.

� Data processors will need to respond to the chal-lenge of smart meters and the associated increasein data volumes.

� Water utilities with a 100 per cent metering policy(either due to water scarcity, leakage, or both)have the opportunity of piggy-backing on a gas/electricity smart meter rollout to accelerate theirmetering programmes and/or deliver them atreduced cost.

35

Part V

Looking to the Future

In This Part� Delving deeper into microgeneration

� Living in a smart home

Smart meters aren’t going to magically appearovernight. Even the most aggressive rollouts will

take years, if not decades, and the world at the end of asmart metering rollout will be very different from thatat its start. In this part, we look at some of the parallelactivities that will influence, or be influenced by, awidespread rollout of smart metering.

Creating a Buzz in Your OwnBackyard: MicrogenerationThe introduction of microgeneration (households pro-ducing electricity from, for example, solar panels) willfundamentally change the relationship between cus-tomer and supplier. No longer a one-way transaction ofthe customer paying the supplier for delivered energy;the ‘prosumer’ will also sell to the supplier and take onthe role of a trading partner.

Microgeneration has a huge potential to minimise trans-mission and distribution losses and offset some of theimpending energy gap threatened by an aging genera-tion plant and an inexorable increase in demand.

For microgeneration to flourish, it needs improvementsin technology, a system of financial reward, and, notleast, a means of measuring the power generated.

Significant growth in microgeneration willpresent challenges to distribution networkoperators who will now need to manage activenetworks (those in which electricity can flowto and from a customer).

Distributed generation will meet demandlocally but less predictably, increasing thechallenge of scheduling the central generationplant effectively by the system operator.Demand is likely to become more volatile,increasing the challenge faced by suppliersand traders in forecasting wholesale demand.

Smart meters, with the capability of measuring exportin addition to consumption, form the key enabler ofthis microgeneration revolution.

Home, Smart HomeImagine arriving home from work. As soon as your digi-tal key unlocks the door, your house adjusts the light-ing, heat, and window blinds to your liking and puts onyour favourite music in the kitchen. In your absence,the house has fed the cat, ordered more milk, turnedoff the TV that your kids left on in the morning, andkept electronic vigil over your property.

And that’s not all. In response to an updated half-hourlytariff from your energy services company, your house

37

38

has turned off your freezer and fired up your fuel cellmicrogeneration unit to sell power to the grid.

A bit far-fetched? Just think of how homes havechanged in the last five years.

For this scenario to become a reality, technology needsto elevate the customer from operator to strategist.The customer takes the strategic decision to adopt asmart tariff and technology takes responsibility fordelivery. In this type of set-up, where you no longerneed to think about when to run the washing machineor dishwasher, half-hourly tariffs become feasible withprofound implications for both wholesale and retailenergy markets. Yet this vision is only conceivable in aworld with smart metering.

Smart electric car chargingA large energy distribution company in the Netherlands madea strategic decision to invest in electric driving andapproached CGI to propose a solution for the charging sta-tions essential to make the project work. The charging solu-tion needed to be safe, simple to use, robust and reliable.

CGI proposed an innovative solution using a mobile device orcard with RFID technology to initialise the charging stationand provide usage feedback. The charging station itself con-tains an energy meter and communicates via GPRS with acentral back office system that handles customer billing.

The benefits received by car owners include receiving feed-back on the charging status of their cars via SMS, being ableto locate a charging station and view charging history viatheir mobile phone and the capability to support internationalroaming.

Smarter SettlementThe energy consumed by a supplier’s retail customersmust be purchased on the wholesale market. Theprocess by which suppliers settle for their wholesalepurchases is likely to experience a transformation trig-gered by smart metering.

Wholesale purchases are settled for on aninterval basis typically every hour, half hour or15 minutes. Interval customers are those thatare sufficiently large to warrant their consumption being metered on an intervalbasis. Non interval customers are those withsmaller consumptions that don’t warrant theexpense of a half-hourly meter. For these cus-tomers (the majority of people), a system ofprofiling is often used to turn infrequent meterreadings into estimates of interval consump-tion so that it can be settled on the wholesalemarket. This process is called settlement.

As suppliers learn more about their customers throughthe increased detail of consumption data provided bysmart meters, their product offerings will expand asthey identify and target specific types of customer.Some of these products will be designed to encouragebehavioural change through innovative lifestyle tariffs.However, for suppliers to realise the benefits of thechanges in customer behaviour that they’ve broughtabout, these changes need to be recognised in settle-ment.

In many cases, it may be feasible to model new cus-tomer consumption behaviours using existing Time ofUse provisions. Thus enabling a proliferation of newsmart retail products.

39

However, the advent of smart homes and increasingalignment of retail tariff structures with wholesaleprices is likely to encourage suppliers to move theircustomers into the interval settlement process wherethey’ll settle for their customers’ consumption on aninterval basis. In some markets, barriers currently pre-vent this from happening but none are insurmountable.

A mass migration of domestic customers from non-interval to interval settlement processes will see anexplosion in data volumes because annual half-hourlysettlement of an unrestricted customer requires over4,000 times as much consumption data as is now thecase. While the central settlement systems will be insu-lated from these volumes by data aggregation, the set-tlement agents will be faced with a profound challenge.

Smarter BalancingKeeping the lights on is the job of the system operatorwho must ensure that exactly enough electricity is gen-erated to meet demand on a minute-by-minute basis. Inthe event of unexpected demand or unplanned outagesof a generation plant, the system operator invariablyturns to the generators to provide the flexibilityrequired to restore the balance between demand andgeneration. Market mechanisms do exist to allow sup-pliers to contribute to the balancing process but thesehave rarely been used.

With the better visibility and control overtheir customers’ consumption provided bysmart metering, suppliers will, for the firsttime, have the tools necessary to actively par-ticipate in the balancing process and realisethe financial benefits this offers. This won’t

40

41

happen overnight. Nor will it apply to a sup-plier’s entire customer base, but there are cus-tomers out there with predictable,interruptible loads who could be helping thesystem operator to keep the lights on. But it’snot just the suppliers who’ll want to use thisnew found flexibility. While domestic demandside management offers suppliers a new rev-enue source, distributors will want to accessthis to better manage their networks. Actionstaken by suppliers for short-term financialgain may not be in line with a distributor’slong-term investment decisions. Similarly,actions taken by distributors to protect theirnetwork may put suppliers out of balance. Andnothing’s stopping third parties offering cus-tomers balancing services directly to trans-mission and/or distribution companies,independently of the supplier! While smartmetering can physically enable domesticdemand management, it’s clear that new com-mercial and regulatory arrangements are alsorequired.

Part VI

Top Ten Smart Tips

This part is small but packs a punch! Here are ourtop tips for surviving and thriving in the smart

world.

Firstly, some general pearls of wisdom:

� Think of smart metering as an opportunity, not a threat. Smart metering is coming and the suc-cessful companies will be those that embrace thetechnology.

� Think about the process, not the meter. To date,a lot of attention has been focused on the box onthe wall but it’s time to start thinking about howto transform your business to exploit the opportu-nities that smart metering will enable.

� Remember that rollout must be watertight. Therollout of smart metering offers a unique opportu-nity to address long-standing, acknowledged dataquality issues in the energy sector – but only if weget the rollout right!

� Smart won’t happen overnight, so be preparedfor the long haul. Even the most aggressive roll-out models are likely to take a decade or more –be prepared to continue to support your conven-tional processes alongside your smart processesor, alternatively, look for sunset options.

� Learn from others. Look to countries that are further down the smart road, like Italy, the US, and the Nordic countries, and learn from theirexperiences.

Here are our tips for the energy suppliers:

� Use smart meters to get closer to your customers.Smart metering offers a unique opportunity to better understand your customers’ energyneeds – so use it!

� Be prepared to be different. The successfulsmart supplier will be the one that can rapidlytranslate customer insight into innovative productofferings. Make sure your IT systems are ready forthe challenge!

� Differentiate in the back office, not the meter.Innovations within the meter belong to everyonebecause everyone is likely to have access to the same basic smart metering functionality.Innovations within your back office are yoursalone.

� Get ready for data – and lots of it. Better cus-tomer insight comes from more detailed consump-tion data. Ensure you have the systems to handlevastly more data than you do today.

� Remember that customers are people too! Thetransition from conventional to smart meters willbe exciting and disruptive, not least for the cus-tomer. Make sure you have adequate informationand support in place to help them through thetransition.

43

Glossary• AMI: Advanced Metering Infrastructure.

The hardware, software, and communica-tions infrastructure required to supportsmart metering.

• AMR. Automated Meter Reading. The ability to remotely read a meter.

• BPL. Broadband over Power Line. The useof Power Line Carrier (PLC) technology to provide broadband through ordinarypower lines.

• CHP. Combined Heat and Power. The useof a heat engine or power station to simul-taneously generate both electricity anduseful heat.

• CDU. Customer Display Unit. Anotherterm for Home Display Unit (HDU).

• Clip-on meter. A low-cost sensor thatattaches inline with the existing conven-tional electricity meter and sends con-sumption data to a wireless monitorelsewhere in the house, showing cus-tomers how much electricity they’re usingin near-real time.

• CML. Customer Minutes Lost. An industrymeasure of electricity outages experi-enced by customers.

• Concentrator. A device required to sup-port Power Line Carrier (PLC) communi-

cation between the head-end system andPLC-enabled smart meters.

• DUoS. Distribution Use of System. Thecharges levied by the distributor on the supplier for use of the distributor’snetwork in supplying the supplier’s customers.

• ERA. Energy Retail Association. An organi-sation representing the major electricityand gas suppliers in the domestic marketin Great Britain.

• Firmware. A computer programmeembedded in a hardware device.

• GPRS. General Packet Radio Service. Apacket-orientated mobile data service thatcan be used to provide an ‘always on’wireless connection to a smart meter.

• HAN. Home Area Network. A networkwithin the home that enables devices andappliances to communicate with eachother.

• HDU. Home Display Unit. Also known asIn-Home Display Units (IHDs) or CustomerDisplay Units, these devices communicatewith smart meters, either directly or overthe Home Area Network (HAN), to displayenergy-related information to the cus-tomer.

• Head-end system. The central componentof an Advanced Metering Infrastructure

(AMI) that communicates with smartmeters in the field.

• IHD. In-Home Display unit. Another termfor Home Display Unit (HDU).

• MDM. Meter Data Management. A singlerepository of meter-related data (billing,settlement, demand forecasting, and soon) that can gather data from multiplehead-end systems and make this availableto multiple applications.

• Microgeneration. The production of heatand/or electricity on a small-scale.

• PLC. Power Line Carrier. Also known asPower Line Communication, this is a tech-nology used to carry data across the samepower line that’s used to deliver electricity.

• Prosumer. A customer (‘consumer’) whoalso generates electricity (‘producer’)from microgeneration.

• SIM. Subscriber Identity Module. A smartcard that stores data for GSM cellular tele-phone subscribers.

• SMS. Short Message Service: a low cost,message-based alternative to voice callsthat can also be used by a head-endsystem to communicate with SMS-enabledsmart meters.

• Smart Grid. A transformed electricitytransmission and distribution network thatuses robust two-way communications,

advanced sensors, and distributed comput-ers to improve the efficiency, reliability, andsafety of power delivery and use.

• Smart Home. A home in which systems(appliances, lighting, heating, air-conditioning, and so on) are connected andremotely controlled over a Home Area Network (HAN) to save energy andimprove comfort, safety, and conveniencefor the occupants.

• SOA. Service Oriented Architecture. A soft-ware architecture where functionality isgrouped around business processes andpackaged as interoperable services.

• ToU. Time of Use. The ability to recordwhen a customer uses energy in addition tohow much they use.

• WAN. Wide Area Network. In the context ofsmart metering, the WAN refers to the com-munication infrastructure used to commu-nicate between the smart meter and thecentral data comms (‘head-end’) system.

• Wi-Fi. The trade name for a popular wire-less technology that’s increasinglycommon in home networks, mobilephones, and video games.

• ZigBee. A low-cost, low-power wirelessmesh networking standard that’s becomingan emerging benchmark for Home AreaNetworks.

A Reference for the Rest of Us!TM

978-0-7645-5476-65 978-0-7645-2571-1

978-0-470-13728-4 978-0-470-12174-0

978-0-7645-5395-0

978-0-471-75421-3

978-0-7645-5193-2 978-0-7645-5194-9 978-0-7645-5195-6

Available wherever books are sold

1284

3

ARTS & CRAFTS

COMPUTER BASICS

LANGUAGES

A Reference for the Rest of Us!TM

978-0-470-51648-5 978-0-470-51259-3

978-0-7645-7028-5 978-0-470-01838-5

978-0-470-51646-1

978-0-470-51501-3

978-0-470-17469-2 978-0-470-14927-0 978-0-470-17474-6

Available wherever books are sold

1099

9_p1

BUSINESS

SELF HELP

DIGITAL LIFESTYLE

http://www.dummies.com