Smart Meter Deployment in the UK Meeting the challenges of mass rollout

Energy, Utilities and Chemicals | the way we see it

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The government is currently consulting on the mandatory deployment of smart electricity and gas meters to every home in the UK by 2020. This represents one of the greatest challenges and opportunities that the UK energy industry has ever faced. The wide-ranging issues being addressed during the consultations include technology, tariffs, data management and finance.

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Our view is that a regionally organised, franchise-type approach to deploying the meters and implementing the underlying network is likely to emerge as the best option to maximise time to value, minimise costs and keep customers on-side. Such a model is equally feasible whether deployment is retailer or DNO led. Other prerequisites include rapid expansion and training of the deployment workforce, the development of alternative customer service channels, and the introduction of sophisticated field force and work scheduling systems.

Analysing the challengesOur experience of carrying out mass smart meter deployments around the world gives us insight into the scale and nature of the challenges involved in this programme. These challenges include complexity and cost, shortage of implementation skills, the additional customer service burden and the need to capture information to support resource allocation.

Complexity and cost of physical deploymentThis is one of the most complex logistical challenges attempted in the UK. In addition to the installation of the 47m meters and the associated in-home displays, a central communication network may also be architected, designed, built, commissioned and integrated to manage the meter data and disseminate it to retailers and other industry bodies such as distribution

network operators (DNOs). The deployment of meters needs to be properly integrated with the network implementation (see panel overleaf).

The UK deployment challenge presents some unique physical and engineering challenges when compared with programmes in the US and Canada. For example, in contrast with North American practice, electricity and gas meters in the UK tend to be located inside dwellings and commercial premises, presenting access problems for engineers and potential issues with network connectivity. Also, UK electricity meters are typically mounted on to the back board and hard-wired to the incoming line using ties; they will therefore need replacing by trained electricians, each of whom will probably only be able to replace a maximum four to five meters per day based on the time required for the tasks. In North America, meters are generally socket-based, meaning that non-qualified staff can be used, replacing up to 40 a day.

Many antiquated electricity meters are still in place here, connected to even more aged infrastructure. Some will require considerable additional work to ensure safe and compliant installation of a smart meter. Since meter engineers will not usually know which dwellings require this work until they get on site, follow-up visits will be necessary. Gas meters will have similar issues: perhaps greater ones in terms of safety checks. Relatively few engineers today are qualified to deal with both gas and electricity meters, a fact that could cause additional complexity and increase the frequency with which multiple visits to the same property are needed.

Cost is a critical issue for the entire smart meters programme, particularly as it will influence customer perceptions, which are key to the success of the programme. Uncoordinated nationwide deployment, is likely to be inefficient (see panel). Such an approach would increase costs, complexity and risk of

However, the issue that is arguably most critical to the overall success of the programme is the physical deployment of the meters themselves. Mandatory deployment of gas and electricity meters will require a visit by engineers to every home in the country over an eight-year period, starting in 2013, to replace 25m electricity and 22m gas meters and (possibly) install in-home displays for every household. This will be a massive undertaking in terms of complexity as well as size.

Energy, Utilities and Chemicals | the way we see it

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Our experience of mass deployment in other countries, together with our knowledge of the UK energy industry, positions us to develop potential approaches and solutions to the challenges raised.

poor service, and thereby alienate the public, whose support is critical to the programme.

A final source of complexity is the fact that the deployment process is also the energy companies’ primary opportunity to educate customers about smart meters and their effective use. That means that each customer will need to be present , not just to let the engineers in but to receive their introduction to the new smart technology. This would apply to initial visits and any necessary follow-up visits, and would eliminate options such as, for example, leaving the key with a neighbour for access. This need for customer interaction means that visits to customers who

are out at work will often need to be scheduled for evenings and weekends (further limiting the numbers of meters that can be deployed in a given time by given resources). Engineers, meanwhile, will need to be equipped to deliver training, to answer customer questions, and perhaps to promote other energy conservation services.

Shortage of implementation skillsThe resources required to meet the 2020 deployment target will be approximately three times the level of the existing workforce. A massive recruitment and training effort will be required, but is unlikely to start until a mandate is agreed – a factor that could jeopardise the 2020 completion target.

The case for a regional deployment model

The proposal that each retailer should deploy to their own customers would involve multiple supply chains, workforce management and customer systems. Most retailers have customers nationwide and so, given the number of non dual-fuel customers, it could well be envisaged that multiple workforces could turn up several times to the same houses in the same street. This pattern has already been seen in European deployments and has a major impact on costs, as well as increasing the risk of customer perception and bad service. Additionally, some retailers are reluctant to undertake replacement of meters in areas where they do not currently have workforce coverage or third-party arrangements in place. It is clear that a franchise model or a DNO led deployment would simplify many of these challenges. However, there are other technical issues that also compel examination of regional and more logically driven roll out such as the Network requirements.

Depending on the type of communications technology selected, it is possible that implementation of the network will need to be integrated with meter deployment in order to avoid network reliability and redesign issues. Also, retailers may be reluctant to deploy smart meters without a network connection present as this will mean they are effectively putting in a “dumb” meter. In this situation the engineer would be unable to demonstrate the meter fully to the customer, and there would probably have to be more customer calls during switch-on, and possible revisits once connection is made to address customer and performance issues.

Therefore, it is a fair assumption that the network needs to be available before meters are deployed. However, if a network architecture like PLC or mesh is chosen, the network could not realistically be deployed across the country in one step. It would typically be deployed in logical areas, and by default meter deployment would follow its availability. (Note that this problem would not arise if nationwide GPRS were used as the sole infrastructure; however, GPRS has potential problems of its own, such as uneven coverage, and reception difficulties underground or in dense urban structures, and so it is likely to be used as part of a portfolio of different network architectures.)

We believe that these issues, combined with the very real constraints on cost, mean that it is almost inevitable that some kind of regional deployment will emerge, and that it is preferable to plan and optimise this deployment model up-front rather than letting it evolve in an uncontrolled way.

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Training of engineers who can install both electricity and gas meters is likely to be a priority.

Additional customer service burdenPositive customer perceptions are vital to the success of the programme. Customers will be aware of the costs of installation, and realise that those costs are likely to be added to their bills. They will therefore want to understand how they can get something back from the devices: how to use them, what tariffs are available, the billing arrangements, and so on. Customers will also demand prompt service and well managed appointments. Unless these expectations are met, they are unlikely to support the deployment.

Satisfying these requirements will necessitate an enormous customer services capability across the UK. Customer interactions will begin pre-deployment, when utilities will need to work with each customer to plan appointments and answer questions. Immediately post-deployment, customers will probably have queries about the operation of the devices, even if they have seen a demonstration by the installation engineer; these queries might relate to faults or energy conservation. On an ongoing basis, the extra data provided by smart meters will prompt customers to interact more frequently with their utility. The additional interactions could potentially overwhelm utilities, leading to considerable additional costs.

Capturing and organising information to support resource allocation Another important task will be to align the available resources accurately with the work that needs to be done. The frontline workforce – engineers and customer service staff – will be the first to uncover issues such as missed appointments, installation and engineering problems and billing discrepancies. If these issues are not effectively captured and managed there

is a high risk of losing control of the deployment, with substantial financial and reputational costs for the utility and for the deployment as a whole.In addition intelligent use of existing data about the housing stock will make it possible to plan the roll-out in a more effective manner. For example, by pinpointing older properties that are likely to have outdated gas and electricity meters and connections, companies can forecast which houses are likely to need extra installation and safety work. Longer visits can be scheduled for these cases minimising the need for return visits.

Our conclusionsOur experience of mass deployment in other countries, together with our knowledge of the UK energy industry, positions us to develop potential approaches and solutions to the challenges raised. Below we discuss the main requirements for a successful deployment.

A regional, franchise-based approach Experience and insights from both the UK industry and other deployments abroad suggest that a regional approach to both meter deployment and network implementation will be the most cost-effective and efficient in terms of both resources and customer management. It allows a single capability to be used for coordination, planning, supply chain, workforce management and customer management, rather than duplicated capabilities which would necessitate a further layer of complex coordination.

A logical approach for a regional deployment could be to use the 14 distribution zones to demarcate the rollout zones. As each zone is complete, smart grid capabilities can be tested and rolled out. This approach also offers the option of splitting the communications hub and meter data management across smaller regional subsets if this proves more cost effective and/or reliable than having one large UK-wide hub.

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One way to tackle regional deployment would be with a franchise model, whereby a single deployment entity approved by the retailers in scope works on all the meters in a given region. Such an entity could be the dominant retailer in a specific region, or one of the licensed meter operator and services companies. Compared with a situation where each retailer would have its own deployment team in each region, this would make for a more efficient, cheaper and more coordinated deployment, with a clearer path of communications for end customers. While this method could appear at odds with the competitive deployment ethos of the consultation documents, it can drastically reduce overall programme costs, length of deployment and time to benefits, as well as the risk of customer disruption and alienation. It has no impact on retail competition for energy or energy services at all, and in fact provides a better deal to customers and retailers through lower cost. Therefore, a regional approach is likely to be an attractive option. We believe deployment models must be agreed as soon as possible to allow effective deployment planning, process and systems design and resourcing to start.

Rapid expansion and training of the deployment workforce Another argument for completing consultations as soon as possible is the need to plug the resource gap. Once a deployment approach and governance have been defined, funds should be made available to start recruitment and training to achieve the necessary increase in the number of engineers available. Retailers and government must work together to launch the recruitment campaigns and initiate the training schemes required.

Enhancement of customer service channelsTo manage increased customer contact, and to avoid customer service centres and existing channels being stretched and incurring additional costs, retailers will need to ensure they have the right channels and capabilities in place. Many retailers are already investing in these types of capabilities, including web portals and Interactive Voice Response (IVR) systems, and this investment will need to continue and in some cases be increased as mass roll out begins. While this is necessary to ensure that customer interaction can be managed efficiently, it also brings the opportunity to take advantage of the “smart revolution” to roll out additional offers and capabilities to customers via multiple channels.

Field force and work scheduling systemsOur experience shows that an integrated field force and work scheduling system is the only way to coordinate, schedule and track a deployment of this scale. We have designed and rolled out systems that combine the work scheduling, meter supply chain, meter location and billing capabilities into a single Control Centre for the utility to manage their deployment. The field force is managed and optimised using bespoke handheld devices for the engineers. This device is integrated into the deployment management systems, billing systems and procurement and warehouse systems to ensure that information from the frontline is instantly available to the relevant business units and vice versa.

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Final commentsBased on our past and current involvement in the strategy, planning and execution of the deployment of millions of smart meters globally, together with our deep knowledge of the UK energy sector, we believe that only by building on the principles above can a mass deployment across the UK be successful. Even then, the scale of the undertaking must not be underestimated. Outstanding programme management will be needed if crippling cost overruns are to be avoided.

The UK is contemplating one of the largest smart meter deployments in the world. If we take this opportunity, let us make sure we put in place the capabilities and governance to make it the most successful in the world.

© 2009 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini

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About Capgemini

Gord ReynoldsPractice LeaderSmart Energy Servicesgord.reynolds@capgemini.com+1 416.732.2200