Releasing the potential of Smart Grids

The adoption of smart metering is accelerating in Europe, the Middle East and Africa but utilities are still missing out on the technology’s full capabilities and benefits, finds ‘The EMEA Smart Grid Rollout’, a study by Oracle Utilities.à‚ 

Bastian Fischer, Oracle Utilities, Spain

The pressure on all big emitters of carbon dioxide (CO2) to reduce their output is particularly strong for the electric utility industry, which accounts for 25 per cent of carbon emissions worldwide, the largest share of any industry.

An effective way for electric utilities to reduce carbon emissions, whilst reaping substantial business benefits, is to implement Smart Grid and smart meter technology ” taking the step towards a bi-directional energy supply chain. Smart Grids allow utilities to manage their distribution grids more efficiently so less power needs to be generated, which cuts emissions and the frequency and duration of outages.

What is more, the technology enables utilities to integrate renewable energies, such as wind and solar, into the grid. Substituting high carbon emitting energy sources such as fossil fuels with renewable energy can reduce emissions and help achieve the European Union’s 2020 target of utilizing more renewable sources and cutting greenhouse gases.

How advanced is your deployment of smart meters? (percentage responses) – Source: Oracle

But smart meters also help consumers and utilities manage their energy use more effectively by being able to better understand energy consumption patterns and detect and report outages and power restorations. The vast range of benefits to consumers enables them to make better decisions about off-peak electricity use, thereby reducing the need for more installed generation capacity and distribution infrastructure.

The rollout of smart meters will also offer enhanced energy efficiency and improved power distribution, operational efficiency and reliability, alongside better control and visibility of energy consumption and billing.

A recent study conducted by Oracle Utilities, titled The EMEA Smart Grid Rollout, reported that utilities across EMEA (Europe, the Middle East and Africa) have made positive steps towards adopting ‘smart’ technology, with 38 per cent having either completed or begun a phased programme to install smart meters in households.

Over half of the utilities (52 per cent) plan to implement smart meter programmes in their countries over the next five years. But, while the number of utilities implementing the technology shows an upward curve, the study concluded that utilities are realizing neither the full capabilities of smart metering nor the benefits of implementing a smart grid infrastructure.

The report also revealed that most utilities surveyed are only planning to put in place the IT infrastructure to support the Smart Grid over the next five years. Almost a third reported that they had no plan to upgrade their IT systems at all to meet the demands of these intelligent networks.

Adopting smart technology

For electricity providers, the most popular feature of smart metering is the capacity to remotely turn on and switch off power to a customer, with 74 per cent of respondents using or planning to use this functionality. On the other hand, many suppliers had no intention of using capabilities to better detect, control, monitor, communicate or charge for electricity usage in real-time, which would bring improvements at an operational, environmental and customer level.

Similarly, the study found that just over half of energy utilities questioned are not communicating smart meters’ full benefits to their customer base: 60 per cent had no communications programme to inform customers about the service benefits; 50 per cent were not communicating on the impact on billing; 56 per cent gave no information on why smart meters are being installed. Among utilities with an active communications programme, only 62 per cent were addressing security issues and 78 per cent privacy implications.

Consumers make choices based on trust and cost. If they are fully knowledgeable on how smart meters can help them to better control their energy usage, and provide them with more accurate bills to save money, they will be responsive. Likewise, if consumers recognize that smart metering will result in fewer outages and a quicker response time to faults, they are likely to be more willing to support the environmental cause and be receptive to understanding the privacy implications.

Analyzing your customer

Feature-rich smart meters produce high volumes of complex data, which utilities can extrapolate using Smart Grid technology for greater analysis and business use, opening up new commercial channels for revenue growth. But to accommodate the increase in data processing, utilities require more robust IT infrastructures. The study found that most utilities have considered the implications of increased data output on their IT systems.

Seventy-two per cent of organizations plan to upgrade their hardware and software in the next five years to meet the date demand, and 70 per cent of these utilities are putting in place a staff programme to introduce the Smart Grid across areas of their business.

On the other hand, 14 per cent of respondents had not begun to assess their systems and an additional 14 per cent are not planning to implement new IT systems to extract the intelligence from smart meters.

By having a Smart Grid in place, with full technical capabilities to extract data, utilities will see the fruition of their investment. The study found that 14 per cent of energy utilities expected not to see any return on investment (ROI) from their smart meter programmes over the next five years, and 26 per cent said they did not know when ROI will be achieved. It is clear from this that utilities investing in smart technologies are unable to fully understand the capabilities delivered, and what can be done to reap the full benefits.

The survey revealed that energy utilities who had invested in the Smart Grid saw their energy efficiency programmes as the core component to helping them achieve ROI (66 per cent), but most utilities were failing to take advantage of the commercial opportunities, beyond streamlining their operations.

By assessing their needs and putting systems in place to make full use of the data from Smart Grids and metering, utilities will be empowered to adapt their business model to improve the services delivered to customers, while becoming operationally more efficient and reducing their CO2 emissions. For example, by applying intelligence from the data to business processes, providers can optimize their field operations for greater efficiency, improve service reliability and take a more customer-centric approach with improved data on customer behaviour to map services against requirements.

The data can help utilities differentiate service offerings to be more commercial and competitive, while automating processes and making timely network infrastructure investments. Utilities can also avoid the need to build new transmission and distribution infrastructure by using the data to reduce peak demands and the related capacity constraints.

Achieving Optimal Intelligence

To fully support intelligent networks, utilities must plan and build an open and agile IT infrastructure to accommodate the flood of data, as well as make the most of critical data that are now available to them. Providers need to isolate their current environment to pre-filter smart meter information so only relevant and condensed information gets past the existing environment.

As mentioned, one of the challenges associated with the move towards smart metering is the inevitable increase in the amount of meter data utilities must handle. To address this, utilities can implement a meter data management (MDM) application specifically designed to gather large volumes of data from multiple meter types, store it and process it according to specific utility needs.

The next step is for data generated from smart meters to be accessible to the core corporation in an enterprise-wide MDM system. Because this integrates a lot of hardware technologies, utilities need to consider a Smart Grid gateway to go on top of the physical hardware in order to isolate it from business processes. These are architectural structures that will enable utilities to be open and intuitive and, at the same time, give them an infrastructure to design processes that are not dependent on the physical hardware.

However, the study found that only 14 per cent of utilities have fully integrated their MDM systems with energy sourcing management: 18 per cent with forecasting services and energy supply contract pricing and rate design; 42 per cent with customer care and billing; 50 per cent with self-service applications; 36 per cent with asset management and 32 per cent with network management systems.

When will you have systems in place that can store and analyze data from smart metering? (percentage responses) – Source: Oracle

To make the most of the Smart Grid and ensure projects are rolled out successfully, utilities need to have strategic executive leadership in place and involve all of their departments in the implementation process. Otherwise, they face the risk of revenue loss, less-than-optimal service delivery and long-term excessive IT costs that can be detrimental to both their business and customer relationships.

Tapping into green transport

A clean and green alternative to diesel and petrol powered transport is the electric vehicle (EV), as it has fewer total fuel-associated air emissions. By supporting the reduction in carbon emissions, it is expected that electric utility providers will be able to make preparations to support EVs.

Yet the study revealed that 84 per cent of utility executives stated that increasing the adoption of EVs is not a priority for them right now; of these 58 per cent will wait for EV adoption levels to increase before making any plans.

Only 12 per cent of utilities that are collaborating with local governments and transport bodies to investigate charging models are factoring EVs into their plans for transitioning to the Smart Grid.

Besides supporting the environment, utilities are missing a completely new value chain and source of potential revenue to tap into. It is predicted that EVs will make up more than 5 per cent to 8 per cent of automobile sales by 2020 and 15″20 per cent by 2030. Utility retailers can reach a whole new client segment, increase stickiness with their customers and at the same time, offer a new set of bundled lifestyle products to differentiate themselves by investing in the EV market.

However, success in supporting the EV space can only be achieved with the necessary infrastructure, the right information and the correct process platform to support a whole set of new customer, billing, energy and analytical processes.

The Smart Grid is a fundamental enabler but it is the responsibility of the utility to start now with the planning and implementation to prepare the widespread adoption of EVs in the coming years.

Synching technology with nature and commerce

Electric utilities are taking the first steps towards adopting Smart Grid technology and implementing smart meters with their customer base. It is recognized that this investment will increase energy efficiency and reduce CO2 emissions. However, the disintegrated approach that utilities are taking means they are missing out on the real commercial opportunity that the technology can offer.

For utilities to make the most of the Smart Grid and deliver ROI, they need to put in place a transition plan by first stating what exactly they want to achieve. Utilities need to examine their marketplace and take a staged approach to adoption based on their most immediate needs, and what will deliver most benefits and ROI in the short term. They can then consider the longer term plans and goals.

But it is not simply a case of implementing meters and synching these up to IT systems and processes to capture the data. Smart meters and Smart Grids by their nature provide far more intelligence than current systems. IT infrastructures need to be reviewed and upgraded to accommodate the volume and complexity of data so executives can utilize the intelligence to take real advantage of the commercial, customer, and environmental opportunities the technology presents. Importantly, communication programmes need to be put in place to educate business stakeholders and customers so people can connect with the benefits.

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