Over the last few months it’s been interesting to look at the coverage of smart meter deployments, as people are starting to question as to what the benefits have been? Did the billions of dollars invested in them help either the grid or consumers? The pace of deployment has certainly slowed in the US and Europe and in recent months there seem to have been as many headlines about smart meters being replaced with old analogue ones as there have about new deployments. At the same time the interest of energy suppliers in smart metering has been waning. Instead they’ve fallen in love with smart thermostats as the way to woo consumers with energy savings. British Gas’ recent purchase of AlertMe for £44 million (a tad short of the $3.2 billion that Google paid for Nest) is the latest example of that trend. And with energy prices falling, any claim that smart metering will engage customers in energy saving is looking increasingly spurious.
But that’s a malaise specific to the North American and European energy suppliers, who are probably beginning to feel that they’ve been mugged by meter manufacturers into deploying white elephants that have turned out to be little more than an overpriced AMR system. If we look at the next generation economies, like Brazil and India, they have a very different set of problems. The most important of which is the amount of electricity which simply disappears. In India around 25% of electricity “goes missing”, equivalent to almost $20 billion of revenue every year. In Brazil around 11 GW is stolen, equating to 20% of generation. The effect of this is not only lost income, but power outages associated with illegal connections and tampering. It is a level of disruption that calls for a very different approach to the one provided by the expensive, over-specified meters of the Western world.
These problems require a far more pragmatic approach to smart metering – generating a new breed of solutions which I refer to as Smart Metering 2.0. Whilst the western deployments should have been about data, they ended up being little more than new billing solutions because the systems were designed from the wrong perspective. That’s largely because they were designed by people who didn’t really understand the architecture of end-to-end systems and were hung up on a legacy approach. In effect they made the meter more complex so the head end could stay simple. That was all about not rattling the cage of the utilities’ IT departments, most of which don’t want to have to deal with more data. The new meters are taking the correct view of keeping the meter as a simple source of data and adding value in the comms and head end. It’s no surprise that these are being spearheaded by companies with a background in comms who understand how M2M and the Internet of Things systems work. It’s an approach which drastically reduces the cost of deployments and allows utilities to upgrade their capabilities as they need them, rather than trying to do everything from day one.
I’ve recently had the chance to look at one of the companies leading this change. They’re Cyan Technology, who are based in Cambridge and are doing well in countries like Brazil and India with their CyLec system. They’re not the only company looking at Smart Meter 2.0 – Semtech have teamed up with Link Labs to use their long range LoRa technology in a similar manner and I’m sure there are other trying to break through the hegemony of the established metering companies.
What the new Smart Meter 2.0 systems do is to provide granularity of data and the ability to evolve both the wide area network and head end to meet the utility’s requirements. Rather than trying to second guess what they need at day one and overload the meters with expensive features, this new generation systems can be configured to maximise benefits and value.
Looking at the losses in newly industrialised countries, the sheer scale cries out for more data on what is being consumed and where. In India, where 300 million consumers still live without an electricity supply, it’s not just data for accurate billing, but a more fundamental requirement for data which lets energy suppliers understand how the grid is being compromised. The scale of the problem means that utility companies need a step-by-step approach which can be deployed quickly and then evolve with their requirements, hence the need for a new, more flexible approach to smart metering.
Cyan’s CyLec system has been developed to address the requirements of these utilities. They’ve developed a short-range, cost-effective communications system operating in a license-free radio spectrum which if needed can be retrofitted to existing meters or incorporated in new ones. The solution works in partnership with the evolving communications infrastructure in countries where there is rapid mobile phone adoption, along with mobile wallets that are enabled by phone operators to create a more real-time, managed approach to energy consumption and its payment. This approach helps identify and reduce theft, increase awareness of grid resilience requirements, and increases the financial standing of utilities to underpin their further evolution. It allows utilities to go either for a full smart-from-the-start communications enabled solution or evolve organically. Both Cyan and Semtech have chosen a set of license-free sub-GHz ISM operating frequencies which means the same solution can be deployed anywhere in the world. Utilities can start off by using it for a simple automated meter reading roll-out, where the meters can be read by a walk-by or drive-by reader. It also allows them to be used in dense urban environments, which has made Cyan the supplier of choice for a number of Indian energy suppliers.
At this basic level it provides vital information to help utilities understand where power is being legally and illegally used, without the need for a wide area communication network to support the meters. It lets them build up a history of usage, outages and theft, from which they can identify areas that need to be addressed in greater depth. It’s a vital first step to understanding what is happening to the electricity supply.
As that learning evolves and the network usage becomes better understood, the AMR rollout can be upgraded to a smart Advanced Metering Infrastructure (AMI) by the addition of local wireless concentrators and network management head-end software. The advantage of a license-free spectrum means that manual drive-by or walk-by readings can be replaced by installing local concentrators which talk to the same meters using a mesh network which uses local mobile network services to provide a fully featured, wide area communications solution. It transforms the system to a two-way smart metering deployment with minimal additional cost and effort. Any meter can be accessed at any point in time, allowing suppliers to drill down into local issues to see where attention is needed.
Rather than investing in successive complex and costly deployments, utilities can develop a roadmap for smart metering where they add functionality and management capabilities as and when they need them. It’s smart metering which is driven by the supplier requirements, not by external technology.
There are plenty of examples in the history of product design of a lower cost, innovative product taking over from an established technology, not just because it costs less, but because it’s more flexible and does the job better. Anyone who’s read Clayton Christensen’s “The Innovator’s Dilemma” will be familiar with how this form of disruption can change an industry. This new generation of smart metering has all of the hallmarks of one of those disruptive technologies. Countries with more challenging distribution problems and less money to spend are realising that it is exactly what they need and are embracing it as a new, cost-effective wave of positive disruption in smart metering.
For countries which are only just embarking on smart metering deployments, Smart Metering 2.0 is the only sensible approach. But what about those countries which have already deployed or are about to start installing smart meters? What should they do? Today it is unclear how much value has been provided by the existing expensive and complicated deployments. Hopes of customer engagement have been shown to be largely spurious. Nor have customers taken well to the prospect of automatic demand response, seeing it as an unwelcome intrusion into their homes. Instead of being a benefit, it has often only served to increase distrust and raise privacy fears. Other than billing, the economic payback has been difficult to find – utilities generally have little to talk about beyond their ability to detect users who are illegally growing cannabis. Now that many US states have legalised that, they’ve lost even that option. It is a classic example of a solution that did not fit and was also too expensive for the problem.
Britain, which has one of the largest smart metering programmes, exemplifies how a deployment can spiral out of control. The plan currently has each home containing a smart electricity and smart gas meter, a communications hub, an in-home display and a wireless mesh network controlled by the utility. Rather than sending data directly to the network, all readings are sent to a central clearing database which then routes them on to the supplier. Data is only sent irregularly and can’t be accessed on demand in real-time, so is useless for emerging volt/VAR control applications. Each year the UK specification has been allowed to creep, with new standards needing to be written, resulting in meters and displays which will be incompatible with those anywhere else in the world. As a result of this complexity the start of the deployment is regularly pushed back by another twelve months, as costs continue to mount.
The British deployment has only ever been justifiable by spurious savings invented by DECC, which they refuse to reveal. With prices currently falling it’s almost certain that there is no economic benefit for consumers from the current generation of complex meters. Yet the tightly-knit and cosy community of energy suppliers, DECC and established meter manufacturers has managed to prevent any consideration of up-to-date alternatives, such as Smart Metering 2.0.
Back in 2011, the UK Government set up the Government Digital Service – a body aiming to find new and efficient ways of simplifying Government IT, both to reduce costs and prevent the ongoing waste of major project failures. They’re doing a great job in driving through digital transformation and reckon they’re on course to save the UK tens of billions by 2020. It’s time they turned their attention to the GB Smart Metering Programme, looking to see if it should be abandoned in favour of the new Smart Meter 2.0 technology, which, ironically, is being led by UK companies who have so far been excluded from the current programme. Which means that the GDS doesn’t have to look very far. If they don’t and the UK industry fails to come to their senses, consumers will be saddled with a bill for a white elephant which could easily cost them more than £20 billion.