The government has described replacement of all gas and electricity meters with smart meters as an essential national energy infrastructure upgrade for Great Britain that will help make our energy system cheaper, more efficient and reliable and be a key enabler of the transition to a low carbon economy.
Already there are 14.9 million smart and advanced meters operating in homes and businesses across Great Britain, although the transition could hardly be described as seamless. It has been thwarted by missed deadlines, interoperability issues, and installation rates suffering a loss of momentum as the government commitment to ensuring that every home and small business in the country is offered one. It’s relief all round that the Department of Business, Energy and Industrial Strategy (BEIS) is now consulting on extending the deadline from 2020 to 2024.
Analysis from BEIS suggests that smart meters will slash £300 million off consumers’ bills in 2020, rising to more than £1.2 billion a year by 2030 – or £47 per household – though those figures have been disputed. For energy providers, applying analytics to the vast quantities of useful data utilities collect from customers can uncover new customer usage patterns, better forecast demand, and improve compliance with regulatory requests, as well as prevent fraud and reduce loss.
The majority of meter installations to date have been first generation smart meters (SMETS1), a standard defined by government to ensure minimum common functionality ahead of the national smart metering communications infrastructure being in place that will pave the way for interoperability between all energy suppliers. The long-awaited introduction of SMETS2 – the second generation of smart meters – has given a new impetus to the use of smart data.
“Utility companies will benefit because, by better understanding how and why their customers use energy, they can offer products and services specifically tailored to their customers’ needs. This includes dynamic tariffs, localised peer-to-peer energy trading and faster switching times”, explains Bjoern Reinke, director, Smart Metering and Systems of Intelligence at Drax, which has worked on smart metering projects with customers including Haven Power and Opus Energy.
“As we move towards a decentralised energy system, where the production and consumption patterns become hard to predict, the access to data is a key enabler for the transition towards a sustainable future”, says Christian Chudoba, founder and chief executive of digital energy platform Lumenaza.
Against a backdrop of compelling benefits, many energy providers remain tight-lipped on how smart meter data is being used to their competitive advantage. A spokeswoman from SSE told Utility Week the commercially sensitive nature of the subject meant it was unable to share details of how it was using data from the 1.45 million SMETS1 and 250,000 SMETS2 meters currently installed among its customer base. Other utilities approached by Utility Week were similarly reluctant to be interviewed.
Although energy providers are in an excellent position to make the most of customer data, in practice most customers aren’t noticing any benefits, says Mustafa Atik, an energy and utilities expert at customer experience specialist Quadient. Only a quarter of UK consumers believe they have been given a better service or advice thanks to their utility companies’ application of their data, while 61 per cent have seen no evidence of it being used at all, according to Quadient’s research.
“With data use such a critical part of the modern customer experience, utility providers risk wasting their efforts if it brings no customer-facing benefits and creates the impression that customers ultimately don’t matter”, Atik says.
Ted Hopcroft, an energy expert at PA Consulting, says availability of the data and knowing what to do with it once you have it remains a stumbling block, not to mention the intricacy of integrating SMETS1 and SMETS2 data. “Companies will need this composite integrated view to reap the benefits of smart data and for distribution network operators in particular, some critical mass of data will be required to deliver the potential benefits.”
Meanwhile, security concerns prevail and the impact on consumer trust is not to be sniffed at. “Some consumers question if the smart meter is spying on their household, while others are concerned about hackers gaining unauthorised access to their home networks,” explains Atik. There’s also the worry that software incompatibilities could hinder switching or that insight into usage could even prompt suppliers to bump up energy tariffs at peak times such as Christmas.
Katie Russell, head of data & analytics at Ovo Energy, says customer communication is key. “We reassure them that we use encryption, controlled access and other security, including ways agreed with the government, to make sure the information transmitted from their smart meters is secure. At the same time, strict new regulations and codes of practice, governed by Ofgem, keep smart meter data private and safe, and all customer personal data is safeguarded by the Data Protection Act.”
Being conscious too that customers may not want their data used for anything other than billing, Reinke warns: “It’s really important that the energy suppliers only inform customers about products and services that are relevant and likely to be of interest to them. Many consumers are already worried about the perceived invasion of privacy in relation to technology such as Alexa. The balance needs to be right. Using the data to give too many notifications to customers could result in disinterest as could those notifications which don’t add any value.”
Making smart meters more useful
Under GDPR, a homeowner’s consent is required for their supplier to take and use their half-hourly readings. If this permission is rescinded, the data collected must be deleted and returned to the customer. Explaining why data is collected and how it is used should help to alleviate this hurdle, says Shona Toms, senior associate at law firm Osborne Clarke.
As data sharing becomes more commonplace in the energy market, the main challenge is not data protection or security but competition and data ownership. “There is a tension between a company wanting to hold on to data for its own benefit and uploading the data to an open platform for the benefit of the industry at large,” Toms adds.
Smart meters are ultimately useless if providers don’t use the data they provide in the right way. Organisations must have a clear view of what they want to achieve with the data, with a clear line of sight from their KPIs to the data provision, Hopcroft says: “They must avoid the trap of drowning in data or creating a function that generates endless graphs and dashboards showing things that are interesting to know but don’t drive business value.”
The potential of smart meter data remains largely untapped. Applying machine learning so that data can be analysed at a much more granular level represents a huge opportunity. “Anomaly detection can provide a great service to customers because it can also identify inefficient equipment and that which is likely to fail.”
The ability to dynamically update tariffs, switch loads and turn on other sources of energy, such as battery storage, are also largely untapped. In February 2019 Octopus launched time-of-use tariffs for consumption, that effectively paid customers to use electricity when there is too much power on the UK system, and in April became the first supplier offering a Smart Export Guarantee tariff.
Marissa Papas, managing consultant at Capgemini, believes using smart meter data in isolation is a missed opportunity. “By combining the data points gathered through smart metering with other data sources, for example demographics and behavioural, utility companies can turn the data into something useful and relevant.
“The true winners in the market will be the ones who use data to address business concerns and customer needs and are agile and proactive in their response,” Papas adds. “Utilities of the future will need to have a proactive and engaged relationship with their customers. Building and maintaining trust with customers is crucial in this highly competitive market.”
The key to successful use of smart meter data is to focus on the outcome and value for the end customer and for the energy system,” warns Chudoba. “After all, the smart meter data is very important, but it is an enabler; a piece in the puzzle of the energy transition.”
Industry view: OVO
Over 45 per cent of Ovo’s customer base is now smart metered, having installed over one million individual smart meters to date. Katie Russell is head of data & analytics at the company
What issues does use of smart meter data present?
When we use customers data to build products, we need to ensure that we are transparent in how we make any personalised calculations and recommendations and that customers have enough information to understand how they are being billed as well as understanding the additional information on how they could save money. Often this means simplifying complicated concepts and only showing the most relevant information.
What does the future hold in store?
We will we show our customers how combining smart meters with Internet of Things innovations in the home will magnify their energy efficiency and offer them benefits. These benefits will be amplified for customers who grant us permission to securely collect the IoT data itself.
What advice would you pass on to others based on your experience to date?
Give customers control of their data and preferences. Listen to their concerns and reassure them about your security practices and how their data is safeguarded. From a safety perspective, invest in training. All our engineers are trained externally by accredited training providers. In product development, A/B test and track customer feedback to ensure the products are as informative and effective as possible.
This article first appeared in the latest edition of Utility Week’s Flex supplment, here.
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