‘The case for smart metering has never been more compelling than it is now’, was the conclusion of The Department for Business, Energy and Industrial Strategy (BEIS) in its June 2021 report ‘Smart Meter Policy Framework Post 2020’. The argument is that while the pandemic has slowed the progress of installing smart meters within domestic and commercial premises in the UK, it has also brought forward the importance of moving to digital services across the economy.
Within the energy sector, digitisation is benefiting businesses and consumers alike. For businesses, it is enabling them to simplify customer onboarding, improve price forecasting and bill customers fairly for the energy they use or export. For the consumer, it is helping them to monitor their real-time energy use and, when using pre-pay functionality, to top up from anywhere, safely and securely. This in turn supports energy efficiency, transparency and can improve consumer outcomes and satisfaction.
According to BEIS, in March 2021, there were 24.2 million smart and advanced meters in homes and small businesses across Great Britain, representing 44% national smart meter coverage. This progress has been achieved over two to three decades, and so with the mandatory half-hour settlement’s requirement for the power retail market to monitor all energy usage through smart meters by October 2025, there is still a long way to go in a comparatively very short period. And while there has been some push back from parts of the industry that believe the pace is too fast, and the cost of installing meters too great, Ofgem has been clear that it is happening and that all the energy retailers, regardless of size, need to be prepared.
The data challenge
The key industry challenge in adopting half-hourly settlement is data, and specifically how to manage the vast amounts of data that will be created once the new regime is fully operational.
Most legacy systems were designed to use physical servers and will struggle to cope with storing and processing the amount of data required. GDPR is another important consideration, as businesses require larger teams with more sophisticated expertise to demonstrate that data is secure and is being managed in line with the regulations. Robust data loss strategies are also required to assure regulators that when servers inevitably go down, there are systems in place to prevent the data from being lost and the poor customer outcomes that may result.
In general, the gas industry has been slower to modernise systems to account for mass data than the electricity supply sector, but the data requirements remain more manageable as much of the data is at a daily and not a half hourly level (as it is for electricity). Across the board, however, achieving the required scalability for any business in the power retail sector will rely on robust planning and having the right systems in place.
SaaS to the rescue
Thankfully, we’ve had the foresight to be able to design and create solutions to accommodate mass data. Taking data off servers and onto the Cloud has been key and has opened the door for Software-as-a-Service (SaaS) businesses to support the power retail market in storing and utilising data in such a way that it becomes an enabling tool, rather than an unwelcome challenge.
Cloud-scale services, for example, mean that companies do not have to maintain redundant server capacity to know that they can always meet their computational needs, and can grow and take on more meters without the worry that they are about to hit a limit. The performance and efficiency of their systems can be maintained throughout by these auto-scaling features, and the SaaS business model can prevent large step-changes in infrastructure costs.
Systems can be built to accommodate GDPR and data loss strategies from the outset to be not only compliant, but also to use the data to communicate with customers about their usage, contracts and billing in a timely and responsive way. This ultimately provides customers with a better and more accurate service, and one that adds value with loyalty schemes, convenient apps and greater transparency in how, where and at what time their energy is being used.
The Cloud has also supported businesses that have had to switch to home working because of the pandemic, as systems can be securely accessed remotely. This is a benefit we expect to continue to be useful as we emerge out of the pandemic, but some elements of remote working still remain.
While suppliers should own their processes, the obscure coding and data security knowledge now required – including cryptography with reference to smart meters – is well beyond the specific expertise previously required within energy supply businesses. Outsourcing is therefore an efficient way to tackle the data issue.
Digitisation and increased automation have also dramatically reduced the quantity of manual processes required to service customers. The days of having to cut and paste information from one spreadsheet to another are fast disappearing. With a SaaS system, time can be better spent to the benefit of customers, employees and the business.
Where we’re headed
Automation has brought about industry disruption, which is where our sector is headed, allowing businesses to create more tailored and convenient products such as intelligent pay-as-you-go tariffs and element-level billing solutions.
Ultimately however, above all benefits of practicality, accuracy, transparency, convenience and fairness, there is an important ideological argument to smart metering at play.
Predicting energy usage supports the customer, especially when it comes to paying a fair price, and ensures supply meets demand. This will become even more important in the future as we strive to generate an increasing proportion of our electricity from renewable sources (such as wind and solar) that are inherently more erratic in their levels of production. This will require a move towards a ‘smart grid’ where the use of electric vehicle charging and smart appliances, for example, can react to the changes in generation (and therefore price), and in turn customers can benefit from tariffs that facilitate this.
But as customers become more engaged and informed and the demand for renewable energy increases, so must energy providers be ready for the huge task ahead of them in the storage, management and use of data, and making the most of that data to deliver a better more efficient service.