In with the new

Martin Malos explains how new technologies can help utilties improve their core business.

“Revenue increases can only be achieved if new services and products for the customers are introduced”
-Martin Malos

There are multiple factors slowing down investments on smart metering projects around the world. Upgrading existing infrastructure towards smart metering and smart grids requires huge investments on the meter and communication network level. Generally, utility companies are conservative and risk sensitive businesses that are used to operating in slow developing markets with low risks and virtually no competition. What is needed for this initial investment is to see a clear picture of the benefits to gain from this innovation. A lot of attention in the past was paid to the technical parameters of AMM/AMI but without explaining how utility companies can use these new technologies in order to improve their core business.

It is a simpler thing to evaluate the technical performance of pilot projects, as they are metering projects managed primarily by technologically oriented metering departments, such as hardware. Solution vendors of smart metering systems are even now mostly oriented towards metering itself, moving from their traditional area of offline metering into smart metering, but still focused on the meters and communication rather than on complex, customer-oriented solutions.

From an economic point of view, benefits in this case means a necessary cost reduction or revenue increase. Costs are generated though all the company by primary and secondary (supporting) business processes; while revenue is only generated on the company outputs at the end of the primary processes - through customers. Therefore some cost reduction can be achieved anywhere in the company wherever technology can be used to do old things in a new way - more efficiently.

Integration of new technology can bring new benefits in new areas. Revenue increases can only be achieved if new services and products for the customers are introduced - doing new things. Generally speaking, the quickest benefit, and requiring virtually no changes in the company, is reducing the costs of manual meter reads through the implementation of automated meter reading (AMR). Further integration deeper into other processes with changes in the distribution area can optimize distribution network investments, reduce power outages and power quality issues. Most companies implementing smart metering have not surpassed this stage.

The experience from the telecommunication business, where similar innovations happened in the 1990s, showed that real changes must be done regarding customers integration, such as introducing new products, new services and finding new markets. The customer must be the center of attention, not least of all because they are responsible for the ROI necessary to cover CAPEX. But this is not an easy task as virtually all legacy processes and systems have to be updated.

As most utility distribution is regulated, there are important tasks ahead for governments and market regulators. Most of the costs of innovation have to be paid by grid operators, while all the other market players not necessarily providing capital or other support share the benefits. New market rules have to be set defining the new requirements and prices for the information and services provided by distributors to other market players.

Utility companies are not used to making large changes and there are very few ICT vendors who can bring to the table the necessary experience, know-how and best practices to ICT solutions. Much can be learned from past changes in the telecommunications business. The utility providers need to go for larger and often riskier projects that focus not only on technical parameters, such as costs, but those that also involve the revenue side and customer integration.

For more information visit www.sitronics.com.

Martin Malos is the Sales Manager of utilities development in Sitronics Telecom Solutions, helping its customers gain more advantage from the smart metering solutions. He has been involved since the early phases, taking part on the solution design, and product and project management for the initial pilot projects and in pre-sales.