Smart meter rollout: established utilities are tapping new markets
At this year’s E-world, the leading energy sector trade fair, the smart meter rollout was once again a hot topic for discussion. In Germany, people are concerned about much more than rolling out infrastructure as mandated by law : they are looking at the new competitive organizational structures that network operators (in Germany: the metering point operators) have to develop. This is a fundamental question for any company that wishes to participate in any emerging IoT market or establish itself there.
At the moment, network operators are especially interested in the benefits of learning from practice , for instance from companies like EWE NETZ that are already on the path toward implementation. They want to know what obstacles these pioneers have overcome, which ones are potential showstoppers, and what uncertainties need to be factored in.
Showstoppers might be:
Market losses due to 3rd-party metering point operators
0% outsourcing, e.g. building up in-house IT competencies
For companies that haven’t yet begun to plan the rollout of smart meters and metering infrastructure, most would benefit from a checklist that walks them through the strategy and planning phase of a rollout.
Below, I briefly highlight three hot topics that are cropping up in our current discussions with network operators.
When designing its smart meter rollout, what aspects should a network operator outsource and what is better kept in house? Theoretically, any amount of outsourcing is possible in a rollout strategy, from 0% to 100%. The key point in defining an outsourcing approach is for the company to clarify what its core business is and focus on its core competencies accordingly. Those don’t necessarily have to include installation services, say, or gateway administration. EWE NETZ outsources both the installation services and the devices, so that procurement and logistics are handled by a single source. However, as the company itself says, this comprehensive level of outsourcing called for a paradigm shift.
Uncertainties about gateways > see it as a learning process!
How long will the gateways last in the field?
After 8 years, will they still meet the security requirements?
How long will you still be able to update them?
Companies that outsource to many different qualified service providers urgently need as much flexibility as possible to customize the process supported by the rollout management software system. In equipment provisioning, for example, the network operator might simply define the target product instead of supplying the service provider with precustomized devices. Once there is a degree of freedom in the process, it becomes more important to define appropriate quality assurance mechanisms and implement them in the system. The processing status of all orders and the corresponding inventory levels for every contracted service provider are two areas that have to be transparent for the network operator at all times.
Topic #2: Making sure your automation goes far enough!
The rollout is and will remain a major task. That makes it even more important to automate all the necessary processes, from planning up to SIM card activation. And it doesn’t stop there. One system has to handle planning, conducting, and managing the rollout plus the operation of the new, smart metering infrastructure. Because of that, it has to be integrated with a wide range of the IT systems involved.
One frequently asked question here is which system should be the lead one for master data storage. The answer: it depends. If there is already a lead system, this is integrated with the others. However, it may be necessary for the data to be held in the rollout management system, for example if you are a smaller company.
Just as crucial are implemented interfaces or cooperative arrangements with appropriate workforce management system (WMS) providers. Small regional service providers for installation, for example, don’t have their own WMS. When contracting such providers, it makes sense to include direct communication with Workforce Management as a Service (SaaS). This is especially important since it’s already clear today that there aren’t enough regional service providers with the appropriate qualifications and appearance, and sufficient capacity to go around.
Last but not least: thorough automation of the processes for rollout management, meter gateway administration, and meter data management is the be-all and end-all – and can make or break this major task.
Topic #3: Simulating strategies
The smart meter rollout market is in flux and only gradually taking shape. It can go so many ways for network operators: from “pure network operator” to a provider of additional innovative products in other grid areas to a service provider for third parties.
Examples of innovative (competitive) products:
Products for metering point operation, e.g. provision of current and voltage converters
Data products, e.g. ad hoc meter reading
Tariff products, e.g. consumption-dependent tariff
Against this backdrop, players need to choose the right outsourcing strategy – from defensive to offensive – as well as the right partner strategy and rollout tactics – from degressive to progressive (see graphic).
In this strategy decision phase, companies have to juggle numerous uncertainties (how high are the costs per metering point?) and make several assumptions (level of demand for new products), and take them into account for their rollout strategy. The key is to recognize which assumptions have been made in this strategic planning phase and then validate them in an iterative process. Don’t call them success indicators – call them learning indicators! This is a new approach that obliges companies to change their orientation, especially in terms of corporate culture. Why do innovations fail? Not because of the people or products, but because of the “how.” Before selecting your preferred strategy, it is essential for you to run a simulation encompassing a wide variety of factors and assumptions based on company-specific data, for example with the help of a smart meter simulator.