Smart meters or Advanced Metering Infrastructure (AMI) roll out is turning out to be a game changer in the energy & utility sector in New Zealand, at par with similar countries like Canada, USA and a number of European countries. This technology aids greater control for consumers and utilities. By 2015, the estimated roll out of smart meters in New Zealand should stand at 1.6 million.
The technology of smart meter is not new, though there is a differing opinion on the definitions of the infrastructure, however, some common attributes that all agree upon are:
• time-of-use (TOU) consumption recording,
• remote meter reading capabilities, and
• two-way communication.
The potential benefits of smart meters accrue to multiple parties in the utility industry including retailers, distributors, and consumers.
Some important consumer related remunerations are control and reduction in consumption, reduction in metering costs, and the collection of data to allow smarter and more targeted network investment.
In the recent past, the market-driven roll out noticed a sweeping change with the Electricity Industry Participation Code 2010 mandate that electricity companies must ensure existing metering equipment gets re-certified by April, 2015. Several companies are taking this opportunity to install smart meters (in case of residential electricity) that collect data at frequent intervals and communicate that data directly to the electricity company. Thoughtful market leaders are trying to leverage the technology by buckling up with revamped customer service and marketing strategies. However, there are many thorns on the way ahead that companies should be careful of with regards to smart meter implementation.
On one hand, companies would be able to deliver value to their customers and shareholders with data on consumption patterns to design their business models and pricing, while on the other, it cannot be ignored that customers are becoming more engaged and knowledgeable about their energy usage and choices they have with a number of providers in the value chain. The customer churn rate in the country continues to be overwhelming at ~20%. Besides, customer perception challenges exist not only with the smart meter technology but also with how well utilities communicate the new meters’ benefits. To make smart metering reliable and seamless, Utilities need to ensure the data integrity of their consumers. A foundation of trustworthy governance of data must be established by firms to comply with existing regulatory demands and prepare for future regulations.
The disruption in the energy value chain in NZ is pushing traditional delivery models for power generation and networks towards obsolesce, which is expected to gain more speed over the medium term. Thus, businesses should aim to reach a break-even point vis-a-vis capital expenditure on smart meter implementation – which by the way can only be achieved by revamping the operating model - less people and improved processes.
Utilities have a track record of being a conservative industry in terms of digital maturity. The retailers, distributors and even the government have focused more on technology and economic scenario, rather than the needs of the consumers of their products and services. With smart meters and grid, consumers are more likely to be in control of their energy usage with real time data and easier billing, this means consumers would also be interested to understand energy spend inclusive of proper explanation of each line items as well energy saving tips and other value added services. This can be corroborated from a survey of more than 1,800 Kiwis, which indicated that those who had changed their electricity usage behaviour (47% of respondents) in 2015, 89 percent did so to reduce the cost of their bill. Thus, Utilities would do well to utilise this opportunity to reflect upon the existing processes and change the delivery model and redesign processes that works well with smart meters. It would be difficult to realise the benefits of the new system with old processes still in place, and climbing up the digital ladder would rather be difficult.
Author: Debaleena Debnath
Debaleena is a digital media consultant @ speradigital.
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