Smart Metering POV
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Utilities must embrace a fresh approach to managing peak demand and system security through smart metering. This includes motivating consumers to conserve energy and shift usage away from peak times, justifying smart meter investments through broader benefits, and increasing market transparency. Most utility executives favor innovative smart metering programs to meet priorities while realizing additional benefits. Utilities must leverage smart meter investments to support demand response, grid planning, reliability, and new services.
Smart Metering POV
- 1. Energy, Utilities & Chemicals the way we see it Smart Metering: A Fresh Approach to Managing Peak Demand and System Security A Call to Action ■ benefits that motivate consumers In the near future, all North American to embrace conservation and utilities will adopt smart metering load management; and the supporting advanced metering ■ business cases that look beyond the infrastructure (AMI) at some level meter-to-cash process for benefits to or another. justify investments in advanced meters, communications and data Some utilities will inevitably take a management infrastructure; and bare bones approach, doing just ■ transparency in the market that enough to meet the minimum enables consumers to align in blocks requirements set forth in the Energy of load that system operators dispatch Policy Act of 2005 and other regulatory more effectively as part of an efficient mandates. The more visionary economic dispatch model. companies, however, will use smart metering as an opportunity to positively Though the utility industry is often influence their destinies, and ultimately, accused of being slow to adopt and the direction of the North American resistant to change, a new study by electrical system. Encouragingly, it Platts and Capgemini suggests just the appears that most utilities favor the opposite. According to the study, in latter option based on the innovative which more than 120 senior executives programs being initiated at large at U.S. and Canadian utilities utilities throughout North America. participated, AMI is the leading “new technology interest” for the majority The only sure thing is that doing of the surveyed executives.1 nothing is not an option. The current state of the electrical infrastructure in The State of the Market North America is not sustainable. To The compliance-based industry in change its course, utility companies which utilities operate simply doesn’t must embrace a fresh approach to offer enough incentive for consumers, managing peak demand and system regulators or utilities to take the security—one that will drive market difficult steps necessary to make efficiency while supporting economic, electrical energy markets operate environmental and social priorities. efficiently. For example: ■ Consumers want lower prices, Certainly it’s a tall order. But Capgemini believes utilities can meet all of their higher quality service and absolutely priorities (and likely realize a host of expect the power to flow 24x7. other benefits) if the approach they ■ Some regulators impose adopt in managing peak demand and long-term rate caps in an system security includes: attempt to please consumers.
- 2. ■ Regulated rates are not tied to Customer Expectations These investments must be leveraged to wholesale markets where utilities As household electricity consumption support a broader set of benefits such as: purchase all or a portion of the increases year over year, peak loads are ■ Aggregating demand response and power they sell. increasing and changes in consumption allowing it to be dispatched to reduce ■ In some wholesale markets, prices patterns are causing load factors to the need for peak generating capacity are set based on the cost of the high- decrease. At the same time, consumers and ancillary services. cost producer. expect higher quality power to operate ■ Refining grid planning processes to ■ Incentives for consumers to conserve the increasing number of digital devices improve the efficiency and effectiveness that we amass each year. Finally, are not significant enough to change of investments the grid. consumers are demanding this their behavior. ■ Improving grid monitoring and control improved quality at the low, stable ■ Regulators impose conservation processes to improve reliability, power price levels of the past while, at the program requirements on utilities, same time, wanting a voice in how the quality and reduce losses. and as a result, utilities suffer from power they consume is generated. ■ Providing new value-added services to decreased revenues which are directly consumers that generate new streams tied to consumption. Aging Infrastructure of revenue and income. Much of the transmission and Despite these current realities, a distribution infrastructure in North In addition to leveraging investments number of factors are converging that America is more than 50 years old over a larger benefits base, performance will enable and provide the right types and was designed to provide power in measures for market participants must of incentives for utilities, regulators and be better aligned; we must create a a different era. For many years, utilities consumers to adopt innovative “win-win” environment. Good examples typically underinvested in the grid approaches to demand management of this include the decoupling underway infrastructure or neglected to make the and market efficiency. in a number of areas to allow significant, ongoing investments required distribution companies to separate their to sustain the infrastructure over the Convergence in the Marketplace revenue from consumption. Decoupling Utilities face a range of converging next decade. As a result, most utilities gives distribution utilities incentives to issues that will have a profound are now at a crossroads, facing a decision truly embrace conservation and demand impact on their futures. that will be crucial to their futures. response programs without jeopardizing their ability to earn a return on Regulation and Legislation The Opportunity their investments in distribution Governments around the world are Make smart metering programs the grid infrastructure. making energy conservation, energy foundation of Smart Grid or Intelligent independence and global warming top- Network initiatives by looking beyond The Challenge of-mind issues. A wide range of taxes, the meter-to-cash process to generate Utilities that structure their smart legislation and other policies designed value for all participants in the electrical metering programs strictly from a to reduce the combustion of fossil fuels energy market (including generators, revenue management perspective are are being considered across the globe. system operators, transmission and selling themselves short. There’s much distribution service providers, retailers, more to smart metering programs than Global Climate Change energy service companies, consumers, interval reads and time-of-use (TOU) As a society, we increasingly recognize regulators and legislators). rates. Utilities should leverage their how burning carbon-based fossil fuels smart metering programs to make near adversely affects the environment. The investments required to implement real-time, point-of-use consumption data Momentum is building on many fronts smart metering are substantial and available to all participants in electrical to limit carbon emissions. Government, usually cannot be justified based solely energy markets. Access to data improves major corporations, citizen groups on the benefits realized from the transparency in the market, and as a and utilities alike are promoting elimination of manual meter reading, result, drives market efficiency. Efficient environmentally-friendly, green efficiency improvements in the revenue markets offer incentives to both management process, improved control generators and consumers that stimulate solutions. Many are insisting that over tampering and theft, and improved balanced investment and consumption behavior must change and adoption outage notification and restoration. decisions and in turn, support economic, a conservation culture is critical. environmental and social priorities. 1 Platts/Capgemini Utilities Executive Study, 2006 2
- 3. Energy, Utilities & Chemicals the way we see it But today’s utilities need to look beyond ■ Engaging other stakeholders in their the technology into the opportunities markets and developing consensus and incentives the technology unlocks. around synergies, critical success Indeed, utilities must take a more factors, required incentives and comprehensive view of smart metering. alignment of performance measures. More important than the technology ■ Formulating a business solution itself is the role it plays in enabling that is capable of meeting today’s system operators, retailers, load serving requirements while being scalable “The current state of the entities, aggregators and customers to deliver against future demand. electrical infrastructure to use real time load data improve market efficiency. ■ Organizing a team capable of in North America is not implementing the chosen Another key challenge is influencing the business solution. sustainable. To change its behavior of consumers. When programs course, utility companies provide meaningful and rewarding The Smart Solution incentives, customers can, and will, In Capgemini’s view, effective smart must embrace a fresh embrace conservation, and as a result, metering solutions share a number of loads can be more effectively and key components: approach to managing efficiently managed. ■ Meters: Standards-based, peak demand and two-way communication, Capgemini believes the strategy for remote connect/disconnect and system security.” utilities should be proactive and that interoperability with in-premise programs for action should include: networks and devices. ■ A long-term approach around ■ In-premise data presentment and smart metering and its linkages control: Near real-time display of to operational improvements, usage and cost, receives market rate conservation programs, demand signal, supports customer demand response, capacity planning and response interaction. new revenue opportunities. End-to-End Smart Metering Solution DR End Devices ooooo 55BBOI Private Legacy Applications WiMax Electric Wireless CIS, OMS, DMS, GIS, EAM, MWFM, etc. Smart Meter Wireless Head- Concentrator DR Broadband End Event Enterprise Service Bus (ESB) End Devices Management ooooo 55BBOI WAN Gas PLC/BPL DB Replication Smart Meter Meter Data Demand Data Third- Management Response Analytical Installers DR Warehouse/ Party Customers End Devices System Control Reporting ODS Presentment Retailers (MDMS) System Regulators Wireless Aggregators ooooo 55BBOI Firewall Firewall Electric Smart Meter Cellular End External Points Telecommunications Enterprise Applications Participants Smart Metering: A Fresh Approach to Managing Peak Demand and System Security 3
- 4. www.us.capgemini.com/energy ■ Meter data collection systems: Two- The Power of Partnership ■ Operational Services: Ability to way communication, multi-vendor Before embarking on a smart metering manage all field installation and solution compatible. initiative, utilities should seek out activation activities including meters, ■ Backhaul communications system: partners who will work collaboratively meter data collection, communications Two-way, high bandwidth, utility or with them to ensure the success of the and in-premise data presentment and third-party owned. initiative. Partners should have a proven control elements. ■ Business Process Outsourcing (BPO) ■ Event management system: Interprets, track record, be prepared to sign up for filters and transfers event data end-to-end responsibility and be willing Hub Services: Extensive experience to stakeholders. to have a stake in delivering results. For with billing and revenue management, superior results, utilities should look for meter data management, revenue ■ Service-oriented integration partners with deep industry experience assurance, demand response, architecture: Standards-based, reusable distribution asset management, call service accommodates changing source in these critical areas: center support, call center overflow and target applications. ■ Program Management: Complex, and technology services, delivered ■ Meter data management system: Asset multi-year, multi- program from hub centers in the right locations. management, data validation, editing management experience with and estimation (VEE); and publishing established methods and tools. Ultimately, the utilities that are able to of billing determinates. ■ System Integration: Expertise in build a strong team of partners ready ■ Decision-support system: Load developing and managing data models, and willing to share their vision in forecasting, revenue protection, service-oriented architecture, interface managing peak demand and system asset analysis and rate design. design and development, configuration security will be the utilities that lead the management, solution documentation way in driving market efficiency – and end-to-end testing. delivering a positive and sustainable impact not only on utilities but also on the North American electrical system. About Capgemini and the Collaborative Business Experience Capgemini, one of the commitment to mutual success and the world’s foremost providers of achievement of tangible value, we help Consulting, Technology and Outsourcing businesses implement growth strategies, services, has a unique way of working leverage technology and thrive through with its clients, called the Collaborative the power of collaboration. Business Experience. Capgemini employs approximately 75,000 Backed by over three decades of industry people worldwide and reported 2006 and service experience, the Collaborative global revenues of approximately Business Experience is designed to help $9.625 billion or EUR 7.7 billion. our clients achieve better, faster, more UTIL_SMMTRINGPOV_072707_013 sustainable results through seamless More information about our access to our network of world-leading services and research is available at technology partners and collaboration- www.us.capgemini.com/energy focused methods and tools. Through For more information contact: Gord Reynolds Practice Leader Smart Energy Services [email protected] +1 416.732.2200 Copyright © 2007 Capgemini. All rights reserved.