In May, the UK energy industry welcomed the news from the Department for Energy and Climate Change (DECC) that the start of mass roll out of smart meters will be delayed until Autumn 2015.
Much like the move to natural gas and the industry’s deregulation in 1998, the roll out is hugely significant, not least because it provides a major opportunity for suppliers to win new customers and to get closer to existing ones. There is much to get right and a great deal at stake.
The original 2014 roll out deadline was regarded by many in the industry as ambitious. There were concerns over the challenging timescales and the uncertainties in areas including the technical specifications required and the regulatory framework, which included issues around consumer engagement and protection. This extension allows more time to solve these complex technical and business issues.
Whilst many key programme milestones have been met, there are still other elements not yet in place. The technical specifications for smart gas and electricity meters have not yet been approved by Europe, the providers of the data and communications services, not yet selected, the data communications company which will co-ordinate interaction between suppliers and services providers not yet established, and there is still work to do to execute the consumer engagement campaign needed to support acceptance of smart meters - all these elements will support the project’s success.
Selecting the right technology partners will be challenging for many suppliers. The smart metering world is new and there are many technology start up companies emerging and competing with companies that are experienced in the legacy world of metering. None of their technologies have been used at the scale, in the configuration required for the roll out.
Subsequently, one of the most critical elements of the project will be to ensure adequate time is set aside for the robust trailing and testing of all the elements of the smart metering system.
Time is also needed to establish the operational interactions between the communications providers, data providers, data communications company and other participants, and to deal with any teething problems that will inevitably arise.
Consumer engagement will also be a big focus for the industry in the next 12 months. In 1998 it took a big publicity campaign from the then electricity regulator, the Office of Electricity Regulation (Offer) to inform the public about the changes, equally, a sustained programme of education and PR is now required to win over consumers.
Whilst there is some breathing space, the new deadline is still tight in terms of what needs to be achieved by the ‘go live’ date and this is definitely not a time for complacency.
The right issues are all getting attention from those involved in the roll-out, and, in common with many other large scale market and infrastructure programmes, and indeed the changes wrought through the 1998 programme, there are several important areas that will need to remain in focus:
- The full suite of requirements for smart meter programmes need to be stabilised soon. This includes the interoperability of the various systems, the final technology specifications, and rules around testing and trialling, as well as the business processes.
- Adequate time must be set aside for testing and assurance - the build and development processes in a programme of this scale can take longer than anticipated. Suppliers, Government and the Data Communications Company will need to have proof of capability testing and confidence that each participant can do what is expected. The interoperability of systems is vital and this area can be complex and challenging. In 1998, problems emerged in the trial phase, which is a good reminder that sufficient time should be set aside to solve any issues.
- While anticipating issues and mitigating risks through the pre-roll out phase is important, recognising that there will be mop up activity and having taskforces in place to deal with issues swiftly will allow the inevitable problems to be dealt with and resolved quickly.
- Smart Metering is a complex new area with a unique structure and lots of stakeholders involved both in the supply chain and in government. There are complexities and risks involved in procurement and gearing up the supply chain for 2015 – suppliers need to assess if they have the right experts involved to handle the complexities and ensure a smooth roll out.
- The delay allows more time to educate consumers and get them to understand the benefit for them of having a smart meter – this is a critical area to get right. Of course, there is also more time for consumer groups and dissenters to lobby against them too!
Whilst there is still a great deal to get done by 2015, the new timetable for roll out is workable. DECC has clearly listened to stakeholders and demonstrated that it is working in collaboration with the industry to ensure the smart meter programme is a success. What we need now is continued strong leadership and co-ordination from government and industry bodies to keep the projects on track and ensure readiness for roll out in Autumn 2015.