DONG Energy Sees Value In Smart Meters

DONG Energy is to install a turnkey smart meter solution from Kamstrup for one million customers in Denmark.
Published: Tue 08 Mar 2016

DONG Energy has so far not seen a positive business case for smart metering, so it is only now in connection with a regulatory requirement that the company is establishing the technology for its approximately 1 million customers in Denmark. More than half of the country’s homes, accounting for more than three-quarters of the consumption, already have a smart meter.

In terms of a 2013 executive order from the Climate, Energy and Building minister, the rollout is required to be completed to all homes by 2020 in compliance with EU requirements but also to meet the country’s smart grid strategy which envisages an increasingly renewables-based intelligent energy system.

“Many of the utilities in Denmark are privately owned by their customers and they have gone ahead with smart meter deployments but we as a public utility couldn’t find a business case for them,” Søren Rønnebech, Manager RPM Project (Distribution & Customer Solutions), DONG Energy, told Engerati in an exclusive interview.

“But while there is a clear policy driver, we do see many opportunities both on the customer side and in the increased insight in what is happening on the distribution grid.”

On the basis of an EU tender, Kamstrup won the rollout of a turnkey solution, based on its OMNIA smart grid platform. Kamstrup will also provide operation and meter reading services.

Why a turnkey solution?

Mr Rønnebech says that there were two key factors in selecting Kamstrup’s solution from the six prequalified  international suppliers who competed for the contract. These were first and foremost the costs and the fact that Kamstrup was able to meet the technical requirements for the delivery.

“We needed to find a contractor who could deliver the turnkey responsibility and what is required at the right quality and in the right timeframe,” he says. “With the need to change out the IT system with the meters, we felt a turnkey solution would ensure the project is done in the most optimal way.”

Henrik Mørck Mogensen, Senior Vice President (Electricity Systems) at Kamstrup, concurs, saying that while a piecemeal approach enables a utility to secure “the cheapest of everything,” experience shows that such a solution won’t deliver all the potential benefits.

“A turnkey solution ensures a complete solution rather than one built up from individual components and it requires a holistic understanding of all the business processes within a utility so these can be integrated and aligned during the deployment.”

Open smart grid platform

Kamstrup's OMNIA Suite is an open smart grid platform providing future-proofing for the changing electricity market. In the project the OMNIA Suite will be integrated with DONG Energy’s new Gridstream meter data management system from Landis+Gyr, and the existing SAP system.

Another interesting point about the contract mentioned by Mr Rønnebech is its length. After the initial 10-year deployment and operation DONG Energy has the opportunity to prolong the contract five times in 2-year periods until 2035. “This is a new way of working with a partner for us,” he says.

As part of the project, a comprehensive operations portal will be set up, where DONG Energy can follow performance and invoicing activities on an ongoing basis.

The customer engagement challenge

Mr Rønnebech says that with the project still in the build-up phase little customer messaging has taken place so far except from some limited information on the company website. However, as the start of the rollout towards the end of the year nears, customer engagement will be stepped up, with both personalized and online communication.

“We want customers to be positive about the project,” he says. “We need to give good explanations to customers about what we are doing and why we are doing it.”

As a result, DONG Energy is very aware of the importance of addressing any concerns their customers may have. A particular concern is the actual installation, with some 60% of the meters in indoor locations. Customers will therefore be given an installation time with the possibility to change it online.

As part of the contract Kamstrup will provide direct consumer support via a help desk.

Smart meter benefits

Mr Rønnebech points to both utility and customer benefits that are expected from the smart meters, noting that in Denmark there is a common hub to which data is delivered.

“Customer side benefits include enabling them to follow their consumption more accurately and to potentially save money by reducing their consumption, and to access the new services that will be coming from third parties. On the distribution side we see benefits such as more rapid response to problems and the opportunity to improve investment planning with better understanding of the load patterns.”

Smart metering in Denmark

Mr Mogensen says that currently in Denmark – and in the Nordics in general – Kamstrup is seeing “some synergies starting to come together. On the one side there is a government push with legislation and incentives for smart grids to secure societal benefits with renewable integration and more flexible demand. But also utilities themselves are starting to see the potential benefits of investing, especially on the operations side of the business.”

Underlying it is what he says is a push for “transparency” throughout the energy system all the way to the end consumers in order to bring them in as participants.

“We see huge potential as these synergies come together.”

In planning a smart grid initiative, Mr Mogensen advises utilities to focus on the benefits and the business promises rather than on the technology, saying that this was DONG Energy’s approach. “Instead of trying to specify a system down to the last detail, pinpoint the benefits and how the new capabilities will integrate into the existing business processes.”

He adds that it is also important for utilities to “look at both sides of the equation,” i.e. both the costs and the benefits of a system. “This is where DONG Energy was very insightful. It’s no good having an excellent system but failing to adjust the business processes and adjacent systems to exploit the value. There will be costs and obviously it is necessary to minimize these as much as possible but it is the benefits that make the investment positive.”