In this guest article, John Peters, Managing Director of Engage Consulting talks about how the power industry should prepare itself to enjoy the full benefits that the smart meter has to offer.
The focus of this year’s Energy and Utilities Alliance conference was ‘Data Communications for Smart Metering 2014’, and, in particular, testing and assurance – one of the most pressing themes for the industry today.
The Data and Communications Company (DCC) will be the exclusive centre for all communications to and from British smart meters. From now until ‘roll out’ in late 2015, suppliers will upgrade their systems to use The Data and Communications Company’s services as part of their smart metering infrastructure. Most suppliers will fix their attention on designing, building, and testing systems upgrades in time for the mass roll out.
This is a crucial time for suppliers to ensure they have the right business strategies, offerings, and operations in place to take advantage of the smart meter.
Massive business opportunity
The smart metering roll out represents one of the biggest changes to the industry in recent years and a compelling new business opportunity. For independent suppliers in particular, there will not merely be a levelling of the playing field, but an opportunity to become ‘game changers’ in the market.
A report issued by the National Audit Office this week noted that only two of the big six suppliers had installed a “significant number of meters”. With 53 million smart gas and electricity meters due to be installed into households and businesses by 2020 – there is everything to play for.
You only need to look to the world of Formula 1 motor racing where recent rule changes have upset the pecking order and allowed the lower order teams to challenge the major players. Innovative F1 teams such as Force India are doing well under the new regime and the number one team, Red Bull Racing, seems to have slipped off its top perch. Another good example is how personalised card specialist Moonpig has shaken up the greetings cards industry. Such change is also possible in the utilities sector too.
Independent energy suppliers are already starting to create waves. The latest Which? 2014 energy satisfaction survey published in January highlighted that many of the UK’s independent suppliers were achieving the highest customer satisfaction ratings – well ahead of the largest suppliers.
Good Energy, a green and independent supplier, topped the league table and other independent suppliers (including Ecotricity, Utility Warehouse, Ebico and Ovo Energy) were all ahead of larger competitors. Like Moonpig, many of these independent energy suppliers are bringing in fresh ideas to the industry and adopting a very customer-centric approach.
Open Utility is a great example of this. It is championing the idea that customers should be able to buy electricity directly from renewable generators in their area. It also believes that suppliers should offer customers a personalised tariff - putting their customers firmly in charge of their energy and in doing so, creating rapport, goodwill, and building trust.
A common denominator in all of these independent suppliers is that they are working hard to differentiate – whether it is through promoting their green credentials or ethical brand values, or investing in customer services so they become well known as a ‘friendly and easy supplier to deal with’ – they are all trying to set themselves apart from traditional suppliers.
Maintaining and building these ‘points of difference’ must be a key part of any smart metering business strategy to ensure success.
Getting the basics right
But suppliers must not lose sight of the underlying operational process that underpins their business. In the next 18 months, they must get the basics right to be ready to take advantage of the smart world. They will have to take a step back to examine their operations and invest time and effort into getting them right.
Ensuring robust business operations involves a number of key areas – all of which pose potential risks. Suppliers need good procurement processes and financing for smart meter equipment and assets; they need to select the right technology partners; and there needs to be truly robust testing and trialling, which includes testing various scenarios and leaving time for solving any system integration problems.
We are working with a number of independent suppliers – helping them get their planning and strategies in place. Suppliers who get this part of the equation right and keep innovating and injecting fresh ideas, are on the road to being real ‘game changers’, with the potential to transform the industry.