Recent environmental and economic pressures have seen many utilities reconsidering the use of smart metering technology to end the high operational costs associated with traditional energy usage monitoring and enabling a broader range of service offerings to consumers. However, a report released today by global management consultancy Arthur D. Little warns that as smart metering gathers momentum, utilities must take extreme care to ensure deploying the new monitoring technology does not come at a business loss. The new report “Advanced Metering Management”, prepared by Arthur D. Little’s Energy & Utilities practice, details how mistakes made in the complex planning process for smart metering deployment will have a severe impact on the utilities provider’s logistics, economic planning, and organisational design in the long term. The report highlights a number of issues that must first be addressed before deployment to ensure a successful smart metering system.
Advanced systems capable of monitoring energy use remotely via telecommunications, smart meters were first used in Europe after liberalization of the energy market 15 years ago. Until recently, many utilities have been reluctant to make the substantial investment required in order to deploy smart metering. However, rising costs of operation and improvements in fraud protection, along with increasing demand from environmentally-concious consumers, means that many more utilities companies are now ready to seriously consider the investment.
According to the report, implementing smart metering requires large-scale investment, necesitates a complex deployment process, and can have significant impact on a utilities key business processes. In order to be successful, utilities have a major task ahead of them in defining and planning custom approaches to making smart metering a cost effecitve and efficent part of their operations.
“Smart metering is nothing new, but as the current regulatory and consumer climate makes it more attractive for more utilities to consider deploying such systems, it is important they identify their strategic objectives and assess all risks before commencing” says Stephen Rogers, a Director in Arthur D. Little’s UK Energy and Utilities Practice. “By establishing a working technological solution and including a thorough process impact analysis in the planning stage, utilities can deploy a smart metering system successfully.”
The key considerations
The first consideration is the significant amount of money involved in the process of deploying a smart metering system. Costs per end customer can easily exceed $100, and this type of investment can have a lasting impact on any organization. However, once the smart meters are in place, the long operational life means getting it right the first time is vital. The sheer complexity of introducing smart metering within the operations of an traditional utility provider will be another key consideration. It not only involves installing a large number of meters, but also introducing brand new information management systems within the organization and, in some cases, installing new telecommunications infrastructure. Good management is required on all levels in order for the significant investment to be used effectively. Finally, utilties cannot underestimate the impact a new smart metering system will have on operations. Many companies will have to redefine their key business processes, operations, and human resources. Inevitably, any alteration will impact upon the utilities relationships with external players, such as suppliers and regulators, augmenting the complexity of the entire supply chain. Arthur D. Little’s report urges that in order to help protect commercial returns, utilities should seek expert support to ensure accurate planning and smooth deployment in a deeply complex and expensive process. “When it comes to investment in smart metering, we believe that in many cases short-term cost could ultimately lead to long-term gain,” said Jesus Rui, a co-author of the report and Senior Manager in Arthur D. Little’s Global Energy & Utilities Practice. “By being clear about what they want to achieve through smart metering, utilities can maximize their chances of a successful deployment that will deliver reliable, accurate service over time.” “Advanced Metering Management” is now available for download at www.adl.com/metering
Notes for EditorsAbout Arthur D. Little
Arthur D. Little (ADL), founded in 1886, is a leading global management consulting firm that links strategy, innovation and technology to master complex business challenges while delivering sustainable results to our clients. Arthur D. Little has a collaborative client engagement style, exceptional people and a firm-wide commitment to quality and integrity. ADL is proud to serve many of the Fortune 100 companies globally in addition to many other leading firms and public sector organizations.
Further InformationStephen Rogers
Arthur D. Little
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Arthur D. Little
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