Beyond The Prospectus: The Retailer’s Challenge Iain Matthews Smart Metering Market Development Manager, Energy Retail 18 th May 2011.

Beyond The Prospectus:The Retailer’s Challenge

Iain Matthews

Smart Metering Market Development Manager, Energy Retail

18th May 2011

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The expectations have been set...

This programme will directly affect us all. For Great Britain, it provides a platform to help us meet those challenges of energy security and climate change.…”

We have…made a full rollout of smart meters to homes and businesses a key part of our Programme for Government”

“The Foundation Stage will be critical. By delivering a positive consumer experience of smart metering, by ensuring that industry is ready and able to roll out millions of meters, it will build a solid platform for the mass rollout”

“The central Programme will be managed by DECC, but its success will depend on the engagement and expertise of industry, national representative organisations, local organisations and individuals......”

Source: DECC SMIP Prospectus Response Briefing , April 2011

Beyond The Prospectus: The Retailer’s Challenge 18 th May 2011

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The timelines have been set...

2012 2013 2014 2015 2016 2017 2018 20192011

DCC Go Live

RolloutCompletion

ApprovedTec Spec

Compliant Smart Meters

Mass Rollout Commences

Phase 2 Go Live

MASS ROLLOUT

FOUNDATION

Regulatory Obligationsincl. ICOP

DCC Licence AwardDCC Service Provider Appt

Foundation Change of Supplier

RegistrationMigration

Beyond The Prospectus: The Retailer’s Challenge 18th May 2011

Source: DECC Prospectus Consultation Response, March 2011

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The Retailer’s challenges remain...

Technology Data Commercials Consumer Engagement Mobilisation Resourcing

Smart Metering Implementation

Future Smart Grid Requirements

Beyond The Prospectus: The Retailer’s Challenge 18th May 2011

Fully Competitive Market

• Components of smart metering rollout are many and complex in their execution

• More complex in execution than other world-wide deployments

Future Smart Grid Requirements

EU Directives – Smart Metering/ Grid

TechnologyBeyond The Prospectus: The Retailer’s Challenge

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Multiple technical challenges• Combination of multiple new components and technologies

– Technical interoperability– Potential for deployment of multiple technical end to end solutions– Robust, secure end to end solutions

• New complex processes– customer consent – asset tracking and maintenance

• Support of a smart data catalogue– New DCC interfaces

• Multiple technical implementations– Foundation Change of Supplier– Mass rollout– Future central Registration

• Potentially complex market entry testing arrangements


Our commitment is clear.... Our future investment remains uncertain....

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Achieving the technical challenge

• Comprehensive and timely technical specification– smart metering system components– final communications technology

• Clearly defined– market entry processes– security requirements to operate within a critical national infrastructure

• Timely availability of– a full smart data catalogue– detailed definition of DCC interfaces

• Programme timescales which recognise the necessary levels of testing

– component– interface– end to end– penetration


Data Beyond The Prospectus : The Retailer’s Challenge

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The data challenge

Cleansing

Maintenance

Smart Data Catalogue

SecurityMigration

Critical National Infrastructure

New Data Items and Interfaces

Cross Industry Initiatives

Alignment

There is an opportunity to ensure industry data is of the best quality prior to migration to the DCC

Accuracy

Legacy to Smart New World


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• Data improvements require cross-industry sign-on

• Timescales and scope require recognition within DECC Programme

• Clearly defined objectives with central co-ordination

• Alignment of electricity and gas data items to a common standard

• Linking of data items at an individual premise level

• Opportunities now for proactive measures during scheduled site visits

Data is a key programme component...



CommercialsBeyond The Prospectus: The Retailer’s Challenge

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Investing in smart...• Procurement of multiple

components• New supply chains• Contracts with multiple

providers• Novatable contracts• Significant legal

undertakings

• Future obligations• Differing end of life for individual

smart metering system components

• Programme timescales / delays• Certainty of future requirements

• DCC service cost arrangements• DCC inc. WAN maintenance

cost recovery• Levels of consumer

engagement• Asset provision and

maintenance

• Consumers right to refuse smart metering

• Levels of consumer engagement• Level of data visibility to develop

and offer new products

Complex Supply Chain

Investment

Cost Recovery

Consumer Engageme

nt

Smart Commercial

Delivery


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Embedding the commercial model

• Significant dependencies on DECC programme delivery still remain

– Delivery of an approved technical specification

– Development of arrangements for the novation of commercial contracts and meter volumes into the DCC

– Confirmation of lead times for technical components

– Full and detailed understanding of consumer protection measures

– Clear definition of DCC operation and the cost recovery model

– Engagement between market participants to address remedial issues with appropriate funding arrangements in place



Consumer EngagementBeyond The Prospectus: The Retailer’s Challenge

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Consumer Engagement

DPASmart Energy Code

Data Privacy Charter

Installation Code

of Practice

BehaviouralChange

DPA Regulated Duties

Consumer Engagement


From....

To....

Detailed clarification is still required

Benefit Delivery

Consumer

Expectation

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Future engagement

• Regulated duties and access to consumer data requires further analysis

• Installation Code of Practice will determine on-site activities

• Data Privacy Charter will provide consumers with greater clarity

• Education of customers will be in a environment of increasing consumer protections

• Complex consumer consent processes will need to be managed

• Delicate balance between technical advances, education, perception and communication

A level of intrusion cannot be avoided in order to deliver the behavioural change and energy education measures which the Government business case demands...


Resourcing Beyond The Prospectus: The Retailer’s Challenge

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The resourcing challenge

• Multiple aspects to resource demands – On-going support of the DECC Programme and working groups– Internal smart programme requirements

• Rollout

• Multiple resourcing challenges

• On-going support of DECC’s Programme• Working Groups• Decision Groups• Milestones in the future to be planned for such as Registration migration

• Internal smart mobilisation and delivery programme demands

• Field force recruitment• Direct dependency between rollout and recruitment profiles• Avoidance of large field force post mass rollout completion / ramp down

• Field force training• New technology deployment = new technical skills• Education of consumers at point of install = new training skills



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Resourcing

• A number of key factors will still determine the resourcing in terms of:

• Numbers

• Skill sets

• Balance between internal and external resourcing

• Key factors include:

• Programme timetable delays

• Roll out volumes caps during the Foundation Stage

• Complexity of final smart metering infrastructure

• The level of consumer engagement required during individual installations

• Obligations around asset maintenance



Smart ImplementationBeyond The Prospectus: The Retailer’s Challenge

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The rollout task ahead...

• As an industry we have undertaken may implementations– we install and replace millions of meters each and every year– we recruit and train resources to ensure they have the correct skills in order to work

in a safe and proficient environment– we already manage contracts with third party service providers

• We operate in a complex and highly competitive market

• We are used to implementing technical and business change


The task ahead presents new and numerous challenges...

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Same challenges...new context...

• Challenging timescales– Rollout of significant volumes of smart metering systems by 2019– Against the potential for significant financial penalties

• Compliance measures– Regulation – Smart Energy Code; Installation Code of Practice, – Potential for new accreditation and certification processes– Security – Consumer protection

• Dual focus– Foundation Stage obligations– Mass rollout and beyond

• Deployment of new technologies– Sufficient testing of both individual components end to end infrastructure– Resource skills

• Benefits realisationOur commitment is clear.... Our future investment remains uncertain....


Smart GridBeyond The Prospectus: The Retailer’s Challenge

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Development of a secure yet agile critical network infrastructure from which benefits for all market participants and consumers can be realised.....

The Smart Evolution

• Significant challenges lie ahead

• Increasingly complex offerings to the end user as time goes on

• Smart metering will be a critical step towards delivering an enduring smart grid capability in the UK

• Need to ensure investment in solutions now delivers the future smart grid model

• Increasing data volumes which must be used and stored appropriately

• Potential command and control conflicts between the Retailer and DNO

• Increasing numbers of entry and exit points– Electric vehicle charging– Solar and wind contributions


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Single Approach

• Need to work together as an industry to ensure the correct levels of investment are made

• Assurance that the correct technologies are adopted

• Return on investment are not reduced by incorrect decisions

• Ensure engagement at an EU level takes account of EU roadmap aspirations and that lessons learnt from around the world are properly assessed


ConclusionsBeyond The Prospectus: The Retailer’s Challenge

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Delivering the expectations...

• Programme timescales are realistic...

• Requirements are clearly defined...

• Investment certainty increases...

• Flexibility to allow innovation...

Considerations today must not limit the energy market of tomorrow....


Questions?

Thank you

Iain MatthewsSmart Metering Market Development Manager, Energy Retail

[email protected]

Beyond The Prospectus: The Retailer’s Challenge Iain Matthews Smart Metering Market Development Manager, Energy Retail 18 th May 2011.

Documents

rollout of smart meters

retailers challenge

live dcc

retailers challenges

foundation stage

live phase

climate change

future investment