Engage Consulting Briefing Note: Smart Metering Implementation Programme: Prospectus

Transcription

1 Engage Consulting Briefing Note: Smart Metering Implementation Programme: Prospectus Introduction This briefing note summarises the content from the Smart Metering Implementation Programme: Prospectus published on 27 th July We intend it to be used to inform interested stakeholders and to summarise proposed Government policy in a short, easily accessed document. Executive Summary The Government has confirmed that it believes that every home in Great Britain should have a smart meter. To secure the delivery of the benefits, the Government wishes to accelerate significantly the rollout compared to previously published targets. Suppliers will start to install smart meters that meet the minimum requirements ahead of a central data and communications entity being established. DECC s impact assessments have been updated and they show that there remains a strong business case for taking the programme forward, with predicted benefits of 17.8 billion over the next twenty years, and a net benefit of 7.2 billion. Ofgem intends to introduce a package of measures in spring 2011, providing for consumer protections in areas such as remote disconnection, installation of new meters, and interoperability to provide suppliers with the necessary confidence to start installing smart meters and supports customers switching suppliers. A data privacy principle is to be proposed by Ofgem where consumers should be able to choose how their consumption data is used and by whom, except where data is required to fulfil regulated duties. Within customer premises, the metering system will be a smart meter for gas and electricity, a home area network, and a wide area network. For domestic consumers, suppliers will also be required to provide an in-home display (IHD). IHDs will have dual fuel functionality so any second supplier providing gas or electricity in a dual fuel home can use the IHD provided by the first supplier. It will be at any second suppliers discretion whether they wish to provide a second display. A Statement of Requirements document has been produced by Ofgem, covering the requirements of the metering system. The Government s view is that a gas valve should be included in domestic meters. The IHD will display, as a minimum, information in pounds and pence and non-numerically. The technical specifications for the Home Area Network are yet to be defined by Ofgem, but solutions will need to be based on open and interoperable standards for any solution used. Wide area network communications will be managed by the creation of a new central entity to identify and procure the most cost-effective solutions for smart metering data management and communications. The Wide Area Network communications module should be upgradable without the need for the meter to be changed. Energy suppliers are to take on the responsibility for the rollout of smart meters. Ofgem will introduce licence conditions into Suppliers licences to set targets for roll out that will include Engage Consulting Limited Page 1 of 6

2 flexibility in the early stages to enable suppliers to respond to customer demand and learn from experience. In parallel, during the initial stages of rollout, additional measures to increase the effectiveness of the rollout and secure the energy savings will be considered by Ofgem. These could include smart grids, local level consumer engagement, prioritise specific customer groups, assist vulnerable consumers or support energy efficiency initiatives. Ofgem requires responses on a number of key aspects of their consultation by 28 th September The responses on the remaining questions are required by 28 th October Engage Consulting provides consulting and IS services to the energy & utilities sector and has been a leader in smart metering development in Great Britain and Europe. Engage provides independent expert advice to energy retailers, network companies, environmental bodies, metering companies and many others through the supply chain for smart metering. Our services have included involvement with national smart meter programmes, benchmarking on customer behaviour, specialist reporting and business requirements reviews. Contacting Engage: Any questions or further enquiries, then please feel free to contact Peter Goodwin at Engage Consulting; +44 (0) or by at peter.goodwin@engage-consulting.co.uk Engage Consulting Limited Page 2 of 6

3 Confirmed by Government The Government has confirmed its commitment to the rollout of electricity and gas smart meters to all homes in Great Britain, including: Energy suppliers to be responsible under licence for procuring and installing smart meters; Data communications for domestic metering systems will be managed by a central function; Smart meters must comply with a set of high level functional requirements; Domestic customers will be provided with a IHD; and Electricity and gas meters at smaller non-domestic premises will need to have smart functionality within the same timescales as the domestic rollout. Energy suppliers are to take on the responsibility for the rollout of smart meters. Ofgem will introduce licence conditions into Suppliers licences to set targets for roll out that will include flexibility in the early stages to enable suppliers to respond to customer demand and learn from experience. In parallel, during the initial stages of rollout, consideration will be given to additional measures to increase the effectiveness of the rollout and secure the energy savings. These could include building smarter grids, local level consumer engagement, giving priority to specific customer groups, assisting vulnerable consumers or support for energy efficiency initiatives. The Consumer Experience Ofgem is reviewing current safeguards to ensure customers interests remain protected. For example, Ofgem is considering the protections around sales and marketing activities and vulnerable customers in the context of smart metering. Real time information is seen by Ofgem as key to helping consumers understand and optimise their energy use, to help save money and reduce carbon use. Ofgem has stated that smart metering will put an end to estimated bills, promote competition by enabling faster customer switching, and open up new products and services (e.g. energy advice, innovative tariffs, etc.). Minimum functionality requirements of the IHD should include the ability to display: current electricity and gas consumption; historical consumption to enable consumers to compare current and previous usage; information in pounds and pence as well as kilowatts and kilowatt hours, and the display must also present the information in a visual format which is non-numerical that enables customers to easily distinguish between high and low levels of consumption; accurate account balance information; and information for both gas and electricity consumption. Where a customer makes it clear that they do not want an IHD, suppliers will need to make alternative arrangements to provide consumption information. This could be via the customer bill. However, if the customer changes their mind within 12 months and decides that they would like an IHD, they will be entitled to receive one from their supplier, free of charge. Engage Consulting Limited Page 3 of 6

4 Suppliers will need to consider the requirements of disabled customers when providing an IHD. For example, this may include the use of large display screens and bigger buttons. Customers will also be able to use their own display devices connected to the home area network if they so choose. Consumers will have access to their consumption data stored on their meter free of charge to enable them to compare tariffs, and easily share the data with third parties should they wish to do so. The potential sensitivity of data on consumers energy usage is recognised. Ofgem has proposed that The customer shall choose in which way consumption data shall be used and by whom, with the exception of data required to fulfil regulatory duties. This reflects the important principle that data control rests with the consumer, whilst recognising access for legitimate needs. The industry will be required to put in place a code of practice for the installation process, taking onboard the concerns and risks raised by consumer groups. Ofgem has proposed that suppliers will be prohibited from imposing an upfront charge on customers to cover the costs associated with the installation of a smart meter. The Government s view is that the benefits of including a gas valve in the minimum functional requirements for domestic smart meters and the certainty this brings outweigh those of leaving it to supplier choice. However, for the smaller non-domestic sector gas smart meters will not require a gas valve. Ofgem expects that smart metering functionality will enable other value-added services, such as energy management and access to home automation initiatives. Central Communications Communication of both gas and electricity data to and from smart meters in the domestic sector will be managed centrally. The central function will also provide a basis to simplify and improve industry processes, including change of supplier, and smart grid development. The central communications functions scope will initially be limited to those functions that are essential for the effective transfer of smart metering data, and subsequently take on board meter registration from the network companies and Xoserve. The central communications function will be a new licensed entity, which Ofgem will licence and regulate. Central communication function trialling and testing will be complete by autumn 2013, along with the mandated use of the central communication function for domestic customers. Regulatory Regime Ofgem has proposed that a new regulatory regime will be established to provide arrangements for the introduction and ongoing operation of smart metering. These regulatory arrangements will be introduced using powers under the Energy Act 2008 to amend existing licences and codes, and to create a new licence activity. A new Smart Energy Code will be introduced by Ofgem to govern the operation of the smart metering system. The code will be one code to cover both gas and electricity. Engage Consulting Limited Page 4 of 6

5 Smart Metering Statement of Design Requirements The proposed smart metering system functional requirements are designed to deliver the range of currently identified benefits, and to be able to evolve as the future requirements of smart grids become clearer. The functional requirements shall include: The communications device should be modular or separate so it can be upgraded without replacing the meter; Last gasp" capability, which enables alerts to suppliers or network companies if the supply is interrupted; The meter should have the capability to store at least 12 months of half hourly consumption data, to enable more effective and informed supplier switching and home energy management initiatives; The meters and communications equipment will be able to be upgraded remotely through the download of firmware; Supply License condition mandating rollout will oblige suppliers to install smart meters that comply with the Catalogue and Technical Specifications; these will be incorporated into the Smart Energy Code by Ofgem. This will ensure technical interoperability; The gas valve should form part of the minimum requirements of all smart gas meters in the domestic sector; A single HAN solution is not proposed by Ofgem, in recognition that there may not be a 'one size fits all option'. However there is a requirement that there should only be a single HAN within a customers premise where technically possible; There is a requirement to limit the average power consumption of any mandated equipment in the consumer premise to 2.6W total; The Gas meter communications is expected by Ofgem to be powered by a battery. Ofgem has proposed a functional requirement for a 15 year battery life under normal operating conditions (metrology, communications and valve operations where applicable). It is noted that battery life constraints mean that any battery powered device will need to operate less frequently, for example transmitting every 15 minutes (Gas) rather than every 5 seconds (Electricity) (as proposed for mains powered devices); Ofgem has proposed that the WAN module should be modular or separate from the electricity meter, with digital and physical security measures close to the meter. The programme will seek a level of WAN interoperability during the initial phase to ensure that consumers can switch between suppliers without the need to exchange the WAN module; Meter design variants must also meet minimum functional requirements e.g. able to accommodate the likes of Economy 7 and dynamic teleswitching type tariffs; No requirement for pulse outputs as it is unlikely it would be used when the functionality is already available in an enhanced form; The consumer being present at the premises and acknowledges that certain criteria are met (e.g. appliances are off) when the supply is re-enabled after self or remote disconnection (which is distinct from outages due to supply faults); Pre-payment top up - the functional requirement includes the ability for remote (e.g. over WAN) and local top up; Prepayment configuration - the functional requirements include that smart metering system has to support the emergency credit, overnight credit, friendly credit, debt Engage Consulting Limited Page 5 of 6

6 recovery configuration and safeguards that are supported in token, card or key-based meters currently available. Also included are functionalities for new forms of disconnection such as trickle disconnection and time limited disconnection; Health and Safety - any solution selected will have to meet national and EU obligations on Health and Safety; and Micro-generation - functional requirements include import / export metrology. Next Steps The Government wishes to accelerate significantly the roll out of smart meters compared to previously published targets. They are looking at the potential for shortening both the preparation period and the roll out period. The proposed staged implementation approach is expected by Ofgem to advance the start of the formal mandate by at least a year compared to the alternative approach of waiting until the full smart metering regulatory regime, systems, and central communications has been established. Key milestone dates: Date Spring 2011 Summer 2011 Early 2012 Spring 2012 Summer 2012 Autumn 2012 Spring 2013 Autumn 2013 Milestone Enhanced consumer protections introduced as required Functional requirements and technical specifications confirmed (subject, if required, to the outcome of any EU notification period) Supply licence modifications mandating rollout implemented Regulatory framework relating to DCC (central communications function) implemented Mandated supplier rollout commences DCC licence granted DCC service providers appointed DCC trialling and testing complete & Mandated use of DCC for domestic customers Suppliers may elect to install meters prior to the go live of the central communication function (August 2013), but this will be at their own commercial risk, with any meters not meeting the required technical specifications needing to be replaced. Responses on a number of key aspects of the consultation are required by 28 th September The responses on the remaining questions are required by 28 th October Engage Consulting Limited Page 6 of 6