New business in utility pipes

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Vodafone’s contract to underpin supply of smart meters by British Gas is the latest operator work with utility companies. Mobile News considers the savings and revenue opportunities, and the barriers to launch

By 2020, every household and business will be fitted with a smart gas/electricity meter, transmitting data from the unit to an energy supplier’s head office via a mobile network.

The decision to implement smart meters was made by the Department of Energy and Climate Change in December 2009, and upheld by former Chancellor Alistair Darling in the last Labour budget.

Darling pledged an additional £1.4 billion to the project at the time, on top of the £9 billion already set aside for low carbon projects. ‘In-home efficiencies’ such as smart meters have been recognised as a viable solution to reduce carbon footprints.

The aim is to replace gas and electricity meters in 26 million UK homes over the next 10 years. Some existing meters are dual-mode, reading both gas and electricity, so the precise number of meters to be replaced is unknown, but is some way north of 26 million. The project will be the biggest energy infrastructure project since the Second World War.

Smart meters can be wired to a fixed line network or can use a mobile network. It is expected the majority of smart meters that are rolled out will use cellular networks, because some homes do not have a fixed line connection.

Smart meters work by reading the exact amount of energy being consumed everyday. The device is embedded with a SIM card which reads the data and sends it securely over the mobile network.

Data is encrypted at point of departure, and can be encrypted again for additional security at utilities’ head offices. Once the data is gathered, a bill is automatically prepared for the energy consumed within a given period.

Smart meters will also display users’ carbon footprints, measuring the amount of energy used by individual appliances in the home. In the future, the meters will be used to centrally control all appliances connected to a home area network.

More interaction between device and energy supplier will come down the line, also, where software updates for the units will be transmitted over the network to upgrade hardware functionality.

The scheme is expected to save energy suppliers £6.3 billion through avoided meter readings, and save customers £4.6 billion through reduced energy usage. An independent trial by the Department for the Environment, Food and Rural Affairs (DEFRA) has concluded smart meters can save customers 10 per cent of their normal bills.

A recent report by Vodafone and Accenture also found the use of mobile technology by the energy sector could cut Europe’s annual energy bill by around €43 billion and reduce annual greenhouse gas emissions by at least 113 metric tonnes of carbon dioxide equivalent (CO2e) by 2020. That figure was 18 per cent of the UK’s annual CO2e output in 2008.

In fact, all countries in the European Union are working towards upgrading utility meters by 2020, but according to industry watchers, the UK is leading the way in terms of speed to market.
Trial schemes

Energy suppliers have been trialling smart meter equipment since 2006, and some have already begun to roll out devices as a full service to end users.

First Utility, which launched in 2008, is the first independent energy supplier to fully implement smart meters for households in the East and West Midlands. To date, is has installed around 15,000 smart meters. Around 80 per cent of the meters are connected with a Vodafone SIM card and 15 per cent with a T-Mobile SIM.

In places where Vodafone and T-Mobile coverage is not available,  Orange or O2 SIM cards have been used. It is working with smart meter manufacturer Landis + Gyr for the roll out of the meters.

British Gas has pledged to roll out one million smart meters to consumers by 2013 and has to date rolled out 80,000 to SME customers. It has partnered with Vodafone to roll out the consumer smart meters and will begin the installation late next year. It is also working with Landis + Gyr.

E.ON claims it will roll out 30 million devices in the next 10 years and, by the end of 2007, had installed 15,000 readers for small businesses and 11,000 meters for households in a £10 million project. The meters are connected to an undisclosed mobile network.

EDF also has a trial in place, part of the Energy Demand Research Project, a partly Government funded project which is managed by OFGEM. It has rolled out 2,000 smart meters. N Power and Scottish Power also have trials in place. EDF, N Power and Scottish Power refuse to disclose network partnerships for the projects.

Orange is working with an undisclosed energy supplier, thought to be British Gas’ business sales arm, and has partnered with smart meter manufacturer Bglobal. Bglobal’s Smart1 meter will have an Orange SIM card embedded in it.

Says Orange director of business product marketing Anthony Keyworth: “The market for smart metering in the UK is rapidly developing. We are working with Bglobal to offer innovative machine-to-machine (M2M) products and services to meet the needs of energy companies and their end-customers.”

Bglobal won in February a new £12 million contract to supply British Gas Business, a variation of an existing framework contract with the supplier. Chief executive Tony Barnes (pictured) says: “The contract also signals British Gas Business’ clear intent to bring on the smart energy revolution and accelerate the benefits of smart metering for UK businesses.

“Until now we have been asked to deliver on broad framework agreements where exact monthly customer requirements have sometimes been difficult to forecast. By signing a fixed delivery agreement under our long-term framework we can set better expectations with our customer and plan ahead.”

Full article in Mobile News issue 464 (May 24, 2010).

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