One of the main talking points in the energy sector in recent months has been concerned with 'getting smart metering right'. But what is it about smart metering that businesses in particular have to 'get right'?
To start, smart metering is not new – a number of countries have already been using it for different purposes. For example, in Italy, one of the motivating factors was to improve customer payment for energy. In Ottawa, Canada, they are taking it one step further and building a 'smart' grid network. So if it is not new, why is there such interest in the UK? The rising cost of energy has, in short, made smart metering very compelling for both business and domestic consumers. Energy costs have moved well up the agenda for most businesses where overheads of all types are being carefully examined. However, unlike some overheads, energy cannot be cut entirely from the balance sheet.
There is a degree of debate about what makes metering 'smart'. At the core is a move away from a 'dumb meter terminal' that simply records energy use, with someone manually reading the meter every quarter. As we know, if there is no access to read the meter then the bill is estimated - sometimes expensively.
Smart meters introduce two-way communication between the supplier and the consumer. That communication can be of varying degrees. For example, it may just be a means whereby the supplier pulls the data readings remotely and there is no need for a meter reader to knock on the door. At the extreme end of the scale it may provide suppliers with the ability to disconnect, to gain knowledge of demand profile and to price energy to match demand. In addition, other functionality such as internet access have been discussed.
Whatever the version that is ultimately rolled out, the business consumer will want to benefit as much as the domestic consumer. The ability to 'demand manage' the business supply should be attractive to both the suppliers and business users.
On the domestic side, there have been privacy issues around what can be seen as the 'spy in the hall' sitting in the metering cupboard. In Holland this has been a major block to smart meter roll out. For business users, that should be less of an issue where cost management should be far more important.
Smart grids are a step further. In effect demand is managed by the supplier at source from the generation level onwards. Businesses may choose to be shut down selectively in order to benefit from reduced tariffs and indeed payment from suppliers. Smart metering will assist in the development of more energy efficient grids.
In December 2009 the UK Government announced two approaches for smart metering - one for the domestic sector and the other for the non-domestic sector. For households, the message is "let's get going". For businesses, there is perhaps a more measured approach. It is true that the Government intends to mandate meter installation on the same timescale as domestic customer (by the end of 2020) but the meters installed will not need to be as 'smart'. For example, the Government does not intend to require a real time display device to be provided to business energy customers. The broad range of premises – from single traders to large industrial premises - meant that a single display device was not suitable when compared to other methods such as websites.
In effect, the Government is juggling the high profile domestic sector and the less prominent business sector. If the latter is not to lose out, then pressure from the business sector will require to be maintained if it is also to truly benefit from smart metering and its potential cost savings.