Turning Smart Customers into Happy Customers – A Global View of Smart Meters

Turning Smart Customers into Happy Customers – A Global View of Smart Meters

THIS ARTICLE WAS WRITTEN BY | 28.06.19 | 10:39 AM

The world is getting smarter when it comes to electricity consumption, with over 700 million smart meters currently installed worldwide according to analysts IHS Markit. Extensive installation campaigns in the UK, Australia, and USA have shown smart meters can reduce energy consumption, improve customer decision making, and help cut electricity bills. But they also show that good infrastructure planning, appropriate customer support, and transparency are crucial to ensuring success. While it hasn’t been an easy journey, the potential for savings shows that it’s worth it.

smart meters reduce average electricity consumption by 10% per customer

IHS Markit’s study estimates that smart meters reduce average electricity consumption by approximately 10% per customer globally once installed. With an additional 1 million smart meters set to be shipped worldwide every day in 2019, learning lessons from established smart meter rollouts is important for countries planning their own future initiatives.

The truth is the more we know about the electricity we use, the smarter we can be about managing it. Data on total electricity use, tariff prices, time of consumption, power-hungry devices, and consumption comparisons all provide a background for customers to make the right decisions.

With smart meters rolling out across the world, here’s a look at what customers say, and what lessons we can learn, in the drive towards this smart meter revolution.


United Kingdom

With a commitment to ensure every home and business in the UK is offered a smart meter by 2020, the UK is a leader in the roll-out of smart meter technologies. Customer testimonials from British Gas reveal some consumers are already benefiting from the additional insight provided by smart meters.


“It has definitely made me stop and think about the way I use energy. I used to just pay my bill and not think about it, but seeing exactly where my money goes makes you more conscious.”
– Mrs Shirt, Cheshire, UK

“From the reports, we saw that we are significantly above average in our energy use compared to similar households…We were really surprised to see just how much energy our heating and appliances were using! It was a real wake up call.”
– Mr Rowe, Leicestershire, UK

When it comes to empowering customers, customer satisfaction is a good measure of success. In order to understand that journey, The Smart Meter Customer Experience Study was undertaken by IPSOS Mori on behalf of the UK’s Department for Business, Energy & Industrial Strategy to explore customer satisfaction in the UK’s smart meter rollout.

While satisfaction shown in the IPSOS Mori study was high, analysis by the UK’s National Audit Office showed that the UK’s smart meter initiative has fallen behind schedule, with costs escalating by 50% above projections. Analysis by consumer group reveals 30 smart meters would need to be installed every minute to meet the original target, with utility companies installing on average 8. This delay is largely attributed to postponements to the original start date, alongside failures by large utilities in recognising the scope of the logistical challenge ahead.

The original plan was to invest GBP11 billion, roughly RM55-RM60 billion, in the rollout of smart meters across the UK. This would equate to GBP374 cost to each household with dual gas and electricity in the UK, and was expected to be easily recouped over long-term savings.

However, rollout of the meters has also been troubled by a particular technological challenge. The first-generation meters, known as SMETS1, often lost their ‘smart’ functionality when transferred between utility companies. The second generation SMETS2 meters, which respond to switches in provider, make up just a small part of the current initiative. An added challenge has also emerged in the limited supply availability of these SMETS2 meters.

However, rollout of the meters has also been troubled by a particular technological challenge.

With smart meters losing key functionality when transferring utility providers, customers were faced with the choice of staying with potentially more expensive tariffs while maintaining their ability to monitor and manage energy use, or switching to cheaper tariffs at the risk of losing their smart meter functionality.

That meant that making informed decisions about energy use faced a substantial hurdle. This is a major part of why consumers are expected to save just GBP11 per year, rather than GBP26 initially predicted, generating resistance and negative sentiment around the project. It’s clear that providing the right technological infrastructure to empower smart decisions must be a fundamental part of any rollout. The UK has adapted to ensure future rollouts will be switched to the SMETS2 meter.


Victoria, Australia

The Australian state of Victoria began the mandatory roll out of smart meters in 2009, and a decade later approximately 95% of households now have these devices installed. The state also introduced a flexible tariff scheme as part of the smart meter rollout, offering users the option to elect cheaper times for electricity consumption.

The state’s initiative has been contentious, as revealed by research by the Australian Energy Market Commission. The fluctuating costs from the flexible tariff scheme were identified as causes of customer uncertainty, alongside questions of how to operate the smart meter technology.


“Because I don’t know what flexible pricing is, I don’t know if I’m on it.”

– Anonymous, Melbourne, Victoria

While the learning curve has been steep, many analysts argue that Victoria will ultimately benefit from a ‘first-mover advantage’. That means that while the road towards adoption might have been rocky, residents will grow to enjoy greater benefits in the long run.


“They make an effort to show how your usage compares against other households on the bill.

– Anonymous, Ballarat, Victoria

Flexible tariff prices and informed usage was a vital part of the learning experience in Victoria. With the insight gained from a smart meter, consumers can see which devices in their home are burning power, when energy consumption and costs are highest, and make decisions to use large devices such as washing machines at cheaper times of the day.

But without being educated on to how to read and operate their smart meters, and lacking key information about flexible tariff costs, consumers were unable to make the most of these benefits. It’s clear that customer education, as well as transparency on tariff options linked to smart meter initiatives, is important for success.


Burbank, USA

Burbank managed to reduce its response time to metering-related queries from days to just 15 minutes

There are 132 million residential electricity customers in the USA, consuming a mammoth~1.4 billion megawatt hours of electricity in 2017. That’s a huge opportunity to embrace the benefits of smarter electricity consumption.

In 2016, the nation’s Department of Energy compiled a comprehensive study to assess the benefits of advanced metering initiatives across the country. The case of Burbank, California, offers a useful look at one area of this implementation.

Burbank Water and Power Company managed to reduce its response time to metering-related queries from days to just 15 minutes thanks to this initiative, with customer service representatives able to quickly and accurately provide detailed insight on energy use and costs thanks to smart meter data. This also reduced bill-related disputes, since the more you can see about your electricity use, the less likely you are as a customer to question just where that money is going.

But the benefits of smart meters go far beyond positive customer reviews. The integrated nature of the smart meters into a smart grid system also enabled Burbank to send outage reports within two-minutes of power disruption, significantly enhancing operational oversight and response to electricity supply disruption.

While the case of Burbank Water and Power Company shows the significant potential benefits of smart meter technology, the wider findings of the Department of Energy study highlight key learnings for its infrastructure introduction. Per meter deployment ranged from US$130 to US$1,895, showing huge variability in cost-efficiency of installation. Full and partial-scale implementations broadly demonstrated lower cost per meter installed.

Interestingly, purchasing and enabling multiple smart meter features and integrating smart meters with larger operational systems increased project costs, but also had a positive impact on benefits for the utility. Another key factor also impacted cost – the role of customer outreach and education. It’s undeniable that this element is key to unlocking the greatest possible benefits for customers, but it also added to the overall rollout cost of the project. When it comes to smart meters, smart economics is often a challenging equation to balance.


Informed decision making starts with informed consumers

What’s clear from the three initiatives is that proper implementation is important, as is transparency on what that implementation might cost. The case of the UK shows that embracing the right technology infrastructure is more important than rushing to implement the quickest solution available.

Utility companies must work to support their customers at every stage of this process, providing clear education on how to use smart meters once they are installed in their homes. Clarity on tariffs linked to smart meter use is also important, with the case of Victoria showing that flexible tariffs will only provide benefits if customers are made fully aware of their existence.

Energy efficiency is a key part of building a better future for Malaysia, and a better future for the world. Improving energy efficiency is one of the most cost-effective methods to reduce our energy burden on the planet. But it’s also an economic benefit too – with the International Energy Agency (IEA) estimating that improved energy efficiency could add US$18 trillion to the global economy by 2035.

 

Malaysia’s electricity use per capita is currently one of the highest in the region, at ~4,500 kilowatt hour per capita. That’s three times the use of regional neighbour Vietnam, and more than five times the electricity use in Indonesia. In interest of supporting a positive environment, the need to use electricity more efficiently is vital.

Smart meters provide serve as a tool for customers to make smart consumption decisions. They can give insight on how electricity is used, when we use it, and ultimately how we could cut costs and save energy while doing so. Demonstrating success in a smart meter roll out means ensuring these benefits are realised. In the end – supporting that change means a better energy future for us all.

 

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