2. 1 World of change for the energy industry
Supplier-Vendor – Outsource made efficient and profitable. This is executive summary share with you my
view on the challenges and opportunities within Utility industry part of focused on AMI are being rolled out on a large
scale all over Europe.
The energy industry is in rapid change and in the years ahead this development will accelerate and significantly alter the
structure and dynamics of the industry. Some of the most important trends are discussed below.
1.1 Energy Market - Deregulation and liberalisation
In the EU, and the UK in particular,the liberalisation ofthe electricity market is rapidly being reversed and replaced
by old-fashioned command-and-control policies,
New regulations on both national and international (EU) level are transforming the market. Competition is increasing
through regulatory changes. The former national monopoly energy markets are forced into open competition. As a result,
many formerly national companies expand their business into new markets. New players are also entering the markets
because of the low entry barriers.
Energy companies also face new challenges with products that are not possible to differentiate. Sale of a neutral
commodity (kilowatts) provides a perfectly transparent market. This is something customers are increasingly aware of,
and make use of. As business dynamics really impacts the Utility giants. Its therefore wise to consult so to giants can
focus on not in demand/supply but also policies and profitability and optimisation.
We as Vendors and service providers are part of the operation and management of the electricity grid which still is
strongly regulated.It is however heavily influenced by the deregulation and liberalisation of the rest of the market.
There can be question , why not hire or exploit with in house consultants. Market dynamically calls for third party
assessment and price-point review so as to assure minimum risk with maximum profit at lower cost as assessment are
more of periodic than as per market trend.
Operational efficiency
A transparent market evokes a continuous pressure on cost reduction.I have mentioned following measures to reduce
operating costs in this paper
These trends will also influence the monopoly, forcing network companies to rationalise and empower their business
with digitised services and automated processes.Above can be explored with experts and advisory panels who study
and monitor the Market trend with loads of innovations and disruptive forecasting.
1.3 Factor of Growth in renewables, micro production and energy management
Micro production of energy and the strong increase of number of electrical cars.This puts the grid under stress and paves
the way for smart metering, demand response programs and smart grid technology.However Smart Grid and IoT
integration is still unclosed loop of invention and exploration.
1.4 Consistent and integrated energy markets
Energy industry is also experiencing a wave of harmonisation and integration between markets. The Northern European
markets are front runners with cross‐border transmission capabilities, the common established financial market and the
planned common retail market.
However, the uncertain and unambitious policies,as well as the differing frameworks, standards, tariffs, subsidies, and
regulations across EU countries serves to make it difficult to sell a medium- to long-term business case, especially
“when companies normally operate on payback periods ofthree years or so.
The UK led the way when it came to reform. The UK market was deregulated, competition was promoted and the industry
was privatised. There was then price-cap regulation of the natural monopoly element. But competition worked.
Subsequently, there have been a number of attempts, through EU directives that followed the British model to some
extent, to liberalise electricity markets.
3. 1.5 Transformation - manual readings to AMI/Smart Grids, Analytics explored
PaaS (Platform-as-a-service) solutions are helping leading utilities unlock insights and transform the energy value
chain.
For many, automated meter reading was a relatively quick and certain CapEx solution for reducing burdensome O&M
costs that were otherwise difficult to displace. Overtime theres lot of changes in the smart metering related service
areas and/orhard-to-access meters where paybacks were clearly visible and immediate.
Energy technology companies have deployed applications to repurpose help customers to help them make better energy
decisions.IOT - The premise that customers equipped with better information are far more likely to make betterenergy
decisions has changed the landscape of how the industry thinks about energy efficiency. IoT have changed the trend
with Technology giants exploring existing network points may it be weather to traffic to regulate and optimise the
resource utilisation.
The replacement of traditional meters with smart meters (have greater impact on market and data factors within utilities
sector opening multiple venues of betterment and challenge the traditional methods and tariffs .
1.6 Opportunities with Change
Liberalisation and deregulation of energy markets and Advanced Metering Infrastructure (AMI) including smart metering
are important to increase customer engagement and competition. They enable both cost savings and new end-‐user
services.
Market distortions
Policies have many detrimental effects. post-2008 – renewable energy producers are immune to the consequences.Also,
subsidies vary hugely across different technologies and different countries. variance in subsidies cause enormous
market distortions. In addition, for a given cost,the reduction in carbon emissions has been much smaller than if more
economically rational mechanisms had been used.
Further problems caused by climate change policies also leads to price spikes and the potential for either huge increases
in consumer prices or blackouts.
2 Supplier/Vendor — industry expertise and delivery capability
While in-house expertise plays vital role, consultants play critical role due to varied and deep industry knowledge
with proven capabilities to deliver and is the perfect partner to build leaders within the energy industry.
Global presence provides quick, efficient sharing of experiences across countries. Experiences that Consultants brings
from deregulating markets are highly relevant when liberalising otherEuropean markets.
Following factors ave shown inconsistent trend in the industry change
2.1 Engaged in the energy industry - Disrupting Utilities
The Industry Responds to data factors and insights
New Participants in a Transformed World
Strategies for Entrants and Customers
4. Businesses that use large amounts of electricity now have a wide range of options if they want to pursue opportunities
in the evolving marketplace.
Become a producer - In this article have sated few examples with the best quotes , Self-generation has long been a tactic
used by intensive energy businesses.Look at your own usage.Electricity used to be regarded as an immutable fixed
cost.
2.2 State of the art Consultation and Utilities experts – local delivery
AMI data can be leveraged to dramatically increase CVR results
Electric cooperatives can avoid demand charges and save power using advanced leverage from existing Advanced
Metering Infrastructure (AMI) installations and Conservative Voltage Reduction (CVR) techniques.
With the penetration of AMI on the rise, electric co-ops have the opportunity to utilize advanced CVR techniques to
improve reliability and economic results.
2.3 Thought leadership within our industries
Supplier/Vendor is dedicated to continue building the information society,where IT fosters productivity and innovation.
We believe that being thought leaders in information technology is not enough; we put a lot of efforts in developing
the energy industry as a whole as well.
As a partner of Supplier/Vendor, you will always be kept up to date with the latest thoughts and reflections on
innovations and the market.
2.4 Expertise across industries
Supplier/Vendor is building the information society across multiple industries.Many of the challenges facing the
energy industry today have already been taken care of in other industries.Especially the Telecom business has many
similarities with the energy industry.In Telecom they have been through a wave of liberalisation, have faced the
challenges of de-‐commoditising their product and lived through mergers and acquisitions. The same development is
seen in the utility business,but we a time delay of about 10-‐20 years.Cross-‐industry focus ensures that innovations
from other industries are introduced to the utility business.
What can the energy industry learn from Telecom and financial services?
The energy industry has been working for a long time on good solutions for advance payment.
Here Supplier/Vendor re-‐use experiences from similar projects in telecom and financial services. Using
your mobile, you can find out or update your own balance at any time.
Based on experiences from other industries,Supplier/Vendor has developed a concept for prepayment/credit-‐
based real-‐time account for the energy industry.Being a market leader in several industrial sectors,
Supplier/Vendor has the expertise and experience that can accelerate innovation in the energy industry.
2.5 Eco-system from vision to results
In deregulated energy markets, customers and their main contact point, energy retailers have a Unique opportunity,
technologically as well as economically, to advance the efficient development of the smart grid throughout Europe’s
competitive energy markets.
This White Paper details the various aspects ofthe retailers’ position and the part Retailers can effectively play in the
central functionalities enabled by the smart grid - through cooperation with consumers and grid managers (DSO),
providing the passage to the wholesale market.
5. Supplier/Vendor is well equipped to handle clients' strategic challenges. We provide a full range of IT‐based solutions
and services for the entire “eco-Systems”, from the server room to the customer relationship. Supplier/Vendor will take
you from vision to result, from start to finish.
2.6 AMI experience
Outsourcing partners and consultation have extensive experience from AMI as IT product supplier, managed
service operator and business consultants.
Multi meter vendorend-to-end AMI solution, AMIRO, is developed to be prepared for future changes in
regulations, technology and customer demands.
In 2005/06 most of the implementation of smart metering project across market involved third parties . After
rollout the projects operated as a managed service from the service center either cloud based/physicalservers .
There was major roll-out of more than 900,000 smart meters in less than three and a half years using Workflow
Management System (WMS). WMS enabled retailers to retain full ownership of the process,regardless of the
contractor, sub-process,ortechnical solution.
In the rest of this document we will share with you important lessons learned and give good advice on the way
forward for utilities entering the road to AMI.
6. 3 AMI – from reading cards to M2M communication
AMI is a challenging experience that transforms the operation of a utility. Learning from experience is a key success
factor for managing the transformation from manually read meters to integrated and automated business processes
built upon a machine-to-machine (M2M) infrastructure of interconnected devices.
In this chapter I will share with you important learning’s from our AMI projects and emphasize strategic
decisions that must be made in different phases ofthe project.
The current representation of the value chain for measurement data will be highly questioned the upcoming years.
The industry will need to develop new ways of handling the measurement process in order to comply with future
requirements of new services. This volume challenge has already been solved in Telecom. Solutions for handling
enormous amounts of CDRs (Call Detail Records) are standard for every Telecom service provider. If your
prepaid subscription volume is empty, the call will be disconnected in seconds.You can use self-‐service portals
for viewing the exact status ofyour bill. This is the future we will see in the utility business also,some more
years down the road.
3.1.6.6 Integrated surveillance and monitoring tools
3.1.7 Information-security
3.2 Rollout phase
The start of the rollout phase is the real kick off for the project, where the utility staff and customers are exposed to
the changes in business processes and infrastructure.Important topics to focus on are discussed below.
Data quality issues
IT-systems readiness
Rollout plan
Rollout and handling ofexceptions
The key to a successfulAMIrollout is the handling of exceptions. Exceptions will occur, probably more than you
expect and in areas that you haven’t expected. Some typical exceptions have already been discussed like:
But there will also be others like for instance:
• Installers that doesn’t follow agreed procedures
• Unexpected IT systemdowntime
• IT systemperformance limitations
3.3 Operations phase
Even though the full scope ofthe operations phase aren’t reached before all meters are rolled out,the phase still starts
after the first meter is installed and delivering values. Therefore the operations phase should be planned early in the
project.
Ensuring a cost efficient and stable operation requires a competent staff with the right skills and an optimal
organization.
Integrated AMI surveillance and operations tools are important to operate the AMI infrastructure in a good way.
Field work must be minimized using remote operations as much as possible, and when on-‐site work is needed
efficient processes and routines is necessary to minimize costs.
This chapter focuses on the efficient organization and split of work for the operational phase.
3.3.1 Organization of operations
7. Efficient operations of the AMI infrastructure require competent and well-‐trained personneland a set of processes
and routines adapted to the needs of AMI.
Experience has shown that ITIL, with some AMI specific adaptions,is a good framework to base the organization
of operations.
3.3.2 Governance model
An AMI adapted ITIL governance model in shown in the figure below with a separation between strategic,
tactical and operational level:
The strategic level is the management group and overall responsible for the AMI operation. Strategic management
involves making decisions about what overall objectives should be Strategic management's planning is long term and
considers where the business wants to be in two to three years’ time. Strategic management has the highest authority.
The tactical level is responsible for the running of the AMI operation. Tactical management is termed as
intermediate management. They have lower authority than strategic management. Tactical management involves
making decisions about how an organisation should go about achieving the overall objectives determined by strategic
management. Tactical management decides what needs to be done within that year to implement the plan of strategic
management.
The operational level consists ofall key components necessary for delivering complete AMI operations. This
management translates the goal of tactical management into operational. The daily routine based work is done by
operational management. This is also known as operating core.
The operational level is split into the following four elements or packages:
• IT infrastructure operation
• IT application operation
• Operation of meters and communication infrastructure
• AMI service operation
The operational level is described in more detail in the next chapter.
3.3.3 AMI operations on operational level
A simple overview over the operational level is shown below:
IT infrastructure operation consists ofensuring the availability and performance of the end-‐to-‐end IT
infrastructure (hardware, software and communication) in order to support the service level requirements of
applications. This may be done by the AMI service operations team or outsourced to an IT-‐provider or internal IT
department.
This include management, operation and maintenance of hardware, servers, network, network components,
firewalls, OS, basic software, databases and systemcomponents with corresponding continuity solutions
designed for high availability.
Risk and affiliations
Application operation is the process of ensuring the availability and performance of all IT-‐ applications involved in
a given AMI operation. This may be done by the AMI service operations team or outsourced to an IT-‐provider or
internal IT department.
Meter and communication infrastructure operation is the surveillance and monitoring of field placed devices.
An AMI solution includes a large population of field placed devices-‐ meters, concentrators and other equipment.
They communicate with the central IT solution through various communication carriers like power line
communication (PLC), radio communication and mobile or broadband networks. The field equipment constitutes a
large Machine-to-Machine (M2M) infrastructure, which requires special competence and skills to operate and
maintain.
8. AMI service opérations is the end-‐product,which is based on the underlying elements (IT infrastructure operation,
IT application operation and meter and communication infrastructure operation).
The Service desk is the Single Point of Contact (SPOC) on the operational level and normally organized as part of
the AMI service operation. It is available for reporting incidents and questions regarding delivery of services. It
also handles 1st line of support.
4 Summary
In this white paper we have shared our experiences and recommendations, learned from extensive experience in
several AMI projects in various countries. AMI is a challenging venture, but will give important business
improvements and open up for new possibilities if conducted wisely.
In this summary we would like to repeat our main recommendations.
Do a thorough analysis in the planning phase,involving cross-‐organisationalteams, and evaluate
• Insourcing or outsourcing
• Business process changes
• Functional scope of AMI
• Technology choices and future IT-‐architecture
• Internal and external communication plan
In the rollout phase focus on:
• Data quality issues
• Detailed planning
• Handling of exceptions
For the operations phase,remember:
• The operations phase starts as soon as the first meter is rolled out
• Operational challenges should not be underestimated
• The right organisation is a key to efficient operations
• Integrated surveillance and monitoring tools are essential
We hope that this white paper have been enlightening and has given a broader perspective on AMI.
We are happy to help you and share our industry expertise from the utility sector.Please get in touch if you are
interested in our IT products,services or qualified advice on your AMI journey.