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Insight
“At scale there is operational efficiency and finance efficiency. So when you roll out all these meters you’ve done it at the best cost base for the customer”
George Donoghue, Southern Water
Smart metering by numbers
Number of leaks detected by smart meters at Thames Water
Amount of leakage on the customer side at Southern Water
Number of smart meters set to be deployed in this AMP
Sources: Southern Water, Dayworth Consulting
Third-party MaaS – the example of Southern Water
Here’s a fact you might not know about the region covered by Southern Water: it’s drier than Sydney, Istanbul, Dallas and even Marrakech. “We know we are facing into a threat concerning water capacity versus demand,” explains Rob Angus, head of customer transformation & interim head of developer services at Southern. “The key benefit [of smart metering] is to be able to inform and educate customers on their consumption, with the goal of helping them reduce consumption and their bill by using less water.”
But Southern Water is adopting an approach to smart metering that – for now – is unique to the UK: using a third party, Horizon Water Infrastructure, to provide MaaS. Southern’s experience with metering goes back to 2010, meaning it has relatively high meter penetration, at about 88%. Most of these meters are AMR designs and are destined to be replaced with smart meters.
The desire, explains George Donoghue, head of smart metering, “rather than doing it in bits” was to “bring in one expert who can fund the meter, install the meter and manage the meter”. He says this approach is financially advantageous. “The benefit for customers is to bring costs down by going to someone who can aggregate those challenges and do it at scale – better than we can. At scale there is operational efficiency and finance efficiency.” It is understood that Southern was able to significantly reduce the cost of meters as a result of Horizon Water Infrastructure’s procurement power.
MaaS also entails a reduction in upfront capital costs, which can be beneficial to utility balance sheets and has the potential to reduce water company gearing ratios. Dady explains: “Some water companies are borrowing too much against their asset base and there are regulatory targets to bring this borrowing down. If your gearing is high, then a funded off-balance sheet solution could be good.”
Donoghue adds: “The cost is not an upfront capital cost, which means you are smoothing out cost for the customer, not spending all that cash and then having to pass it on.” There are also performance guarantees for the meters – if they fail, the onus is on HWI to sort the problem out, which reduces potential expense and risk.
The Southern / HWI deal is also relatively long-term, covering three AMP cycles, or 15 years. Angus says: “We only buy one meter for the 15-year period. If that meter fails it doesn’t cost us any more money, because we are buying data, we’re not buying assets.
“HWI is buying the assets, the comms network and everything else, and charging us a data fee.”
Why you need near-real time data and resilient comms
It’s important that data is transmitted frequently enough to be of interest to the customer, although the more frequent the transmission, the shorter the battery life, Reilly explains.
“For the customer it is near real-time data that will engage and interest them, and near real-time data that gives you an insight into consumption and leakage in the home – not reading data so infrequently that the data is meaningless. But some water companies have gone in the direction where they are only getting one meter read a week to stretch battery life
“That is not enough to deliver the outcomes that you want from your smart meter programme.”
Also of prime importance is the comms network that underpins data transmission. As communications networks evolve, Horizon offers an agnostic approach, rather than being wedded to one system or supplier. “Horizon has non-exclusive arrangements with all our suppliers; we can work with anyone,” explains Dady. “We have to remain agnostic with all of our systems: we will take data from any meter provider or any comms system.” The alternative, Donoghue suggests, might be “picking certain meter manufacturers and being stuck with them, or stuck with a proprietary solution”.
All the water companies Utility Week spoke to for this report agreed that simply getting the meters in the ground is not enough, despite the pressures to ramp up volumes. “The activity of putting the meter in the ground does not give customers usage insight, nor does it identify a leak,” says Rob Angus of Southern. “But the consequence of that installation is everything. Decisions around data and the way we present that to customers are important.”
One of the ways water has learnt from the energy sector smart meter rollout is in not providing in-home displays (“technology has moved on”, believes Angus). “We are going to use mobile, the web and apps to present information and there will be a range of technologies and channels.” Algorithms enabling data to be personalised and understood by individual households are just one example.
“In most solutions we’ve seen, consumers will see their consumption on an hourly basis and then data at 15-minute intervals”, says Angus. “And that’s just the start. We want to build a richer customer experience using smart metering data. We should be able to help the customer understand their consumption, what that means from an energy perspective, and pull the whole thing together in terms of where water comes from, how much water is in the reservoir that’s feeding their property, where their wastewater goes, and how that is being used.
“There is a huge programme needed on the back of the smart meter installation to bring this to life for customers.”
Currently, there is a widespread lack of awareness about water consumption, he says. But with the sector’s reputation at a low ebb, smart metering provides an opportunity to improve perceptions while educating households. “What would good look like in terms of our programme?” Angus asks.
“It would be a customer base where we’ve regained trust via accurate billing time and time again, and where customers are engaged and understand the consequence of consumption on the environment.”
