To improve the value of their investments, power and utilities companies need to manage their AMI journey as a purpose-led, customer-centric smart transformation program instead of a meter replacement initiative.
Steps for a successful smart transformation
Smart metering programs have a significant impact on the organization, technology and processes — from retail customer-facing services and billing to procurement, asset management and grid operations. These multiyear, inherently complex programs will require power and utilities companies to build new capabilities and reimagine operations in a new smart meter-enabled environment. From their global experience in digital grid transformations, EY teams have identified three key priorities for power and utilities companies to consider as they embark on their smart transformation journeys.
Priority 1: Set the smart transformation up for success
A successful smart transformation project must firstly define a clear business case and the value drivers. Traditionally, these programs have focused on delivering operational efficiencies enabled by the smart meter via remote operations, the reduction of non-technical losses and automatic meter reading. The energy transition has created the opportunity for power and utilities companies to enhance the value proposition of a smart transformation to include socioeconomic benefits, such as job creation, nation building and energy efficiency. They should also consider how this can play a pivotal role in driving customer awareness and transforming customers into active participants in the energy system — a crucial factor for the energy transition to succeed.
Establishing a smart transformation office will be pivotal to execution. A full-scale customer-centric rollout of smart meters needs fluid collaboration between the program and a diverse group of internal and external stakeholders from equipment manufacturers, systems integrators and field teams to business users, advocacy groups and regulatory bodies. A well-executed transformation office can interlock all parties to deliver within the expected time, schedule and costs — and most importantly, in the interests of the power and utilities company and its customers. It also drives proactive management of risks and dependencies in a constantly evolving landscape compounded by increasingly demanding customer expectations, regulatory pressures as well as supply chain and technological disruptions.
The smart metering vendor landscape is vast, with diverse services, significant expenditures and long contract durations creating a complex set of decisions and commitments for the power and utilities company. A robust and well-defined procurement strategy and framework underpins the smart transformation office. This is also vital for power and utilities companies to make the right decisions on what services, solutions and commercial models are suitable; align to the program and business requirements; and deliver the quality outcomes expected.
Priority 2: Design and expand the smart transformation
The deployment constitutes one of the most significant cost components and offers one of the greatest opportunities to achieve efficiencies over the lifetime of a smart transformation program. It is important to build a dedicated deployment operations capability that can define the right deployment strategy. This will provide a strategic focus and a “north star” to guide decision-making and planning to align the deployment to the achievement of strategic objectives. Deployment operations also play a critical role in providing end-to-end visibility of the smart meter rollout beyond the coordination of supply chains and meter installations. They can drive continuous improvement through the rectification of bottlenecks, gather customer feedback to improve the installation experience and drive new innovations to improve deployment efficiency.
The smart transformation also creates a unique opportunity for power and utilities companies to reimagine their customer relationships. It will create multiple touch points with every customer before, during and after installation of the new smart meters.
A focus on designing an effortless customer journey will help deliver trusted, engaging experiences. These will allow the power and utilities company to drive the adoption of new products and services that create new energy-efficient customer behaviors and encourage the evolution of users into omnisumers — customers who actively participate in a dynamic energy system.
Customer education and engagement is key to reducing the risk of resistance to the smart meter rollout while driving demand for its benefits. Transparent and meaningful communication can alleviate concerns, encourage customer participation and ultimately foster advocacy of such benefits, leading to increased customer satisfaction and engagement. This involves the creation of compelling new services and product offerings that provide an intuitive understanding of the energy data and encourage customers to engage in new interactions with the energy system.
Priority 3: Realize long-term value from smart transformation
Power and utilities companies should consider the long-term capabilities that need to be built to operate in a future with smart meters early. The immense amount of smart meter data and new functionalities will need to be integrated into core business processes, services and product offerings. The new ecosystem of physical assets, communication networks and software must also be securely operated and maintained.
It is crucial for smart meter operations to be established early and scaled up as the program transitions from early pilots to a full-scale rollout. Power and utilities companies should consider strategic decisions, such as who will operate the different components of the smart meter solution and where smart meter operations should reside in the organization. They also need to consider the division of responsibilities and the service level agreements dictating performance expectations and incident response times.
A structured framework to build the skills, knowledge, new end-to-end business processes and technologies needed to execute smart meter operations effectively is essential. This will enable the proactive identification, categorization, prioritization and resolution of issues so that the smart metering ecosystem does not hinder business performance as the organization becomes highly reliant on its data and functionalities.
Enterprise architecture and design governance enable the smart transformation program to provide a common language and devise a pragmatic roadmap toward integration of the smart metering solution and its functionalities into the rest of the organization. Effective enterprise architecture will guide development of the overall solution through its transition and final states concurrently with the mass rollout of smart meters. This involves the creation of a roadmap to unlock business value through the launch of new capabilities, services and product offerings at the right time for the business and customers.
A multitude of smart meter-enabled use cases exist for both the retail and distribution businesses, with the area of focus and investment depending on the strategic objectives of the power and utilities company. An agile, incremental approach to unlock the value of smart metering involves leveraging data platforms, data discovery and data analytics early to explore and understand what the smart meter data reveals about customers and the low voltage network. This approach can help the business refine requirements for its future services and product offerings as well as provide invaluable insights into the solution’s performance that may identify areas for improvement.
Smart transformation is a pivotal foundation for delivering on the potential of the clean energy transition for power and utilities companies, customers and society alike. In this pivotal moment, it is more crucial than ever to “get it right the first time” to avoid costly delays and impediments to the path toward net zero. Power and utilities companies that seize the opportunity can fundamentally transform their organizations, digitize operations and reinvent business models to better serve the customer.
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Summary
Digitizing and modernizing the power grid is a critical step toward acceleration of the energy transition, fundamentally changing how electricity is produced, consumed and managed.
Smart transformation presents an opportunity for power and utilities companies to transform the organization, digitize operations and reinvent business models to better serve the customer. Such transformation is expected to be a win-win situation for power and utilities companies, customers, regulators, and investors in a new energy ecosystem.
