Commentary

31 July 2009

Response from Onzo Ltd

Company profile

Onzo, a leading global designer of home management systems, is pleased to have the opportunity to respond to the consultation on smart metering for electricity and gas announced by the Department of Energy and Climate Change in May 2009.

Response to Consultation: Executive Summary

Onzo welcomes the consultation as an indication of the government's continued commitment to the general introduction of smart meters, first set out in October 2008, but believes the terms in which the consultation is couched are likely to give rise to misunderstanding about the nature and purpose of smart meters and exaggeration of the benefits they will provide to the consumer.

Paragraph 1.1 of the consultation document states: "smart electricity and gas meters provide accurate real time information on energy consumption... They will provide a step-change in the information available to consumers, helping them to save money on their bills and to reduce their carbon emissions... They will empower consumers."

Smart meters provide greater accuracy and frequency of billing - which is welcome - and remove the need for manual meter reading - which will be welcomed by shareholders and customers if the benefit is passed on.  But on their own, smart meters do not provide any more real-time information to the consumer than is available from the present generation of meters.  However, meeting the government's objectives of reducing energy usage and cutting carbon emissions requires effective customer engagement.  Useful information to facilitate this can be provided in a variety of ways, and we believe there should be an obligation on suppliers to provide real time energy information to consumers.

Response to Consultation Questions

Onzo has focused its response on Sections and Questions that directly relate to home management systems.

Section 2: Proposals for the Domestic Sector Delivery Model, Questions 1 - 6

I.    In respect of the market model for the roll out of smart meters, Onzo agrees with the conclusion that the Central Communications model is on balance preferable to the others.  We have argued elsewhere for the merits of centralising the provision of infrastructure and support the argument that this model will encourage both innovation and competition.

II.    We believe the technology for smart meters should not be developed in isolation from the drive, over much the same time-frame as smart meter roll out, to provide broadband access as a universal obligation, as set out in the "Digital Britain" document (Department for Business, Innovation and Skills /Department for Culture, Media and Sport).  Recent evidence, such as the findings of the Ofgem Communications Consumer Panel, shows that consumers now consider broadband to be the fourth utility.

III.    We urge the Government to consider the possibilities that a smart meter roll out under the Central Communications model could offer in terms of the provision of a range of remotely delivered, value-added services to the home.  These could include health care, assisted living, home automation and home security.  The potential for these value-added services is one of the most important benefits that could arise from smart metering in the long term.  We hope that the Government's response to the consultation will recognise the importance of enabling innovation and the creation of a 'energy services space' where anyone can compete to fulfil consumers needs and wants. A space which catalyses utilities to evolve from energy supply businesses with a few services attached, to service businesses that also offer energy. Including this in the requirements should not impact adversely on the cost or time-scale of smart-meter rollout.

IV.    The writing of high quality standards to ensure interoperability between devices can facilitate the provision of future value-added services over the smart meter and AMI network.  The British Standards Institute for example is well positioned to exercise a leadership role in this area and to provide a link with the work on standards being undertaken on the continent.

Section 3: Proposals for the Domestic Sector Functionality, Questions 7 - 14

I.    In terms of electricity meter functionality we envision standardised smart meters as devices to meet the requirements of suppliers and distributers as enablers of innovation, as mentioned in Section 2, point II. Two factors will be major enablers of innovation over the long-term:

Firstly, the issue of data granularity, i.e. time interval of data. A cumulative energy data measurement at an interval of 15 or 30 minutes is adequate for billing and tariff innovation. However other add-on facilities such as real time displays may wish to make use of power measurements, or even voltage or line frequency measurement. These should be made available at 1 second (or more frequent) intervals. Although it would appear uneconomic at the moment to backhaul this level of data for processing away from the customer's premises, data compression and other techniques may make this possible in the future. Secondary data return paths such as broadband could also be utilised and this data could go either to utility of third party service provider.

Secondly, the issue of two-way communications to the smart meter.  Smart meter communications (WAN and HAN) should be capable of supporting additional applications beyond just those of electricity and gas metering.

II.    Onzo strongly believes that means of communicating meaningful and actionable information are essential if consumers are to be able to understand and manage their energy usage.  The consultation document expresses the belief (paragraph 3.20) that the universal deployment of displays with the smart meter is likely to be necessary to ensure maximum consumer engagement. It is true that research shows that displays are the most effective tool at the customer interface for realising a reduction in energy use and shifting use off peak. However, there are other mechanisms, some of which are far more cost effective, including websites and printed reports, and messages sent to mobile telephones.  The following table, compiled by Onzo based on a review of existing academic literature, indicates the energy saving that may be achieved from displays, websites and printed reports.



However, all these mechanisms may not yet be accessible by all.  As they are complementary it is likely that a combination of them will be the most effective.

As Onzo pointed out in its response to previous consultations (see our letter on the HESS Consultation of 29th April 2009), energy efficiency can best be served by stipulating not one specific means but the outcome.  We believe it should be possible to draft the suppliers' obligation to supplement the installation of smart meters in such a way as to encompass all these tools.

III.    If a display is to be mandated then we believe it would be a mistake for the functionality to be stipulated in any detail beyond a basic standard or definition e.g. 'real-time energy display'.  There has not yet been sufficient research to define what functionality is most effective and there is a temptation to cram information onto a display that would be better suited to another medium.  We believe it should be for the energy suppliers to decide for themselves the kind of display they will provide for their customers if they are required to provide one.  This will be conducive both to innovation and competition.

IV.    If functionality is to be stipulated for displays, then this needs to be determined as early as possible.  The lead-time for the design and development of a consumer electronics product for volume deployment is at least a year and for industry to deliver effective and cost effective products it needs some certainty about the long-term direction of the market.

V.    DECC is understandably anxious to take into account the views of consumers and their representatives on the data provided on displays.  However, any company that has an effective new product development process would testify that consumer opinion of what information or functionality might be required in an entirely new area can be very misleading as it is often a long way from that which subsequently proves to be effective.  For this reason we would recommend that consumers' views are considered in a sensitive manner and with reference to 'real life' experience and studies where possible.

Section 5: Other issues and Next Steps, Questions 22 - 23

In terms of substantive other issues which warrant further investigation and quantification, we propose three additional studies:

I.    Value-added services - We propose it would be useful to add a study of value-added services to the Impact Assessment for smart metering and the role of the communications provider (CCP) in handling data for value-added services. A study majoring on well defined standards for the wide area network (WAN) and messages that pass across that network. To allow utilities and other authorised bodies to access the CCP servers to obtain appropriate data and to guarantee high degrees of protection to the consumer.

II.    Security engineering - The UK smart meter system is likely to have the capability for remotely disconnecting electricity and gas supplies from every house on the country. Thus security is not simply a commercial matter for energy suppliers but also of strategic national importance. The highest standards of security engineering must therefore be employed. The history of information technology is filled with examples of security flaws being discovered and exploited after equipment is deployed in the field. We propose that it is important to add a study into the security engineering requirements of the UK smart meter network.

III.    Wireless home area network - We note and agree with the assumption that the home area network (HAN) will be implemented, in whole or in part, by a wireless network, and that the same wireless network should be chosen for every home to ensure interoperability of equipment and a competitive market for innovation. We propose a study which builds on the original ERA 'SRSM and Beyond - Local Communications Development' work which focuses on real world physical testing to ensure candidate wireless technologies are fit for purpose.

Onzo would be happy to enlarge on the points made in this document should it be considered helpful for us to do so.