Smart Utilities: For a Sustainable planet

The potential benefits of competition change in the UK water industry are similar to those achieved in the Energy sector (although that has not been without some issues), in that customers will be given choice between suppliers, and prices should be reduced. Customer services should also be improved, as that will be another way to attract customers.

There are however a few issues and challenges. For many commercial and practical reasons (such as installation costs and practicalities) any property is only ever likely to have one set of supply pipes and sewerage, and related treatment and pumping facilities. Thus the customer will have no choice as to who provides their infrastructure, even if the incumbent is sold, or sells off the area as an inset. The cost per property for that infrastructure will be variable, depending on location factors such as:

• The availability and treatment cost of water;
• The environmental constraints on discharge;
• Geographical factors (e.g. terrain, population density);
• The metres of pipe required to service each property (usually more in rural areas);
• The age and condition of the existing infrastructure.
  

The competition regulation thus needs to be carefully constructed to ensure such issues do not create unreasonable cost differences between areas.

I will discuss how companies could achieve success in my final blog.

Posted by Mike Jones at 12:24 PM | Permalink | Comments (0)

In my last 'competition' blog I looked at some of the proposals in the UK. I will now consider what these may mean to industry and customers.

'Vertical separation' (meaning the accounting and often business separation of parts of a company's business) will mean in the case of a water company that elements such as customer services and billing could be open to full competition. In this regard it would be similar to the Energy market. At present the proposals for competition are limited to commercial customers (all supplied above a yet to be finalised daily volume).  Insets would be fully open for any customers with any supplier purchasing water and sewerage services from the incumbent Water Company at a common price, including the commercial arm of that incumbent Water Company.

This may lead to a number of significant changes, some of which are already being seen in practice:

• Large national customers, such as supermarkets, may choose to use one supplier only;
• Water Companies will seek to win commercial customers in other areas;
• Other companies (e.g. other utilities, supermarkets, etc.) may enter the market.

Business (and potentially in the future domestic) customers will thus be able to choose their supplier, and this should drive down prices. However as well as benefits, there are issues and challenges with this change, that I will discuss in future blogs.

Posted by Mike Jones at 7:25 AM | Permalink | Comments (0)

In a number of countries there is already an element of competition, as the water utilities are privatised and compared through regulation. That regulation can be quite exacting, and companies who are in the bottom of the 'league tables' for performance can suffer significant penalties.

In  the UK changes being proposed include increasing the number of business customers who can chose supplier by lowering the de minimis amount supplied per day, expanding business competition to wastewater as well as supply (it is linked at present), and vertical separation of parts of the water utility, such as billing and customer services. These proposals are laid out by Ofwat, the UK water economic regulator in various documents (e.g. http://www.ofwat.gov.uk/hlg/prs_web20130308hlgfrmwk.pdf). It is also possible that 'insets' may increase: these relate to new areas not previously served by an existing Water Company, or to 'large' commercial customers, or where an existing supplier agrees to transfer an area to a new supplier. In the regulatory proposals (draft Water Bill, June 2012) companies will be able to operate on the basis of a single national authorisation from Ofwat, thus greatly simplifying the process of companies expanding their market.

Posted by Mike Jones at 10:33 AM | Permalink | Comments (0)

Competition is increasingly being seen across the water sector as a mechanism to deliver substantial improvements, especially at present in the UK. Those of us already working in a free market, where competition requires us to constantly innovate and improve, know that it can drive 'step changes' in industries. However water utilities, like other utilities, operate in a different environment than many other sectors. In a short series of blogs, I will look at the potential for competition in the water sector, its advantages and dis-advantages, and how companies can best manage and respond to the changes that will occur. The blog will focus on the UK, as a number of changes in competition are being proposed there.

Posted by Mike Jones at 2:36 PM | Permalink | Comments (0)

The recent deal signed by Centrica to source shale gas from the US from 2018 onwards appears on the face of it an assertive step in establishing a continuing strong role for gas in the UK. This comes on the back of the UK government's Gas Generation Strategy and establishing of an Office for Unconventional Gas and Oil for exploration of shale in the UK itself. But beneath the surface of these developments there remains a great deal of uncertainty on how gas consumption will play out in the coming years, particularly in the power industry that uses gas to generate power.

Continue reading "To build or not to build" »

Posted by Barry Walsh at 10:41 AM | Permalink | Comments (1)

Carbon Labelling

Worldwide there is an increased awareness of the need to make lifestyle changes to sustain our environment. With increasing environmental concerns and the state of the world, businesses are being asked to commit to measuring and reducing carbon emissions.

Labelling, or marking of products based on various parameters have been a standard approach to pin down accountability in terms of product content, raw material usage in a product, as health indicators and also to mark energy efficiency. However, environmental concerns have pushed the boundary to businesses being asked for green accounting, in other words accounting for the effect their activities have on the climate, both direct as well as indirect.

'Carbon Labelling' or putting a figure to the amount of CO2 emissions that a product or process emanates is being used by organisations worldwide as a measure of an organisation's emissions management efficiency.  Every aspect that influences a product's life is being accounted for - raw materials, every stage of production activity, distribution and disposal are being precisely measured through the entire life cycle of a product before it is delivered to the end-user.

The debate is on to fix standards across the world as divergent methodologies have evolved over the years to compute emissions. Difficulties have cropped up on how to measure disparate elements, spread across diverse geographies. The complexities involved in measuring, monitoring and collating all the data elements precisely proves to be a back-breaking exercise.

Despite the ambiguities and current difference in approaches, the world is increasingly getting united on the need to regulate emissions. Organisations across the world have voluntarily come forward to commit themselves to measurement and reduction strategies with an increase in awareness of the need to make lifestyle changes to sustain our environment. Governments and private initiatives are deliberating not on the need but on the best approach to calculate and capture carbon data. Most of these efforts revolve around devising methods and agreeing to a common approach to carbon footprint all products and services. Research and application has shown definite benefits in terms of increasing operational efficiency and cost reductions that organisations can achieve over and above emissions reduction.

There is a looming energy crisis worldwide. There is now a significant risk of an 'energy gap', where the supply of energy is no longer sufficient to cope with the levels of demand. Energy outages are becoming a more common occurrence across the world.  In order to tackle the gap, the way we look at energy management has to change. A re-look at existing practices across the product lifecycle becomes imperative. Some of the important areas that could significantly enhance the efficiencies are by revisiting the way the 'Supply Chains' and 'Service delivery and logistics' are handled.

Consumer awareness is accelerating quickly - investors are starting to increase pressure on corporates to take action. Organisations are being put under the scanner and are being asked for environmental accountability in an appeal to their responsibilities as corporate social citizens. Businesses thus have to respond to:

§  Government regulation

§  Business risk mitigation

§  Consumer and market pressure

Emission measurement is based on a Life Cycle Assessment (LCA) of a product. Multi-layered life cycle analysis considers all of the inputs and outputs throughout the procurement, manufacturing, distribution, disposal and recycling phases of a product.

By using the LCA method, an organisation can estimate the carbon emissions at each stage of a product's life cycle, and then target the stages at which large amounts of emissions are happening across the Supply chain. By devising reduction measures tailored for each stage, reductions can be efficiently achieved. Re-aligning processes and supply chain strategies to weed out energy gobbling inputs into the system can result in both cost savings and improving operational efficiencies. Besides improving the organisation's bottom line, operational and management staff can devise appropriate methodologies to switch to alternative sources that can help them gain new revenue opportunities from new low-carbon products and services. Accurate measurement, reporting and reduction strategies also help organisations improve their corporate social responsibility position. These differentiators cumulatively add up to help the organisation stand-out from the competition and also to have increased acceptability in the end-user markets.

Posted by N.S.K. Varma at 3:12 AM | Permalink | Comments (0)

Service provider work on the principle of bulk purchasing, wherein the consumer annual energy consumption details are collected for the analysis of his load profile and forecast the future power requirement. After collecting all information from consumers, service provider leads a negotiation with energy providers for competitive rates.

Overview of Service provider Approach:

"Load profile" known as the variation of an electrical load versus time, depends on consumer categories like residential, commercial and industrial and also on consumer sub-classes within those categories. As we know consumer contacted load is used to guesstimate the future electric supply requirement and power pricing. There are two key parameter of power pricing; demand charge and energy charge. Demand charges are calculated on the basis of consumer's peak load, which is the highest rate of electricity usage during that time period. Energy charges are based on actual energy consumed by consumer over a given period of time. Now day's service providers are playing a key role in power distribution business to provide competitive energy prices to their consumers. Service providers make a consumers group as per variation of individual consumer peak load. It helps to manage overall load profile of group and improve the energy pricing of group. Service providers will give economic advantage to his the consumers by securing more competitive power prices in market. Service provider has a high level of expertise in Power purchasing process, analyzing load data, administering the RFP process and ability to do a negotiation with energy providers.

Advantage of purchasing electricity through service provider

Increased Buying Power: Wholesale energy markets are dynamic trading environments and subject to great volatility and liquidity. Consumer group with high electric load have a greater purchasing power and more leverage in negotiations with their energy providers.

Improved Load Factor: Through load aggregation, service providers can enhance their purchasing power by taking advantage of load diversity among multiple facilities as a means of improving the overall load factor for the group.

Lower power distribution cost: Consumer may be able to recognize additional benefit by taking the services from experienced service provider in packaging load data for market, managing the RFP process, and leading negotiations with utility.  By deploying a higher level of expertise of service provider in the power procurement process, consumer group will typically enjoy more competitive rates and lower distribution costs.

Competition: Buying groups have an opportunity to seek energy quotes not only from energy providers but also service provider. They will select the suppliers on the basis of best pricing quotes, terms and conditions.

Open Challenge with service provider

Skill Set of service provider: The challenge lies in finding appropriate service provider, Who should be specialist and capable of analyzing load data, administering the RFP process, leading negotiations with energy suppliers, and providing ongoing management and monitoring services on behalf of the group.

Discrimination in group members: In a group, it is possible that few members of group will benefit and other will not. As an extreme example a group consisting of a large hotel and several small ice factories, the hotel with its attractive load profile may end up with a slightly higher price and the ice factories with their much less attractive load profiles would each most certainly benefit immensely. Sometimes some members of an aggregation group are subsidizing in comparison to the other members of the group.

Dynamic trading environments: Consumer buying groups and their supplier will keep the offer price open for a particular time frame.  It can be a few days, for a week or even extended days. Holding an energy price open is chancy.  If consumer signs up, during the offer period and meanwhile the tariff in wholesale markets for electricity rise, then supplier may lose margin and purchase energy at a price that is higher than the price they have committed to sell to customers. Mostly supplier will add risk premium to their offer price to get protect from fluctuation in energy pricing.

Summary 

Continue reading "Consumer benefited by purchasing Electricity through Service Provider" »

Posted by Gaurav Saxena at 9:20 AM | Permalink | Comments (0)

MDMS (Meter Data Management systems), is an integral part of the meter to cash process that enables smart grid. Core functionalities of Meter Data Management Systems are data validation, storage/management of data, and provision to share data with external systems like outage management, billing, Distribution management etc.

Extracting maximum value out of the huge data present in MDM (Meter Data Management System) is a challenge and needs correlation and analysis. Hence Meter Data Analytics is required and it plays a key role in the business of utilities, as it can help increase operational efficiency by analyzing consumption trends, theft detection, revenue protection, better decision making, event analysis etc. The Utility industry community is rapidly enhancing its focus on analytics driven approach which will help to identify the problem areas by analyzing the meter data. Meter data Management market is transforming into an analytics focused market thereby vendors are also aligning on similar tracks to keep their existence in market. I believe that there should be a separate system for analytics purpose so that it will not hinder the core functionality of Meter Data Management Systems.

Meter data analytics will help utilities to achieve maximum benefit with primary source of information being Meter Data Management System. This will help utility in:

·         Analysis of consumption trends.

·         Analysis of asset performance so that it will help in selecting right vendor while purchasing meter and related assets.

·         Identifying the theft and unbilled revenue by analyzing tamper events that will reduces losses for utilities.

·         Outage event analysis that help to pin point the exact problem areas in the distribution network.

·         Analyze irregularities in meter data reading that will help in providing quality data.

With the changing utility market Meter Data Management Systems vendors will have to think how they can provide a strong foundation for this analytics. Utilities also need to be careful while selecting Meter Data Management Systems, as it has to be a product which seamlessly integrates with any kind of analytics software.

Posted by Arun Vyas at 4:56 AM | Permalink | Comments (0)

Posted by Roger Eatwell at 12:06 PM | Permalink | Comments (0)