Don’t get caught out – prepare early for the EU’s 2020 Energy Strategy

The UK’s utility and energy sector is under tremendous pressure as it grapples to fully understand and implement the changes needed to meet the EU’s 2020 Energy Strategy regulations. On one hand, the changes could be seen as a burden. On the other, it could be an opportunity for utility providers to (re)establish their foothold in the market, introduce a more flexible IT infrastructure and offer customers a better service.

As part of the 2020 Energy Strategy, the EU aims to reduce its greenhouse emissions by at least 20%, increase the share of renewable energy to at least 20% and achieve energy savings of 20% or more.*

The 2020 Energy Strategy claims to be ‘a strategy for competitive, secure and sustainable energy’. It also underlines the importance of demand-driven policy as a way of achieving the targets, but also by empowering consumers.

Smart meters are one way to offer consumers more control over their energy use and are just one part of the challenge facing the energy sector. When you add price capping, increasingly competitive alternative energy sources and a host of regulatory changes, it’s no wonder energy companies are feeling overwhelmed.

In order to meet the government’s directive of installing smart meters in every household and business in England, Scotland and Wales by 2020, energy companies need to prepare early for the challenges ahead.

The technology is archaic when you compare it to other sectors

Smart meters are an essential upgrade to the UK’s energy system – one industry that perhaps hasn’t kept up with the speed of technological progress over the years.

If you’re old enough to remember the days of the gasman coming round and take a meter reading, you’ll agree things have moved forward in terms of being able to manage this online yourself. But the issue lies with the technology behind the meters. It’s incredibly outdated, it’s hard for consumers to know what they’re using and this is the reason why estimated bills are not produced until a meter reading is submitted.

But the 2020 Energy Strategy means that all of this is changing.

SMETS 1 and SMETS 2 smart meters will play a pivotal role in the drive for a more efficient, greener and smarter energy system and lays the foundations for smart grids in the UK. The new approach relies on digital communication technology to detect and react to local changes in usage, which relies on data and information coming from the smart meters.

Now, all of this may sound relatively straightforward, but from my experience of working with energy suppliers, this will be far from simple.

Progress on the SMETS 1 meter roll out has been perhaps hampered by cyber security issues and the introduction of GDPR has created other challenges. The outcome is a more secure smart meter – SMETS 2 – that will protect user’s data by collecting it through a single government-run organisation, the Data Communications Company (DCC).

All energy companies will be looking to install SMETS 2 meters at some point very soon – the government rules state that only SMETS 2 meters should be installed from mid-2018 and SMETS 1 meters will need to be replaced because the data doesn’t flow into the DCC.

Are energy companies ready for the DCC?

While there are overall benefits to introducing SMETS 2 meters, it poses some challenges for utility companies and the sooner they are able to identify exactly what these are for their own business the better position they will be in for the future. Let’s explore some of the key considerations.

4 major challenges facing utility companies in advance of the 2020 Energy Strategy

  1. Compliance with EU, UK and DCC regulations

Energy providers as well as electricity and gas network operators will need to ensure all industry regulations and standards are met. With new smart meters comes new vendors to supply the devices. Smart certificates play a major role in ensuring secure communications to and from the DCC. Companies will need to work closely with smart meter providers to ensure the relevant certificates are set up.

In order to monitor compliance, the DCC’s systems and the energy company’s systems need to talk to each other. The DCC will supply data they collect to the energy companies, which means the collection, storing and use of this information needs to be GDPR-compliant and raises many questions about whether existing systems and applications can handle this.

  1. Existing infrastructure

Back end systems will need to adapt to the DCC infrastructure to allow for a seamless flow of communication between all parties – no mean feat. Utility companies will have to identify the capabilities needed to ensure a successful DCC integration.

Do the interfaces between them align? How do you keep firmware up to date or investigate problems when the initial data that comes from the smart meters is collected by a different company?

It’s important that the IT infrastructure being developed for this new world is built in such a way that it can adapt and react to any changes made by the DCC.

The IT infrastructure also needs to meet NSCS regulations, including regular checks for vulnerabilities. Core national infrastructure is increasingly a target for nation state cyber-attacks and utilities providers need to ensure that their infrastructure and their customers’ data are safe.

Gone are the days when IT, the CIO and CTO were responsible for security. In 2018, security is a responsibility for the whole business and every employee has a duty to ensure they are aware of the risks and the implications of not following procedure. This agenda change needs to be led by department heads who will have to educate themselves, relay the information, define policies and procedures, something which can only be achieved by key stakeholders attending a SIRO course.

Linking back to the first point, another important factor here is the need for any PCI-supported platforms to be on Windows 10 in order to be compliant. If this hasn’t been factored in, then now is the time to act and start making plans to migrate to the new system before Windows 7 reaches end of life on the 14th Jan 2020. Energy companies that are accepting payments over the phone also need to ensure that the platforms that support these payments are PCI-compliant.

  1. Knowing how best to use the data

Aside from the technology infrastructure and compliance aspects of data sharing, energy companies will need to be ready to use the information they receive from the DCC effectively. With more information about consumers than ever before, the importance on data analytics will no doubt rise significantly.

When you are able to process and analyse the data effectively, it becomes easier to develop solutions targeted specifically for consumers, provide a more consistent power supply and even develop systems to offer bespoke pricing, for example. With the ability to interpret and use the data, energy companies and utility providers can become more than just a provider of energy. They can use their knowledge, expertise and technology to drive a smart grid and position themselves as a serious player in the market.

  1. Meeting the timescales

When I hear people talking about 2020, I still think this is a long way off. The reality is is it’s only 18 months away and energy companies shouldn’t underestimate the time needed to implement the necessary changes.

All energy providers are required to undertake an audit on compliance this year, for example, but I bet many are not even aware of this. The SMETS 2 meters are rolling out imminently, but do they have plans in place that factor in any SMETS 1 meters that customers have?

Get help navigating the complexity of the 2020 Energy Strategy

There’s no denying the fact that the rollout of the 2020 Energy Strategy is going to be a challenge for many. Working to create a shared infrastructure is no easy task, especially when you have a day-to-day business to run, which is why it is useful to have some help.

Ricoh acted as a trusted and critical partner to enable Utilita Energy – the UK’s leading pay-as-you-go energy supplier – to transform its business operations and IT infrastructure. With Ricoh’s support, the company was able to scale rapidly from a 90-person SME into a 2,000-strong corporation serving 670,000 customers around the UK.

In a world where consumers are demanding more and more from their energy providers, businesses that can deliver value to the customer and help them shape their own energy consumption will be the true winners.

To learn more about how proactive digital transformation can help you deliver value for customers, download our latest report, The Economy of People. To get your copy, just fill out the form to the right or below if you’re on mobile.

*Source: ec.europe.eu

Gary Olive
Gary Olive
Gary.olive@ricoh.co.uk

Business Consultant at Ricoh ITS

Read all articles by Gary Olive