A Thought Leadership Blog – Getting SMART in energy
By Deborah Phelps MD - LBN by Phelpsey
Big data is becoming increasingly important in the energy sector and LBN is already advising stakeholders in this field on how they can best use key data insights to manage assets and maximise value.
In the UK alone, the domestic and non-domestic energy market is undergoing its largest transformation since de-regulation 20 years ago - and it’s one with many significant moving parts. The move to renewable energy, the drive towards a truly digitally competitive market, new ways to generate power, volatile gas wholesale markets and perhaps the most challenging; the Smart Meter roll-out to be completed by 2020.
Promoted by energy providers and the government to manage domestic energy use using technology, an estimated 53 million smart meter installations are required to meet the 2020 deadline. A tremendous drain on resources say some critics, a fantastic financial opportunity say others. But nearly everyone agrees that the Smart Meter rollout is a hugely complex project, subject to many hidden costs and risks.
We are seeing significant investor interest in this roll-out because of the much publicised inability of the energy providers to fund this colossal financial burden, which is estimated at more than £11billion. The bill for this will ultimately be footed by the end user, the public and small businesses. Already highly publicised large tariff increases, most recently British Gas at 12.5%, are accelerating customer switching of energy providers and increasing churn, with recent reports stating that two of the ‘big six’ have already lost as many as 500,000 customers. This creates even more pressure on processes and data management.
While techniques for the tracking of assets are well established, the churn as end customers switch between suppliers is a key consideration. It is essential Meter Asset Providers (MAPs) track these changes to ensure accurate invoicing to suppliers and of course not ‘lose’ meters. While a robust Information Management (IM) system combined with bullet proof processes will also reduce risk dramatically, which is where specialist data advice for financial institutions and suppliers can be invaluable.
Ultimately, outsourcing to a MAP enables energy suppliers to focus on the customer experience. But MAPs have the difficulty of churn which then causes a bottleneck of inaccurate rental invoicing to the supplier, who then bills the end consumer (but potentially inaccurately and then a poor customer experience).
The compressed nature of these time frames are exacerbating the complexity and indeed the risks involved, so for both entrants and longtime players our insights into the various pitfalls and innovative solutions are of particular benefit.
Under the auspices of increased competition, over the last three years the number of licensed suppliers has risen considerably. This is not unique, the telecoms sector had similar market forces at play during its deregulation, while the rise of the Internet also saw a mass influx of providers. We should not forget that some leaders in these markets failed as a result of high costs and the pace of technological change. While we have already seen some initial casualties, the digitalisation of the energy market in the UK still has the potential to eject some of the current early players - data insights could be key to their longevity.
Deborah Phelps MD – LBN by Phelpsey, has 13 years’ experience in logistics, supply chain and maritime. She worked within finance and business solutions at Inchcape Shipping Services for eight years and in operations at DHL Exel Supply chain.
She has broad experience across many other sectors as a business analyst/project manager and consultant on a global basis and has developed business process and analytics for existing or new platforms across the shipping and downstream energy B2B and B2C sectors.
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Deborah Phelps MD – LBN by Phelpsey