Lower functionality smart meters will deliver half the benefit of the best

Smart metering solutions with lower functionality will only deliver between 50% and 67% of the benefits of solutions with the highest functionality.

That emerged from analysis by Frontier Economics and Artesia, published today. In a report, commissioned by communications specialist Arqiva, the researchers highlighted that there is no defined smart metering standard in water, which means there is no common definition for the performance of a smart meter. Consequently, metering solutions available have a spectrum of capabilities which yield different levels of benefit, and come at different costs.

Frontier and Artesia identified that for smart metering to deliver demand savings, customer and operational improvements which are “transformative, sustained and maximised”, then data and the insight that can be derived from it need to be timely; provide sub-daily consumption patterns; be available over a wide area – i.e. high degree of property coverage; and provide reliable data returns from a high proportion of the installed meters. According to the report: “Reductions in capability across these dimensions can have considerable impact by reducing the potential for benefits to materialise.” This is shown in the table.

The study, Smart water metering: making the right decisions, urged Ofwat to “be careful and consistent in how it compares the different proposals” put forward in water company business plans for PR24. It highlighted:

• A material proportion of the costs will be specific to the metering solution proposed and therefore will be challenging for Ofwat to benchmark.

• The difference in benefits and associated costs of different technology solutions means that they need to be evaluated in an integrated way to avoid the risk of setting an infeasible outcome by combining the costs of one solution with the benefits from another. 

• Smart metering data will play a vital role in delivering Ofwat’s aspirations for the water efficiency fund, as well as supporting vulnerable customers. Understanding the level of performance that companies are expecting from their smart metering plans will be important for Ofwat to be confident that their objectives in these areas can be met. 

The paper urged water companies, in setting out their investment plans, to define the level of performance they are expecting from the smart water metering systems they plan to deploy, and when that level of performance will be delivered. It also flagged up the need for firms to future proof investment, and consider the issues in the context of the adaptive planning framework being used by Ofwat for PR24.