by Kevin Tate, EnerNOC
We live in a world ripe with technological advancements that make our lives better, or at least more efficient. With many applications’ being used by millions of people every day comes an immense amount of data. And although the free collection and dissemination of data might be the norm in many industries, in the energy industry it’s a topic that is growing in complexity by the year.
The Current State of AMI Deployment
There are nearly 50 million smart meters deployed across the U.S. and millions more worldwide, according to the Edison Foundation. This gives utilities and energy retailers access to a tremendous amount of customer data and includes a number we can expect to grow. Thirty of the largest U.S. utilities have deployed smart meters to their customers, according to the Institute for Electric Innovation (IEI). And global penetration is expected to reach 800 million installed smart meters by 2020, according to Telefonica.
The bulk of smart meter deployment is focused on residential; however, utilities are ramping up deployment to their business customers to provide better insight and value-added service to their heavy energy-consuming customers. In the U.S. alone, smart meters have been deployed to 4.6 million commercial and industrial (C&I) customers, according to the Energy Information Administration. This represents only 11 percent of the total deployment, but these smart meters serve nearly 340 million megawatt-hours (MWh), making up 49 percent of all energy served by total advanced metering infrastructure (AMI) installs.
Increasing ROI With Customer Engagement
With these extensive deployments comes a high cost. Total capital costs per meter, including installation, range from $81 to $532, according to Siemens, and when multiplied by a million or so meters, costs quickly inflate. One way utilities are accelerating their smart meter ROI is by using the AMI data to deliver shared utility-customer value, particularly for C&I customers.
JD Power announced in January that electric utilities have achieved the highest level of business customer satisfaction since 2009.
“When a utility highly satisfies its customer base, there is a quantifiable positive impact on profitability and credit ratings for the utility,” according to JD Power.
One way utilities can delight customers is by improving communications, a tactic enhanced by the insights utilities can draw from their customer data, accessed through smart meters.
Consider these stats that show improvement in utility communications to C&I customers: Overall communications satisfaction among customers who recall receiving a communication from their utility is 74 points higher than among those who do not recall any communication. And the percentage of business customers’ recalling a communication from their utility has increased to 55 percent in 2015 from 51 percent in 2014, according to JD Power, demonstrating that utilities are getting better at communicating with their C&I customers.
Having access to the AMI data that can help utilities better engage their customers is a great place to start, but many utilities struggle to use data in new, different and innovative ways. Building customer relationships and improving satisfaction rates can be challenging without an obvious starting point, and many utilities reach out to third parties such as EnerNOC to help them make the most of their data.
Cybersecurity in the 21st Century
Although the improved utility access to customer data can mean only good things for the evolving customer experience, utilities and third-party providers still have a responsibility to protect sensitive customer information. In our daily lives, we tend to be more relaxed about others’ having access to our data, with many of us freely sharing our information on Google or Facebook without understanding the implications.
We desire to share, and definite value exists in sharing-our Internet experience is that much richer and more tailored because we share our data with Google and others-but what works for social media doesn’t work for the energy industry. Customers expect their utilities to deliver on three critical items: reliable energy, low prices and emergency communications, according to E Source. To achieve these three deliverables, grid security is essential.
Regulators continue to beef up security rules. The Federal Energy Regulatory Commission is working with the North American Electric Reliability Corp. to determine how to best protect essential substations and facilities critical to the operation of the electric grid, according to Security Magazine. Not unique to North America, grid security is a global issue. The grid is critical infrastructure no matter where in the world we are, and a massive security breach that causes a wide-scale blackout would devastate the economy.
Security breaches have occurred, and we can expect them to occur again. Last year researchers demonstrated Nest thermostat vulnerabilities, and the Department of Homeland Security confirmed a brute force attack had occurred on a public U.S. utility. No harm was done in either instance once access was acquired, but it is a sobering reminder that threats occur, and we must be prepared for them.
How Utilities are Approaching the Opportunity
Security focuses on where the data is stored and how it is transmitted.
Whether the data is hosted by the utility or a third party, it’s ideal to keep data in the same country from where it was sourced to avoid legislative barriers surrounding privacy laws.
The way data is transmitted also is important. When files are sent from one server to another, encryption is crucial, as is only transmitting essential data (avoiding credit card information or other tempting data sets) to avoid disaster should a breach occur.
Some utilities around the world are building their own systems to host and analyze energy data, but many others are outsourcing to third parties that have expertise in the area.
Working with a third party is becoming more popular as utilities become more open to using cloud-based solutions, which move away from bulkier, more complicated desktop software.
This is often a favorable solution when different software applications don’t play nicely with others. Solutions that easily are integrated into legacy systems ease the burden on a utility’s information technology team and enable greater visibility into data across the organization, crossing silos and internal barriers.
Where some utilities encounter problems, however, is in the disconnect between what they can deliver and what customers assume they can deliver.
In the Internet of Things, especially when smart meters are involved, customers expect that utilities can access and analyze their data on demand, which frequently is far from reality.
Challenges also arise when utilities don’t have good customer data-billing address, floor area, operating hours, etc.-at the outset. Energy data aside, without access to good, clean customer data, utilities can’t perform on-demand analyses that help add value for their customers.
In other instances, energy retailers face issues in open markets where they have access to customer data but are restricted from using it for what could be construed as marketing purposes because it might offer them a competitive advantage.
Educating customers is an important step here and will help reinforce the message that their utilities are trusted energy advisors.
How Energy Intelligence Software Companies Help Bridge the Gap
EnerNOC works with utilities to help them achieve all of their C&I demand-side goals, from customer engagement and energy efficiency to demand response and operational effectiveness, with energy intelligence software.
Both utilities and third parties should protect customer data by following industry best practices in security such as using demilitarized zones, data encryption and privacy by design practices to prevent infractions.
Whether implementing an existing third-party system or starting anew with an internal system, utilities must remember that data security can help avoid potential issues.
Although the 100 percent breach-proof system might be the result of wishful thinking, utilities and third parties can make it much more difficult to obtain data when a breach occurs through simple practices such as encryption and data separation, protecting customer data and avoiding major issues.
Kevin Tate leads EnerNOC’s Utility Solutions Product Development team. He has been in the software industry more than 30 years and has extensive experience in UX, agile methods and the development of energy solutions for utilities, computer networks, operating systems, 3-D graphics and computer animation.