What is Metered is Managed

Throughout the developed world, water and gas are delivered us by pipes and monitored by meters that track consumption over the course of a month. Before a bill is prepared, an engineer is supposed to manually check the meter to see what the actual consumption was over the course of the month.

Unfortunately, this time intensive task is rarely done and much billing is done using modelling to estimate consumption. This is about to change. Smart Meters allow the utilities to monitor the amount consumed remotely through a transmitted signal. The signal is sent from the home to a server which then sends the information to the utility companies that accurately prepare a bill based on actual usage, not hypothetical usage. In the United Kingdom, this rollout is under way with a goal of completing the installation by 2020. [1] The plan is to install 53 million smart meters throughout the UK, eliminating the costly need to have workers manually check the machines each month.

In addition to removing the manual checking component of the current workflow, the new devices will allow homeowners and renters to monitor their energy consumption and adjust their energy consumption, resulting in savings for them and increased energy efficiency.[2]

Smart Meter Systems (SMS.LN) has been one of the biggest beneficiaries of this new regulation. In the early 2000s, they created a device that could be retrofitted to existing meters and could be installed in just one hour. This product has helped them quickly get market share from the incumbents. See the below stock chart to get a sense of how quickly they have grown their market share.


However, they face several issues in maintaining their growth. The biggest they are currently facing a lack of skilled engineers to install the new smart meters. They have the largest workforce of engineers able to install these meters and their current rate has them installing them at 200,000 per year. In determining how they should ramp up their installation so they can help the UK reach their goal by 2020, there is not an obvious solution. Training additional engineers to install meters is a long process and the magnitude of the problem means that they would have to divert significant resources from the rollout itself.

I suggest that the SMS and other smart meter companies develop a solution that can be installed in a much quicker time period by the individuals who are currently going out to the homes to record the consumption. While they will forfeit some of the economics of their current arrangement to the utility companies, they provide significant value to their clients (the utilities) by helping them avoid fines such as the one that E.ON received in 2014 for failing to make significant progress on the smart meter rollout. [4]

Furthermore, creating an even easier to install device will help them in developing market share in the other regions as more countries move to a smart metering system. Given the complexities of a rollout at this scale, it is likely that other countries will look to successful models and players in those markets who are able to operate abroad. SMS is one of the very few players in the UK market who is not a UK utility company, giving them a competitive advantage in the worldwide arena.

The second issue they are facing is a growing concern of the privacy and health issues relating to the devices as they use frequency and submit over an open network.[5][6] I suggest that SMS uses this current weakness to develop a hardened product to address the privacy concerns and that they document how much lower the broadcasted signal of these devices is compared to that of a standard cell phone. [7]While these concerns may have some variance in the level of truth behind them, SMS should take advantage of the negative publicity to present a superior product and market it accordingly.


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[1]  “About the National Smart Meter Rollout | Smart Energy GB.” About the National Smart Meter Rollout | Smart Energy GB. N.p., n.d. Web. 18 Nov. 2016.

[2] Horne, Christine, Brice Darras, Elyse Bean, Anurag Srivastava, and Scott Frickel. “Privacy, Technology, and Norms: The Case of Smart Meters.” Social Science Research 51 (2015): 64-76. Web.

[3] “Smart Metering Systems PLC.” Google. N.p., n.d. Web. 18 Nov. 2016.

[4] @ofgem. “E.ON to Pay £7 Million for failing to Supply Advanced Meters.” Ofgem. N.p., 02 June 2016. Web. 18 Nov. 2016.

[5] Moore, Michael. “UK Smart Meters Rollout ‘Must Be Stopped'” TechWeekEurope UK. N.p., 31 Mar. 2016. Web. 18 Nov. 2016.

[6] Krishnamurti, Tamar, Daniel Schwartz, Alexander Davis, Baruch Fischhoff, Wändi Bruine De Bruin, Lester Lave, and Jack Wang. “Preparing for Smart Grid Technologies: A Behavioral Decision Research Approach to Understanding Consumer Expectations about Smart Meters.” Energy Policy 41 (2012): 790-97. Web.

[7] Milaj, Jonida, and Jeanne Pia Mifsud Bonnici. “Privacy Issues in the Use of Smart Meters—Law Enforcement Use of Smart Meter Data.” Smart Grids from a Global Perspective Power Systems (2016): 179-96. Web.


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Student comments on What is Metered is Managed

  1. Great article, Daniel! I enjoyed reading it and learned a few things about smart meters in the process.

    I really like the idea of smart meters. Not only does it convey real-time and accurate usage information in a transparent manner, the next step is to link it to a smartphone app, where users can view their energy usage at any instantaneous point in time. As the energy tariff usually is designed for peak and off-peak pricing, the user is more equipped to make informed decisions about when they should consume energy. They can save energy cost by allocating their energy consumption more towards the off-peak times. This would result in a more smooth or even demand for energy, which helps the utility provider too as it would be less strenuous on their machines as they don’t have to ramp up at such large amplitudes and helps them forecast energy demand more accurately.

    Therefore, I agree with you that although there are privacy issues surrounding the usage of smart meters, if the benefits of transparency are communicated well to the consumers and the potential savings they can get from the data, then smart metering company can obtain buy-in from the end consumers.

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