1. Energy, Utilities & Chemicals the way we see it
Smart Metering: A Fresh
Approach to Managing Peak
Demand and System Security
A Call to Action ■ benefits that motivate consumers
In the near future, all North American to embrace conservation and
utilities will adopt smart metering load management;
and the supporting advanced metering ■ business cases that look beyond the
infrastructure (AMI) at some level meter-to-cash process for benefits to
or another. justify investments in advanced
meters, communications and data
Some utilities will inevitably take a management infrastructure; and
bare bones approach, doing just ■ transparency in the market that
enough to meet the minimum
enables consumers to align in blocks
requirements set forth in the Energy
of load that system operators dispatch
Policy Act of 2005 and other regulatory
more effectively as part of an efficient
mandates. The more visionary
economic dispatch model.
companies, however, will use smart
metering as an opportunity to positively
Though the utility industry is often
influence their destinies, and ultimately,
accused of being slow to adopt and
the direction of the North American
resistant to change, a new study by
electrical system. Encouragingly, it
Platts and Capgemini suggests just the
appears that most utilities favor the
opposite. According to the study, in
latter option based on the innovative
which more than 120 senior executives
programs being initiated at large
at U.S. and Canadian utilities
utilities throughout North America.
participated, AMI is the leading “new
technology interest” for the majority
The only sure thing is that doing
of the surveyed executives.1
nothing is not an option. The current
state of the electrical infrastructure in
The State of the Market
North America is not sustainable. To
The compliance-based industry in
change its course, utility companies
which utilities operate simply doesn’t
must embrace a fresh approach to
offer enough incentive for consumers,
managing peak demand and system
regulators or utilities to take the
security—one that will drive market
difficult steps necessary to make
efficiency while supporting economic,
electrical energy markets operate
environmental and social priorities.
efficiently. For example:
■ Consumers want lower prices,
Certainly it’s a tall order. But Capgemini
believes utilities can meet all of their higher quality service and absolutely
priorities (and likely realize a host of expect the power to flow 24x7.
other benefits) if the approach they ■ Some regulators impose
adopt in managing peak demand and long-term rate caps in an
system security includes: attempt to please consumers.

2. ■ Regulated rates are not tied to Customer Expectations These investments must be leveraged to
wholesale markets where utilities As household electricity consumption support a broader set of benefits such as:
purchase all or a portion of the increases year over year, peak loads are ■ Aggregating demand response and
power they sell. increasing and changes in consumption allowing it to be dispatched to reduce
■ In some wholesale markets, prices patterns are causing load factors to the need for peak generating capacity
are set based on the cost of the high- decrease. At the same time, consumers and ancillary services.
cost producer. expect higher quality power to operate
■ Refining grid planning processes to
■ Incentives for consumers to conserve
the increasing number of digital devices
improve the efficiency and effectiveness
that we amass each year. Finally,
are not significant enough to change of investments the grid.
consumers are demanding this
their behavior. ■ Improving grid monitoring and control
improved quality at the low, stable
■ Regulators impose conservation processes to improve reliability, power
price levels of the past while, at the
program requirements on utilities, same time, wanting a voice in how the quality and reduce losses.
and as a result, utilities suffer from power they consume is generated. ■ Providing new value-added services to
decreased revenues which are directly consumers that generate new streams
tied to consumption. Aging Infrastructure of revenue and income.
Much of the transmission and
Despite these current realities, a distribution infrastructure in North In addition to leveraging investments
number of factors are converging that America is more than 50 years old over a larger benefits base, performance
will enable and provide the right types and was designed to provide power in measures for market participants must
of incentives for utilities, regulators and be better aligned; we must create a
a different era. For many years, utilities
consumers to adopt innovative “win-win” environment. Good examples
typically underinvested in the grid
approaches to demand management of this include the decoupling underway
infrastructure or neglected to make the
and market efficiency. in a number of areas to allow
significant, ongoing investments required
distribution companies to separate their
to sustain the infrastructure over the
Convergence in the Marketplace revenue from consumption. Decoupling
Utilities face a range of converging next decade. As a result, most utilities
gives distribution utilities incentives to
issues that will have a profound are now at a crossroads, facing a decision truly embrace conservation and demand
impact on their futures. that will be crucial to their futures. response programs without jeopardizing
their ability to earn a return on
Regulation and Legislation The Opportunity their investments in distribution
Governments around the world are Make smart metering programs the grid infrastructure.
making energy conservation, energy foundation of Smart Grid or Intelligent
independence and global warming top- Network initiatives by looking beyond The Challenge
of-mind issues. A wide range of taxes, the meter-to-cash process to generate Utilities that structure their smart
legislation and other policies designed value for all participants in the electrical metering programs strictly from a
to reduce the combustion of fossil fuels energy market (including generators, revenue management perspective are
are being considered across the globe. system operators, transmission and selling themselves short. There’s much
distribution service providers, retailers, more to smart metering programs than
Global Climate Change energy service companies, consumers, interval reads and time-of-use (TOU)
As a society, we increasingly recognize regulators and legislators). rates. Utilities should leverage their
how burning carbon-based fossil fuels smart metering programs to make near
adversely affects the environment. The investments required to implement real-time, point-of-use consumption data
Momentum is building on many fronts smart metering are substantial and available to all participants in electrical
to limit carbon emissions. Government, usually cannot be justified based solely energy markets. Access to data improves
major corporations, citizen groups on the benefits realized from the transparency in the market, and as a
and utilities alike are promoting elimination of manual meter reading, result, drives market efficiency. Efficient
environmentally-friendly, green efficiency improvements in the revenue markets offer incentives to both
management process, improved control generators and consumers that stimulate
solutions. Many are insisting that
over tampering and theft, and improved balanced investment and consumption
behavior must change and adoption
outage notification and restoration. decisions and in turn, support economic,
a conservation culture is critical.
environmental and social priorities.
1
Platts/Capgemini Utilities Executive Study, 2006
2

3. Energy, Utilities & Chemicals the way we see it
But today’s utilities need to look beyond ■ Engaging other stakeholders in their
the technology into the opportunities markets and developing consensus
and incentives the technology unlocks. around synergies, critical success
Indeed, utilities must take a more factors, required incentives and
comprehensive view of smart metering. alignment of performance measures.
More important than the technology ■ Formulating a business solution
itself is the role it plays in enabling that is capable of meeting today’s
system operators, retailers, load serving requirements while being scalable
“The current state of the entities, aggregators and customers to deliver against future demand.
electrical infrastructure to use real time load data improve
market efficiency. ■ Organizing a team capable of
in North America is not implementing the chosen
Another key challenge is influencing the business solution.
sustainable. To change its behavior of consumers. When programs
course, utility companies provide meaningful and rewarding The Smart Solution
incentives, customers can, and will, In Capgemini’s view, effective smart
must embrace a fresh embrace conservation, and as a result, metering solutions share a number of
loads can be more effectively and key components:
approach to managing
efficiently managed. ■ Meters: Standards-based,
peak demand and two-way communication,
Capgemini believes the strategy for remote connect/disconnect and
system security.” utilities should be proactive and that interoperability with in-premise
programs for action should include: networks and devices.
■ A long-term approach around ■ In-premise data presentment and
smart metering and its linkages control: Near real-time display of
to operational improvements, usage and cost, receives market rate
conservation programs, demand signal, supports customer demand
response, capacity planning and response interaction.
new revenue opportunities.
End-to-End Smart Metering Solution
DR
End Devices
ooooo
55BBOI
Private
Legacy Applications
WiMax
Electric Wireless CIS, OMS, DMS, GIS, EAM, MWFM, etc.
Smart Meter
Wireless Head-
Concentrator
DR Broadband End Event Enterprise Service Bus (ESB)
End Devices Management
ooooo
55BBOI
WAN
Gas PLC/BPL DB Replication
Smart Meter
Meter Data Demand
Data Third-
Management Response Analytical Installers
DR Warehouse/ Party Customers
End Devices System Control Reporting
ODS Presentment Retailers
(MDMS) System
Regulators
Wireless Aggregators
ooooo
55BBOI
Firewall Firewall
Electric
Smart Meter Cellular
End External
Points Telecommunications Enterprise Applications Participants
Smart Metering: A Fresh Approach to Managing Peak Demand and System Security 3

4. www.us.capgemini.com/energy
■ Meter data collection systems: Two- The Power of Partnership ■ Operational Services: Ability to
way communication, multi-vendor Before embarking on a smart metering manage all field installation and
solution compatible. initiative, utilities should seek out activation activities including meters,
■ Backhaul communications system: partners who will work collaboratively meter data collection, communications
Two-way, high bandwidth, utility or with them to ensure the success of the and in-premise data presentment and
third-party owned. initiative. Partners should have a proven control elements.
■ Business Process Outsourcing (BPO)
■ Event management system: Interprets, track record, be prepared to sign up for
filters and transfers event data end-to-end responsibility and be willing Hub Services: Extensive experience
to stakeholders. to have a stake in delivering results. For with billing and revenue management,
superior results, utilities should look for meter data management, revenue
■ Service-oriented integration
partners with deep industry experience assurance, demand response,
architecture: Standards-based, reusable distribution asset management, call
service accommodates changing source in these critical areas:
center support, call center overflow
and target applications. ■ Program Management: Complex,
and technology services, delivered
■ Meter data management system: Asset multi-year, multi- program from hub centers in the right locations.
management, data validation, editing management experience with
and estimation (VEE); and publishing established methods and tools. Ultimately, the utilities that are able to
of billing determinates. ■ System Integration: Expertise in build a strong team of partners ready
■ Decision-support system: Load developing and managing data models, and willing to share their vision in
forecasting, revenue protection, service-oriented architecture, interface managing peak demand and system
asset analysis and rate design. design and development, configuration security will be the utilities that lead the
management, solution documentation way in driving market efficiency –
and end-to-end testing. delivering a positive and sustainable
impact not only on utilities but also on
the North American electrical system.
About Capgemini and the
Collaborative Business Experience
Capgemini, one of the commitment to mutual success and the
world’s foremost providers of achievement of tangible value, we help
Consulting, Technology and Outsourcing businesses implement growth strategies,
services, has a unique way of working leverage technology and thrive through
with its clients, called the Collaborative the power of collaboration.
Business Experience.
Capgemini employs approximately 75,000
Backed by over three decades of industry people worldwide and reported 2006
and service experience, the Collaborative global revenues of approximately
Business Experience is designed to help $9.625 billion or EUR 7.7 billion.
our clients achieve better, faster, more
UTIL_SMMTRINGPOV_072707_013
sustainable results through seamless More information about our
access to our network of world-leading services and research is available at
technology partners and collaboration- www.us.capgemini.com/energy
focused methods and tools. Through
For more information contact:
Gord Reynolds
Practice Leader
Smart Energy Services
gord.reynolds@capgemini.com
+1 416.732.2200
Copyright © 2007 Capgemini. All rights reserved.