The smart energy revolution 

The data-led transformation of the energy market is creating new and innovative solutions to deliver cost savings and to meet carbon reduction goals. Consequently, we are now seeing the formation of a large market for the establishment and management of intelligent technology assets, smart sustainable systems, and energy efficiency services. We are uniquely positioned to be a continued driving force as this market grows, helping lead the smart energy revolution in the UK.

The market opportunity

We fulfil our mission to deliver the future of smart energy through our unique energy offering which serves an ever‑increasing number of energy suppliers, industrial and commercial organisations, and the wider domestic market to realise the benefits of smarter energy practice. Through these services, we are playing an increasingly critical role in transforming and decarbonising the UK energy system.

Smart meters: the cornerstone of the smart energy system

The development of a world-leading smart energy system delivering secure, cheap and clean energy is an important part of the UK Government’s plans for its economic and industrial future. As highlighted by the government’s Clean Growth Strategy – the ambitious proposal to decarbonise all sectors of the UK economy through the 2020s – smart technologies and services will play a vital role in decarbonisation, and the ongoing national smart meter rollout is fundamental to this mission.

At the cornerstone of the future smart energy system, smart meters are a vital upgrade to our national energy infrastructure, not only putting consumers in control of their energy use, but also providing the building blocks of a more flexible and resilient energy system. This could bring consumers, the energy industry and wider economy up to £40 billion of benefits over the next few decades.

Almost 15 million smart and advanced meters have so far been installed across homes and businesses in the UK. In total, 53 million smart meters need to be offered to UK premises as part of the domestic smart rollout by the end of 2020, representing a remaining market of 38 million smart meters left to potentially be installed.

The non-domestic smart meter rollout (of which just over a million devices have been installed) also covers approximately two million sites. All these meter points provide opportunities for data services for the purposes of settlement, analytics, presentation and additional energy service and asset opportunities.

As at 31 December 2018, our portfolio of metering and data assets under management stands at 3.1 million (up 54% from 2017). A significant part of this growth has been due to the continued expansion of our customer pipeline in the mandated smart domestic meter rollout, where we now own more than 846,000 smart meters.

Looking forward, our current contracted customer pipeline through our exclusive and framework agreements gives us access to a further c.8 million meter points to be exchanged to smart.

SMS has been involved in the solar industry in the UK since the government first launched the Feed-in-Tariff (FiT) scheme in 2010. Since then we have worked closely with housing associations, installation contractors, energy suppliers and FiT administrators. Our services in this area have been to install smart meters to monitor and provide consumption data from the solar generation, to connect them to the electricity distribution network, and to register the MCS accredited schemes with the FiT supplier to enable and then manage the ongoing collection of generation and export revenue.

We are now expanding our services in this field to include managing the end-to-end installation and delivery of Photovoltaics (PV) and distributed generation solutions, based on our proven engineering knowledge, customer journey and IT field management platform and supported by our electricity connection, metering and data services. These installations will be complemented by the introduction of other technology, including smart meters. Smart meters not only measure and record export of generation to the grid, but can also be integrated with battery storage and demand side management solutions which maximise the benefit of local generation to the end consumer.

As of 2019, we provide services to a PV portfolio of around 10,000 sites with a combined installed capacity of c.20MW.

Over 9,000MWh of battery energy storage is expected to be deployed in Britain over the next five years. This high growth is driven by the need to better balance supply and demand, particularly with an increasing amount of intermittent renewable generation connected to the grid.

Utilising our national engineering capability and integrated with our delivery of smart metering solutions, SMS will be directly contributing to this market growth over the coming decade, and have begun testing and developing trial and proof of concept solutions with our I&C and energy supplier customer base.

Source: UK Battery storage: Opportunities & Market Entry Strategies for 2018-2022, Solar Media Market Research

Electric vehicle (EV) charging represents a huge opportunity for the UK’s Industrial and Commercial sector. It is estimated that there will be 35 million electric vehicles on UK roads by 2040, with 3 million public-use charge points required alongside domestic charging points to enable the mass rollout of green fleets.

In the shorter term, the UK will need more than 80,000 extra charge points in the next two years to cater for the 1 million EVs in use by 2020 (currently there are only 19,000 points in the UK).

Through our OLEV approved electric vehicle (EV) installation charging solutions, we are supporting the UK market to establish this national network of EV charging infrastructure. For example, we are project partners on a Park & Charge project, which aims to demonstrate a fully integrated, scalable EV charging network.

Sources:

- National Grid Future Energy Scenarios 2018
- Aurora Energy Research
Emu Analytics
- ZapMap

Estimate of the non-domestic UK energy efficiency market indicated that it totalled £349m in 2017. The sector has grown steadily over the past few years (the median rate of growth has been 15% per annum), driven by the growing trends of corporate sustainability, environmental compliance measures, and public sector procurement frameworks.

Most importantly, the market is demonstrating huge potential to grow. Estimates indicate that if the UK energy efficiency services market is to make a strong contribution to delivering the fifth carbon budget for non-domestic buildings alone, it will have to grow at an annual rate of almost 20%, reaching an annual revenue of almost £5bn in 2032.

The requirement to implement measures in other non-domestic sectors beyond buildings, such as in industry, will add significantly to this figure. Meanwhile, demand for greater energy efficiency is likewise expected to be boosted as an increasing amount of businesses face the prospect of rising energy costs (the overall energy bill is forecast to increase by 55% by 2028 compared to 2018).

Sources:

- Non-domestic Energy Efficiency Services Market, Department of Business, Energy & Industrial Strategy

- SMS Plc Energy Risk Forecaster