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.
- BEIS announced a proposed extension of the UK smart meter rollout deadline to 31 December 2024 with annual mandatory performance targets to be introduced on a supplier by supplier basis.
- DCC fully operational – c.4 million SMETS2 meters connected as of 27 February 2020.
- C.70% of all meters covered by the UK smart meter rollout are still to be exchanged with the industry-wide run rate just over 1 million meters per quarter.
- DCC Radio Frequency technical issues in northern areas resolved, though some technical meter variants still to be fully deployed. Certain energy suppliers still to fully test volume connectivity to DCC and mobilise mass SMETS2 rollouts.
- The Enrolment and Adoption programme for SMETS1 meters commenced but was delayed. Key next phase now planned for June 2020.
- SMS expects a smoother installation profile and is focused on productivity, efficiency and aligning its engineering resource base to the longer rollout profile with sufficient flexibility built into its operational model to meet peaks of demand, supported by its in-house training academy.
- We continue to work with all our customers to fully mobilise SMETS2 rollouts and meet their regulatory obligations, with considerable technical experience and our own test labs in our training academy to support end-to-end testing across all meter and firmware types.
- We continue to support DCC with test lab services, supporting the acceleration of the Enrolment and Adoption programme, and also with all energy suppliers to ensure they bring forward all SMETS1 meters for enrolment and adoption in line with their obligations from June 2020.
- The independent energy retail sector has grown to >30% market share.
- Further market disruption with disposal of one “Big Six” retail business in January 2020 (SSE) to an “independent” energy supplier (Ovo Energy). SSE had c.12% market share.
- Energy retail price cap on prepayment and standard variable tariffs continues and, alongside competition, provides challenging financial environment for energy retail businesses.
- Further consolidation is expected, as well as continued exit from the market of some smaller businesses.
- New time-of-use tariffs and innovative services being developed by energy suppliers.
- SMS’s primary relationships are in the Domestic market with “independent” energy suppliers, and we therefore see the opportunity to grow with this market segment.
- Competitive long-term index-linked rental arrangements provide lowest-cost rental for suppliers and long-term opex cost certainty.
- SMS has focused credit control to ensure timely collection of rental revenue streams, minimising exposure further. This is also mitigated by Ofgem’s Supplier of Last Resort process.
- Active engagement with suppliers onto whom SMS meter assets have churned, to secure formal, contracted arrangements.
- Government-legislated target of net-zero carbon emissions by 2050 expected to drive the public policy agenda and consequent business and consumer response.
- Ofgem set out its decarbonisation action plan, detailing its next steps on an urgent, but decades-long, journey towards net zero.
- The government’s much-awaited Energy White Paper, which will detail how it intends to achieve net zero, has been delayed (expected H1 2020).
- We have an established energy services business, which already helps businesses to reduce their carbon footprints and execute greater control over the generation, use and storage of energy.
- We have partnered with an infrastructure fund to provide capital support for SMS’s identified pipeline and future opportunities of CaRe assets.
- An Environmental, Social and Governance (ESG) Committee is in the process of being established.
- We nurture a culture that empowers safety and sustainability on an individual and organisation-wide level.
- Government target for all new vehicles to be electric by 2035, with a ban on the sale of new petrol, diesel and hybrid vehicles due to be enforced accordingly.
- The government’s Road to Zero strategy includes legislation designed to improve EV uptake.
- Ofgem has set out its decarbonisation action plan to identify and tackle regulatory barriers, and remove obstacles to new business models, products and services.
- Decarbonising heating is a big challenge facing the energy sector with residential heating alone currently responsible for c.18% of the UK’s greenhouse gas emissions.
- The UK government plans to publish a Low Carbon Heat Roadmap in 2020 and, along with the expected Energy White Paper, this should provide some direction for the future.
- SMS has obtained accreditation from the Office for Low Emission Vehicles (OLEV) as an EV installer, enabling us to support our customers to deploy the required EV infrastructure at a domestic, on-street and business level.
- SMS is lead co-ordinator in the Virgin Media Park and Charge (VPACH) project, a UK government-funded scheme which aims to demonstrate the opportunity to build a fully integrated, scalable and timely EV charging network for on-street residential parking including a trial of 1,200 such charging points.
- SMS is a lead partner on the REMeDY project, a UK government-backed development that aims to establish a local, decentralised, automated energy system for the city of Southend (but which is replicable across the country), integrating artificial intelligence and IoT technologies with zero-carbon solutions across electricity, mobility and heat.
- SMS training academy and national installation platform able to support mass infrastructure-scale deployment of low-carbon assets, such as EV charging points, battery storage and local generation
- Digitisation of energy.
- Volume of data being generated by smart meters and other devices.
- Technology being used to drive efficiency and enhance customer experience.
- Digital revolution driving a more dynamic energy system, with demand and generation needing to be able to respond to each other on a local basis.
- Artificial intelligence, automation and use of blockchain have potential to further disrupt the energy market.
- Provision of firmware management services to energy suppliers to manage SMETS2 devices and their integration with other energy asset classes (such as EV charging points).
- Expansion of data services, to encompass half-hourly settlement of domestic data from smart meters on behalf of energy suppliers, facilitating the design of smart time-of-use/dynamic tariffs.
- Investment in cloud infrastructure and cyber security to provide integrated digital asset management and deployment platforms.
- SMS is a lead partner in the Orkney-based ReFLEX project; a major project aiming to digitally link renewable generation with consumer demand, eventually eliminating the need for fossil fuels.