Smart meters: an IT disaster waiting to happen?

Smart meters are finally ready to roll out across the UK. But is the selected system 'the next major government IT disaster'?

Everything has to be prefixed with the word “smart” these days – smart phones, smart cities, smart meters – when really what is meant by the word is that something is not necessarily better, or smarter, but just connected.

Often, the word is also used as spin to deflect attention from the fact that what has been decided is anything other than smart, and nowhere is that more true than in the impending smart meter rollout across the UK.

Telecoms veteran Nick Hunn, the director of WiFore Consulting, describes the system cooked up between the utilities and metering industries as “fiendishly complicated”. He warns: “Too many cooks have ratcheted up the technical complexity to the point where it is no longer fit for purpose. As a result, it’s lining up to be the next major government IT disaster.”

Illusory savings

Minister of state for energy and climate change, Charles Hendry, has said that even though the rollout will cost an estimated £11.3bn – all coming out of consumers’ four-figure energy bills – the technology will help them to achieve some £18bn in savings, albeit over the next 20 years.

But these purported savings do not add up, says Hunn. The major savings attributable around the world to smart metering so far have come in countries, such as India, where up to 30 per cent of power output is stolen somewhere along the line, he says. Smart metering enables electricity companies in such countries to accurately pinpoint exactly where their power is going missing and to take remedial action.

The savings to be made by households in the UK able to pinpoint more accurately when and where they are wasting electricity are therefore largely illusory – people already know that they should change their light bulbs from halogen to energy savers and LEDs, and that they should turn off televisions, computers and other devices they are not using in order to save money.

Besides, the big energy consumers are non-negotiable, such as refrigerators, while the scope for running many items of equipment at off-peak hours are minimal.

In other words, consumers will never recoup the £11.3bn costs as the savings simply aren’t there to be made, or the small savings that could be generated could equally easily be made using much cheaper and simpler technology.

Take, for example, the “in-home displays” (IHDs) that will connect wirelessly to smart meters to provide a read-out of power consumption, anywhere in the home, says Hunn. In the age of the Wi-Fi-enabled tablet computer and smartphone, such a device is an unnecessary (£450m) extra expense.

Nor will they be accurate. Instead of enabling users to log-in directly into their account on their utility provider’s billing system to see how their bill is totting up in near-real-time, they connect only to the smart meter, which will not be able to reflect all the billing information.

This, though, is the architecture drawn up by utilities and metering companies, and approved by the Department of Energy and Climate Change (DECC).

Market makers

The reason, says Hunn, is that for smart metering to provide truly near-real-time billing and usage data would require utilities to drastically overhaul their own billing systems. Based largely on old mainframe technology, and often cobbled together following multiple acquisitions, mergers, demergers and divestments, they are unable to take minute-by-minute data feeds from smart meters – let alone provide minute-by-minute access to accounts by consumers.

Utilities and their metering suppliers, with whom they enjoy close, long-term relationships, have therefore designed a smart metering system to suit themselves and their current infrastructure, he believes, for a variety of reasons.

First and foremost, with the cost of smart meters being met by consumers, it is in the utilities’ interest to put as much of the cost of the rollout into the meter, and hence pass it on to consumers, rather than select an architecture in which they will have to bear more of the cost.

Utilities told DECC that it would cost between £1m and £100m to upgrade or install new billing systems that would be capable of handling genuinely smart metering.

Second, he argues, the traditional meter makers are ill-equipped to comprehend and absorb the technology that smart meters require, such as wireless communications.

“Most meter manufacturers are metal bashers by background. They have had communications technology thrust upon them. That’s where, to a large degree, they have been mugged by companies that can’t find a market for their technologies, which don’t necessarily work too well,” says Hunn.

Smart meters: an IT disaster waiting to happen?

Smart meters are finally ready to roll out across the UK. But is the selected system 'the next major government IT disaster'?

Hence, instead of using commodity parts, protocols and technologies, the utilities and metering companies have devised their own architecture that suits them best, which has consequently been endorsed by the 100-plus civil servants at DECC working on smart metering, most of whom probably know even less.

The UK’s smart metering standards are based on ZigBee, the open, low-power, wireless mesh networking standard. The attraction of ZigBee’s mesh networking is that data can hop from one ZigBee node to another so that not every meter necessarily needs to be in range of a receiver in order to transmit its daily metering information.

However, the complexity of this technology also adds to its cost. ZigBee, says Hunn, was originally devised in 2003, but since then it has been overtaken in market acceptance by Bluetooth and Wi-Fi, pushing it into a number of specialist niches instead – including smart metering. It will, however, operate at the same congested 2.4GHz frequency that home Wi-Fi networks currently use.

Furthermore, low volume adds to cost: it costs about $10m to develop a new communications chip and protocol stack, and each change in specification adds to that cost. On top of that, ZigBee is anything but settled. While traditional meters are expected to last for between 25 and 35 years, ZigBee standards today don’t work with ZigBee standards of just four years ago. And with the UK opting for a relatively proprietary variant using a niche technology, they risk being developed by fewer competent people either contributing or reviewing the specifications.

Perhaps most worrying of all is the fact that while ZigBee chips have been incorporated into about 40 million meters – mostly in the US – only about 50,000 use the “ZigBee link” for communications. There have also been issues with over-the-air upgrades and the tunnelling protocol in the UK specification required for end-to-end security.

In other words, not only are there continuing glitches that still need to be overcome, but there are genuine question marks over the longevity of the technology and its potential long-term cost of maintenance. In places such as China, by contrast, utilities don’t use ZigBee to connect meters to a comms hub, they simply use WAN or neighbourhood area connections direct to each meter, which covers the majority of metering scenarios at lowest roll-out cost. Some even use powerline networking, where appropriate. The emphasis, though, is always on whatever is most cost effective, not on creating an all-encompassing “gold standard”.

Export opportunities

With 53 million existing gas and electricity meters to be replaced across 30 million homes and other premises, the original government-led idea was that if the UK forged ahead with smart meters before anyone else, it could unlock lucrative export opportunities for domestic meter manufacturers and all the technology companies in their supply-chains.

Indeed, energy minister Hendry still claims that smart metering will “unlock huge benefits for the UK”. But, says Hunn, the export opportunities have now all but disappeared, partly because the industry has taken so long to thrash out its standard, but also because the architecture they have alighted on will be unique to the UK and the “gold standard” they have chosen too expensive.

For example, according to Ian Jermin, an analyst with AIM-market broker Allenby Capital, while Brazil is expected to be a major market for smart metering, local utilities are reluctant to procure high-cost technology to meet this requirement. Countries such as Brazil, therefore, are looking at simpler systems based on more basic and cheaper standards – not the “gold standard”.

However, the UK’s impending smart metering car crash has not prevented firms such as Cambridge-based Cyan Technology from carving out a niche exporting low-cost smart metering systems to countries as diverse as India and Brazil. These include, for example, simple wireless boxes that can be retro-fitted to existing meters.

They can provide the same kind of information to a wireless device at a considerably lower cost than UK-standard smart meters.

Perhaps if DECC – and photo-opportunity-hungry politicians – had been smarter themselves, the UK’s own smart meters might already be rolling out, not just in the UK, but around the world.

@GraemeBurton