White paper intends to give visibility on - Doles from Suppliers and vendors - Opportunities in Advanced Metering Infrastructure

1. Utilities
Opportunities and expansion
- Doles from Suppliers and vendors
- (Advanced Metering Infrastructure)
White paper
Sagar Zilpe
June 2017

2. 1 World of change for the energy industry
Supplier-Vendor – Outsource made efficient and profitable. As an experienced Project
and Outsourcing consultant and ―Forever learner‖ of AMI I would like to share with you my
view on the challenges and opportunities facing the utility industry as AMI are rolled out on a
large scale all over Europe.
The energy industry is in rapid change and in the years ahead this development will
accelerate and significantly alter the structure and dynamics of the industry. Some of the most
important trends are discussed below.
1.1 Energy Market - Deregulation and liberalization
In the EU, and the UK in particular, the liberalization of the electricity market is rapidly being
reversed and replaced by old-fashioned command-and-control policies, writes Carlo
Stagnaro*, Senior Fellow of the Italian free market think tank Institute Bruno Leoni. One of the
main reasons for these reversals is interventionist climate policies. According to Stagnaro, who
has a new book out on energy liberalization, this trend will lead to inefficiencies, higher costs
and potentially even blackouts. He calls on policymakers to pick up the liberalization baton
again.
After World War II, the electricity industry in Europe went through a period of nationalization,
partly because of the technical nature of the sector, and partly because of the ideological
climate that prevailed in those days. Over time, however, it became clear that the arguments
for nationalization were unconvincing. Firstly, changes in technology led to the ability to
produce electricity on a smaller scale. Secondly, it became clear that, even if some parts of
the process of electricity production and distribution had ‗natural monopoly‘ aspects, other
parts did not. Moreover, it became increasingly understood that state electricity suppliers were
very inefficient
New regulations on both national and international (EU) level are transforming the market.
Competition is increasing through regulatory changes. The former national monopoly energy
markets are forced into open competition. As a result, many formerly national companies
expand their business into new markets. New players are also entering the markets because of
the low entry barriers.
Energy companies also face new challenges with products that are not possible to
differentiate. Sale of a neutral commodity (kilowatts) provides a perfectly transparent market.
This is something customers are increasingly aware of, and make use of.
We as Vendors and service providers are part of the operation and management of the
electricity grid which still is strongly regulated. It is however heavily influenced by the
deregulation and liberalization of the rest of the market.

3. 1.2 Operational efficiency
A transparent market evokes a continuous pressure on cost reduction.
Examples of known measures to reduce operating costs are:
• Reduced cost of service and Infrastructure maintenance
• Introduction of e-invoicing
• Outsourcing of IT applications and operations
• Centralization and cost-‐sharing of market functions
• Increasing the degree of customer self-‐service
• Cost savings by minimizing manual processes, particularly in customer service
• Digitalizing business and work processes to allow a higher degree of automation
These trends will also influence the monopoly part of the business, forcing network companies
to rationalize and empower their business with digitized services and automated processes.
Suppliers and Retailers are seeking great outcomes from Profit-share and revenue share based
models with Consultant approach in current market trend, this have further increased Invoice
performance and Increased exploitation of data-points at extensive level.
1.3 Factor of Growth in renewables, micro production and energy
management

4. With varied sources of energy and new techniques derived and invented out of countries like
China, India and EU members – there‘s been loads of disruptive innovations. Another driver is
the rapid growth in renewable energy resources, micro production of energy and the strong
increase of number of electrical cars. This puts the grid under stress and paves the way for
smart metering, demand response programs and smart grid technology.
However Smart Grid and IoT integration is still unclosed loop of invention and exploration.

5. 1.4 Consistent and integrated energy markets
As if these challenges were not enough, the energy industry is also experiencing a wave of
harmonization and integration between markets. The Northern European markets are front
runners with cross‐border transmission capabilities, the common established financial market
and the planned common retail market.
According to Second report of European commission – have created Staff Working Document
(SWD)
The overall aim of this SWD and the selected key indicators is to develop a sound, robust
monitoring tool that provides a factual snapshot of the situation across the EU and in the
Member States and identifies potential discrepancies vis-à-vis the achievement of Energy
Union objectives. More specifically, this is intended as a practical tool for use by the
Commission and Member States in the assessment of the implementation of future national
integrated energy and climate plans
The fifteen companies interviewed for the report, 21st century energy: Business reflections on
renewables in Europe, were ACCIONA, Anglian Water, BT, Doosan Babcock, DSM, EDF Energy,
Eurelectric, GSK, Google, IKEA Group, Interface, LafargeHolcim, Philips Lighting, Sappi, and
Stora Enso. Many of these companies have already made significant moves into the
renewable energy sector by investing in projects, or committing to ambitious renewable
energy targets. One example held up by the report is that of Finnish paper company, Stora
Enso, at its Langerbrugge Mill.
―The mill produces paper products out of recycled paper, is self-sufficient in steam, produces
about 75 per cent of its own electricity, and uses a biomass boiler to generate renewable
energy.‖
The report further found that the business case for renewable energy is not as linear as
traditional business decisions. ―Each of the companies interviewed had found that value
comes in many guises — avoided costs, business diversification, energy bill reductions, or
additional income streams, with different businesses having different experiences,‖ the report
notes. ―The premium on renewable energy costs as experienced in the past has often
encouraged companies to explore much more proactive energy efficiency policies, resulting
in an overall decrease in energy costs.‖
However, the uncertain and unambitious policies, as well as the differing frameworks,
standards, tariffs, subsidies, and regulations across EU countries serves to make it difficult to sell
a medium- to long-term business case, especially “when companies normally operate on
payback periods of three years or so

6. The UK led the way when it came to reform. The UK market was deregulated, competition was
promoted and the industry was privatized. There was then price-cap regulation of the natural
monopoly element. But competition worked. From 1990 to 1999, electricity charges for
domestic consumers fell by 26 per cent, with a larger fall for industrial users. Electricity
companies were able to use cheaper fuels (not necessarily more expensive domestic fuels),
free from political constraints. It was not only energy prices that fell in the UK after liberalization;
energy-related greenhouse gas emissions fell by 12 per cent between 1990 and 2010, and
emissions per unit of GDP fell by 45 per cent
Subsequently, there have been a number of attempts, through EU directives that followed the
British model to some extent, to liberalize electricity markets in the EU more generally. By 2007,
all EU member states required third-party access (TPA) to electricity networks, and most had
transparent wholesale markets and a degree of consumer choice. As a result, the average
market share of incumbent dominant firms in the EU fell from 64.9 per cent in 1999 to 55.9 per
cent in 2010. Several private and foreign companies also entered markets that had previously
been state monopolies. These steps were also accompanied by harmonization and
centralization of regulation at the EU level.
1.5 Transformation - manual readings to AMI/Smart Grids
– Analytics explored
The evolution of the energy industry during the last century have been tremendous and AMI is
an important foundation and catalyst for the changes discussed here.
AMI-enabled PaaS (Platform-as-a-service) solutions are helping leading utilities unlock insights
and transform the energy value chain
AMI Analytics – Automating, Exploring and Mining
Between the time the first ―automated meter‖ was conceived in the early 70‘s, and the advent
of deregulation in the mid to late 90‘s, companies pursued smart meter investments
primarily out of a desire to reduce operating costs for otherwise high cost activities.
For many, automated meter reading was a relatively quick and certain CapEx solution for
reducing burdensome O&M costs that were otherwise difficult to displace. Initially,
AMI deployments focused on utilities with high meter reading and field servicing costs (remote
customers spread over large service areas and/or hard-to-access meters) where paybacks

7. were clearly visible and immediate. But it wasn‘t long before other sources of value became
readily apparent. Reducing the cost of collections through automated disconnects and
reconnect for example, sweetened the value proposition greatly.
But for the most part, the first 30 years of the smart meter could be summed up as a pure
financial story, as the vast majority of the first deployments were based on a simple operational
value case. While there was a lot of talk and hype about the ―value of the data‖, it wasn‘t until
the turn of the millennium that companies were able to begin tapping into the value their AMI
data streams were capable of producing.
Early stage AMI analytics focused heavily on resolving data quality problems through
advanced validation and data conditioning, as well as exploring and testing some of the basic
and most obvious use cases for the available data. And most of these were centered
on traditional ―revenue cycle functions‖: Strengthening billing accuracy, enhancing collection
strategies, designing and deploying new rate options, and improving the billing and payment
experience. The early going for AMI analytics was all about getting the data right, and proving
that the data could in fact be used for more than automating operational activities.
Energy Analytics - Moving beyond the Revenue Cycle
As these low hanging, meter-to-cash benefit streams are ―tapped out‖, utilities have been
exploring new ways to harness the power of metering data for the broader benefit of
customers and the environment. Energy technology companies have deployed applications
to repurpose and deliver this same meter data to customers to help them make better energy
decisions. The premise that customers equipped with better information are far more likely to
make better energy decisions has changed the landscape of how the industry thinks about
energy efficiency.
Traditionally the utility industry had electromechanical meters (black color, ―Traditionnel‖, in
the illustration), one way flow of energy from production facilities to end consumers and the
meter readings were collected manually. The capacity for energy supply was larger than the
demand, the end-‐user services were very limited and billing was done once a year.
The replacement of traditional meters with smart meters (green color, ―AMI‖, in the illustration)
enables automatic collection of meter readings, process automation and billing on actual
consumption. The end consumer gets better control over their own consumption, but is not
able to influence the energy costs to a great extent.

8. Demand/response solutions (orange color, ―Demand Response‖, in the illustration) were
dynamic pricing is used as tools for balancing the demand and supply of energy and to
reduce peaks, has been tested in pilot projects all over Europe. Some utilities have also
introduced this as a commercial service, in some cases also combined with automatic or
manual control of loads. The end user can then be an active participant in the energy market
and influence his own energy cost in an active way.
What we now call Smart Grids (red color, ―Smart grid‖, in the illustration) is characterized by the
introduction of distributed energy production, increasing number of electrical cars, possibilities
for energy storage and heavy use of information technology in the grid. This opens up for
increased use of renewable energy resources, new end user services and new business
models. What the Smart Grid will eventually look like remains to be seen, but it is
unquestionable that AMI is an important foundation.
1.6 Opportunities with Change
Liberalization and deregulation of energy markets and Advanced Metering Infrastructure (AMI)
including smart metering are important to increase customer engagement and competition.
They enable both cost savings and new end-‐user services.
In a relatively short time period, customers will require billing on actual energy prices,
consumption governed by price signals, distributed micro-‐generation of electricity, electric
cars and real opportunities for local storage of electricity.
These changes opens up opportunities for your utility company and in this white paper we will
guide you into making the right decisions and being aware of the pitfalls.
Market distortions
These policies have many detrimental effects. For example, when the demand for electricity
falls – as it did post-2008 – renewable energy producers are immune to the consequences.
Also, subsidies vary hugely across different technologies and different countries. Photovoltaic
received an average subsidy of €496/Mwah in the Czech Republic and slightly lower subsidies
in Belgium, France, Italy and Luxembourg, whereas biogas and waste received an average
subsidy of only €2.76/Mwah in Finland. These differences cause enormous market distortions. In

9. addition, for a given cost, the reduction in carbon emissions has been much smaller than if
more economically rational mechanisms had been used.
In France, the marginal cost of reducing emissions could be around 50 times higher than in
Finland
The cost of reducing CO2 outputs has been huge under EU policies. Even in Finland – the
country that has been able to reduce CO2 emissions most cheaply – the cost per ton of
reduced carbon emissions has been around three to five times the value of permits under the
EU emissions trading scheme, which provides a proxy for the cost of achieving the de-
carbonization goals efficiently.
In France, the marginal cost of reducing emissions could be around 50 times higher than in
Finland. This arises because the compulsory use of national renewables targets means that
countries such as Sweden and France are replacing generating capacity that emits very little
carbon with renewables. This is hugely wasteful. A carbon tax or cap-and-trade system alone
would lead to a much more efficient outcome.
Further problems caused by climate change policies include the genuinely competitive part of
the market being reduced in size as well as significant supply-and-demand imbalances. The
intermittency inherent in many renewable sources of energy also leads to price spikes and the
potential for either huge increases in consumer prices or blackouts.
Highly regulated
What is even worse, one intervention begets the other. For example, intermittency has led to
pressure for regulated capacity support mechanisms – yet another intervention in the market.
These reduce competition further by remunerating electricity producers in a highly regulated
environment. Producers are rewarded not for actually producing and distributing power, but
for simply having the capacity to do so.
Regulatory intervention in this area is not necessary. Where there is the potential for
intermittency, market processes are needed to discover whether consumers prefer energy
markets to be subject to price spikes and intermittent supply, or whether they prefer a higher
average price and more reliable supply and price patterns. Different consumers may have
different preferences that can be provided by different companies or tariffs.
Thus, although the latest EU climate change policy may prove to be less expensive than its
predecessor, we are a long way from liberalized and efficient energy markets in which CO2
emissions are reduced in the cheapest possible way.
The UK needs to return to, and the EU to develop, a fully liberalized and competitive energy
market. Even if policymakers believe they cannot rely on free markets to correctly price
negative externalities from carbon emissions, they should devise policies that supplement
markets in internalizing the environmental costs of energy production and consumption
patterns. This should be combined with liberalization and the promotion of competition and
innovation, both at the wholesale and retail level. The UK experience between 1990 and 2005
showed how successful such policies can be.
Most of the policy changes needed the involvement of third party assessment and see that
there‘s no or reduced customer impact at reduced cost-to-serve value. Suppliers and vendors
often worry about the changes and obligations from compliance stand-point to avoid
customer and regulatory actions. It‘s always seen that third part is able to assess the assets and
the regulatory monitors from rational of unbiased approach and add to the controls and
effective parameters for the market.

10. 2 Supplier/Vendor — industry expertise and delivery
capability
Supplier/Vendor have come together to combine deep industry knowledge with proven
capabilities to deliver and is the perfect partner to build leaders within the energy industry.
With a solid foothold in the Nordic markets and representation in 30 countries, Third party
solutions and expertise available across the European region have provided unique
understanding of different local markets and regulations. With the framework in place, many
established standard solutions can be adapted accords to customer's needs.
This provides quick, efficient sharing of experiences across countries. Experiences that
Supplier/Vendor brings from deregulating markets are highly relevant when liberalizing other
European markets.

11. 2.1 Engaged in the energy industry
The energy industry has long been a prioritized industry which has contributed to
vendor/Supplier unique experience and strong references. There are several experts who work
across the value chain of the energy industry; where most of customers are major players in
the markets.
Disrupting Utilities
We think predictions of a death spiral for power utilities are overdone. But if utility companies
don‘t stay ahead of change, the dangers will intensify. New market and business models will
become established as a result of this energy transformation and could quickly eclipse current
company strategies. At risk for energy companies is their distribution channel to end customers,
which upstarts could disinter mediate, just as Amazon did to incumbent publishers and
booksellers.
Utility companies will have to reconsider their strategy amid a shifting landscape. Because the
economics are attractive on both a small scale and a large scale, more and more households
and businesses are deciding to generate a portion of their own electricity — whether it is a
homeowner in Germany generating a small amount of power on her rooftop or a
manufacturer building an on-site co-generation plant in Brazil. According to the Deutsche Bank
Research ―2015 Solar Outlook,‖ in many countries around the world, rooftop solar electricity
costs between US$0.13 and $0.23 per kilowatt-hour today, well below the retail price of
electricity in many markets.
The shape of demand is changing, too. An August 2014 report from UBS projected that battery
costs would fall by more than half by 2020, and advances in battery design have already
made them viable for electricity-powered transportation. The development of advanced
battery storage is attracting investment capital, such as the $4 billion to $5 billion that Tesla
Motors plans to invest in its gigafactory in Nevada. Economical storage of electricity could
dramatically change customers‘ view of the grid. It might go from being the primary supplier of
electricity to being an occasional one, and growing numbers of customers could sell electricity
to the grid themselves. Utilities may find that their role in supplying volatile demand will be
undercut by widespread storage and new methods for managing consumption patterns. And
they will be confronted with the need to transform the design of their systems to cope with a
grid in which fewer users are available to bear the costs of maintenance and operation.

12. Meanwhile, markets are changing rapidly. In virtually every part of the world, electricity is a
regulated industry, sometimes regulated at multiple levels. In many instances, the current
market designs won‘t support the shift from a capacity-oriented system to a disaggregated,
flexible power system without significant adaptations. However, because these designs need
to evolve in the course of the transformation, we foresee the emergence of a number of new
market models, which might appear alone or in combination within or across a region.
Examples include green command-and-control markets, in which governments own and
operate the energy sector and mandate the adoption of renewable generation and digital
technology; ultra-distributed generation markets, in which deployment of distributed energy
resources reshapes how the grid aggregates and balances supply and demand; local energy
systems, in which communities demand greater control over supply or markets; and regional
―super grids‖ — cross-border and national systems that can transmit renewable energy over
long distances.
The Industry Responds
In defining future business models, utilities need to understand and challenge their company‘s
purpose and positioning in tomorrow‘s markets. In the past, operating an integrated utility from
generation through customer supply was well understood. Now, unbundling opportunities are
extending deeper into the value chain and enabling greater participation by specialists. As a
result, electric companies will need to rethink not just their roles and business models, but also
their service and product offerings and approaches to customer engagement (see Exhibit 1).

13. We are also likely to see a great deal of innovation and opportunity in new areas, particularly
those that involve customers, data, and technology. Smart grids, micro grids, local generation,
and local storage all create opportunities for companies to engage customers in new ways.
Companies that aim to enhance the value of the grid to all customers will use technology to
improve system performance and customer engagement and to provide flexibility. They will
offer solutions in scaled storage, virtual energy, home automation and convenience, and
demand-side management. In a digital-based smart energy era, we expect that the main
distribution channel for services will be online and the energy retailing price will hinge on
innovative digital platforms
New Participants in a Transformed World
As they work to adjust to the new environment, utilities have the advantages of long operating
histories, substantial assets, customer relations, and a host of relevant capabilities. But they will
confront a new set of competitors. The same forces that are pushing utilities to change are
opening up new avenues for companies that, until now, have been only tangentially
connected to the power industry, or that are newcomers entirely. History teaches us that the
majority of business model innovations are introduced by newcomers. And the barriers to entry
into the distributed energy market are much lower now than ever before. The market, currently
worth tens of billions of dollars, covers a wide spectrum of opportunities, including energy
controls and demand management activities, local generation, large-scale storage and
regional super grids, and software that encourage behavior change (see Exhibit 2). As a result,
non-incumbent companies can take numerous strategic actions to participate in the rapidly
developing power technology and customer markets.
To begin with, ask yourself if you can be part of the changing game. What capabilities do you
have that could be applied to the emerging electricity markets?

14. The answer may have nothing to do with technology. In 2011, Vivint, a 15-year-old home
security company based in Utah that utilized a mobile, direct sales force, decided to get into
the solar business. It did not have demonstrated capabilities in installing solar panels. It did,
however, have demonstrated capabilities in managing the logistics, training, and
compensation of a vast army of door-to-door salespeople. By the spring of 2014, when the
company staged a successful initial public offering valuing it at $1.3 billion, its salespeople had
persuaded 22,000 homeowners to place solar panels on their roofs. And by May 2015, it had
installed panels with a generating capacity of 274 megawatts — equal to a utility-sized plant.
Engineering and technology companies such as General Electric and Siemens have long been
important players as equipment providers in larger-scale segments of the distributed energy
market. But the growth and extension of distributed energy is blurring the boundaries between
such companies and the power utility sector, at both the individual customer and community
levels. For example, Siemens has been working on a project with the Parker Ranch, a large
agricultural operation in Hawaii, which is constructing a powerful micro grid as part of an effort
to reduce operating costs.
In a distributed energy community with its own grid or micro grid, companies other than power
utilities can play an energy or data management role. New entrants to the data center market
are putting together product and service offerings that are as much about the world of power
as they are about the world of data. For instance, U.K. private equity–backed company
Hydro66 offers data center space in northern Sweden, which is naturally cool and close to
sources of hydroelectric power. Opower, a U.S.-based company, has used big data analytics,
cloud computing, and insights into behavioral economics to craft efficiency-encouraging
billing and communications solutions that are used by more than 90 utilities with a combined 32
million customers.
One significant area of convergence is between the electric car and the energy storage and
production sectors. Elon Musk, the founder of Tesla, and one of the founders of Solar City,
stands at the junction of these efforts. Tesla is using the expertise and scale it has built in
constructing advanced car batteries to offer a new home energy storage product called the
Powerwall, which can store excess electricity produced by solar panels as well as provide
backup power.

15. Such system solutions have a bright future, both for incumbents and for newcomers. The notion
of smart cities is based to a large extent on combining digital technology with efficient,
renewable sources of energy on the one hand, with urban planning and construction on the
other; the result should be to raise people‘s quality of life with new forms of transportation and
better healthcare, water, and waste management services. For instance, technologies such as
electric vehicles in combination with Internet applications provide the foundations for new
transportation systems in metropolitan areas, including driverless cars. According to our 2015
Global P&U Survey, smart cities and communities will play an increasingly important role over
the next decade.
Strategies for Entrants and Customers
Businesses that use large amounts of electricity now have a wide range of options if they want
to pursue opportunities in the evolving marketplace.
• Become a producer. The distributed energy market allows all sorts of players to generate and
sell energy. IKEA has put solar panels atop virtually all its U.S. stores. Waste Management, the

16. largest garbage collector in the U.S., has found ways to pivot into electricity production. By
capturing the methane released in 130 landfills around the country, and harnessing it to make
electricity on-site, Waste Management has become a significant producer of what the U.S.
Environmental Protection Agency defines as renewable energy — its generating capacity, at
about 500 megawatts, can provide electricity for about 400,000 homes. In addition to using or
selling the electricity, Waste Management has turned these capabilities into a line of business,
as it becomes a project manager and advisor to cities that want to build such systems at their
own landfills.
Self-generation has long been a tactic used by intensive energy businesses. For example,
Scandinavian building products company Moelven says it has a goal of obtaining at least 95
percent of its energy needs from self-produced wood-chip bioenergy and of taking ―an active
role in the technological and market development of the bioenergy sector.‖
• Look at your own usage. Electricity used to be regarded as an immutable fixed cost. But
today, thanks to all the changes we‘re seeing, opportunities for savings abound. What was
once a cost can quickly transform into a lever for profits and operational excellence.
In the 2015 PwC Global P&U Survey, energy-efficient technologies were singled out as likely to
have the biggest impact on the power markets between now and 2030. However, saving
energy is only one way to profit from the energy transformation. Shifting demand to periods
when energy is more abundant and cheaper is another way for industrial production
companies to reduce costs significantly.
Earning money through flexibility of demand, often referred to as advanced demand-side
management, is not yet well exploited. That‘s because, among other reasons, such flexibility is
often not rewarded in the same way as the provision of energy. However, negative load — the
term for the swift reduction of electricity use — can, at times, be as valuable to the power
system as is the provision of energy. As markets shift from relying on fossil fuels to incorporating
more renewable energy such as solar and wind (which are intermittent), markets for flexibility
will need to be established to reward the shift of electricity demand.

17. 2.2 State of the art Consultation and Utilities experts – local delivery
AMI data can be leveraged to dramatically increase CVR results
Electric cooperatives can avoid demand charges and save power using advanced leverage
from existing Advanced Metering Infrastructure (AMI) installations and Conservative Voltage
Reduction (CVR) techniques.
With the penetration of AMI on the rise, electric co-ops have the opportunity to utilize
advanced CVR techniques to improve reliability and economic results.
Advanced CVR techniques can leverage real-time measurement and violation alarm data
coming from AMI meters to deliver a larger energy consumption decrease. Unlike traditional
CVR solutions, with these new techniques voltage constraints are actually measured, not just
estimated.
CVR is one of the most cost-effective ways utilities can manage electrical loads and gives
utilities significant reliability benefits using voltage regulation to adjust load consumption within
system reliability limits. By deliberately and actively controlling electrical network devices,
utilities can reduce consumption through voltage changes on the network, thus avoiding
unnecessary demand charges.
Global presence over Technology Infrastructure and support has eased out the Operations
delivery.
This gives Supplier/retailers delivery capability for large projects all over Europe.
2.3 Thought leadership within our industries
Supplier/Vendor is dedicated to continue building the information society, where IT fosters
productivity and innovation. We believe that being thought leaders in information technology
is not enough; we put a lot of efforts in developing the energy industry as a whole as well.
As a partner of Supplier/Vendor, you will always be kept up to date with the latest thoughts
and reflections on innovations and the market.

18. 2.4 Expertise across industries
Supplier/Vendor is building the information society across multiple industries. Many of the
challenges facing the energy industry today have already been taken care of in other
industries. Especially the Telecom business has many similarities with the energy industry. In
Telecom they have been through a wave of liberalization, have faced the challenges of de-‐
commoditizing their product and lived through mergers and acquisitions. The same
development is seen in the utility business, but we a time delay of about 10-‐20 years. Cross-‐
industry focus ensures that innovations from other industries are introduced to the utility
business.
What can the energy industry learn from Telecom and financial services?
The energy industry has been working for a long time on good solutions for advance
payment.
Here Supplier/Vendor re-‐use experiences from similar projects in telecom and
financial services. Using your mobile, you can find out or update your own balance
at any time.
Based on experiences from other industries, Supplier/Vendor has developed a concept
for prepayment/credit-‐based real-‐time account for the energy industry. Being a market
leader in several industrial sectors, Supplier/Vendor has the expertise and experience that
can accelerate innovation in the energy industry.
2.5 Eco-system from vision to results

19. In deregulated energy markets, customers and their main contact point � energy retailers �
have a Unique opportunity, technologically as well as economically, to advance the efficient
development of the smart grid throughout Europe‘s competitive energy markets. This White
Paper details the various aspects of the retailers‘ position and the part Retailers can effectively
play in the central functionalities enabled by the smart grid - through cooperation with
consumers and grid managers (DSO), providing the passage to the wholesale market.
Supplier/Vendor is well equipped to handle clients' strategic challenges. We provide a full
range of IT‐based solutions and services for the entire ―eco-Systems‖, from the server room to
the customer relationship. Supplier/Vendor will take you from vision to result, from start to finish.
The regulatory challenges in achieving the smart energy ecosystem concept are depicted in
detail.
Regulators at national and European level are already giving consideration to certain key
aspects concerning regulation of network companies. However the implications of smart grids
are much wider and are considered in this White Paper.
It is up to the EU and its Member States to establish a regulatory framework in which the smart
energy ecosystem, depicted as a multi-party system with various interests and objectives, can
evolve towards the required state, in line with the goals set forward by the EU. However, energy
retailers suggest some guiding principles for the regulatory framework
1. Clearly distinguish smart grids from smart meters in terms of economic assessment (cost-
benefit analysis as proposed in the Third Energy Package)
2. Ensure that investment in smart grids and smart meters is efficient and not ‗gold plated‘
3. Be conceived and developed within existing structures at national, regional and EU
level
4. Identify and resolve regulatory barriers or disincentives for smart grid development
5. Recognize and trust industry to develop the necessary detail, within a high-level
framework, rather
6. than requiring detailed ex ante regulation
7. Commit the necessary regulatory resources to support and help guide industry
development
8. Recognize the importance of wide stakeholder involvement – not just consultation but
participation
9. in joint industry platforms overseeing industry system design and development
10. Maintain the importance of non-discrimination with regard to the services available to
system users
11. Give priority to ensuring maximum scope for retail differentiation and innovation in the
services to be made available
12. Maintain the principle of the supplier being the primary point of contact for the
customer
13. Give retailers the customer-facing role in demand side management and demand
response, with intervention by network operators only in emergency situations.

20. 2.6 AMI experience
Outsourcing partners and consultation have extensive experience from AMI as IT
product supplier, managed service operator and business consultants.
Multi meter vendor end-to-end AMI solution, AMIRO, is developed to be prepared for
future changes in regulations, technology and customer demands.
In 2005/06 most of Supplier/Vendor was responsible for the implementation of smart
metering project in Skåne, Sweden. After rollout the project has been operated as a
managed service from the AMI service center in Lillehammer, Norway.
There was major roll-out of more than 900,000 smart meters in less than three and a half
years using Workflow Management System (WMS). WMS enabled retailers to retain full
ownership of the process, regardless of the contractor, sub-‐process, or technical solution.
In the rest of this document we will share with you important lessons learned and give good
advice on the way forward for utilities entering the road to AMI.

21. 3 AMI – from reading cards to M2M communication
AMI is a challenging experience that transforms the operation of a utility. Learning from
experience is a key success factor for managing the transformation from manually read
meters to integrated and automated business processes built upon a machine-‐to-‐machine
(M2M) infrastructure of interconnected devices.
In this chapter we will share with you important learning‘s from our AMI projects and
emphasize strategic decisions that must be made in different phases of the project.
An AMI project can be divided into three main phases:
1. Planning phase
2. Rollout phase
3. Operations phase
Even though the phases for simplicity sake are handled as distinct in this document,
please remember that they are more or less overlapping and decision‘s made in one
phase have strong impact on subsequent phases.
3.1 Planning phase
In the planning phase the scope and ambitions of the AMI project are laid out. Key topics
to address in this phase are discussed in this chapter.
3.1.1 Outsourcing or using internal resources?
AMI projects in European countries have been performed using different procurement
models. Some utilities have executed the entire project using only internal resources, while
others have outsourced parts or the whole process. There are failures and successes for both
models and there is no correct answer in general what is right for your utility. Within
outsourcing there are also sub-categories like:
• Outsourcing of rollout only
• Outsourcing of operations only
• Outsourcing of both rollout and operation
Before selecting your approach you should consider the following factors:
• Outsourcing reduces risk, but has a risk fee
• Outsourcing of operations profits on economy of scale, as the AMI operator
normally has several large projects in operation
• Outsourcing requires a good definition of the project scope and well defined
governance models
• The follow up of sub vendors (on meters, communication, etc) requires a lot of
resources, outsourcing simplifies the process with only one contractual
counterpart
• Internal projects requires the build-‐up of a large temporary project organization
• All the required competence for executing an AMI project is probably not
present in your existing organization

22. 3.1.2 Organisational high-points
An AMI project influences every employee in a utility and most business processes are
changed. A successful implementation requires involvement of all parts of the organisation,
from the installers in the field to customer service and all the way up to top management.
A good approach is to perform a business process analysis describing processes AS-‐IS
(before AMI) and TO-‐BE (after AMI) involving cross-‐organizational teams. As a
consequence of this the IT infrastructure should also be evaluated, to realize which parts
could be kept as is, and which needs change or upgrades.
3.1.3 Functional scope of AMI
The functional scope of AMI can vary from just automating the meter value collection
process, to full automation and surveillance of the low voltage network. The ambitions must
be decided in the planning phase. Potential services to consider include:
• Breaker on all meters to automate the connection and disconnection process
• Sub-station surveillance
• Low voltage network monitoring of earth faults, voltage levels and outages
• Load control
• Energy displays and energy management
Whether or not you should aim for these kinds of services will depend on your business case
for the services in question. However, remember that the AMI infrastructure you are
implementing will have a long lifetime and must be prepared for future, not yet known,
demands. It is always a good idea to have future options for getting maximum profit from
your investments.
3.1.4 Procurement Process
The procurement process must be planned in detail, involving all parts of the organisation,
working out detailed technical, economic and legal requirements.
Potential cooperation with other utilities should be considered to get better bargaining
power and to share resources.
It‘s also a good idea to include one or more pilots as part of the process to get a hands-‐
on proof of concept from the supplier and to work out and tune business processes.
3.1.5 Communication plan
―It takes a lifetime to build a good reputation and 5 minutes to ruin it‖. An AMI project
affects each and every customer and employee of a utility. In a short period of time you
will visit every one of your customers. Care should be taken to prepare and educate both
your employees and your customers.
A thorough communication plan must be worked out already in the planning phase.
Involve professional resources and evaluate timing, message, channels and audience. Be
innovative and extend the traditional communication channels with digital supplements
like Facebook and Twitter.
Ensure that your recipients understand the message and avoid utility specific jargon. The
message must be repeated and updated several times during the lifetime of the project,
and is of special importance when you start visiting customers and rolling out meters.

23. 3.1.6 IT-‐architecture
The IT-architecture is a critical element of the AMI system, not only the architecture of
the AMI system itself, but also the integration with legacy system. The following key
attributes must be emphasized:
• Meter vendor flexibility
• Unification and process- intégration
• Based on international standards (CIM, IEC)
• High performance
• Real-‐time capabilities
• Integrated surveillance and monitoring tools
3.1.6.1 Meter vendor flexibility
From experience utilities often implement silos with one meter vendor, but are forced to
integrate other vendors at a later stage due to systematic failures in meter batches, end-‐of-‐
life for meter models, missing functionality or other reasons. If the system architecture is
designed from scratch as a multivendor system this gives greater flexibility and reduced risk,
when additional vendors are needed.
3.1.6.2 Unification and process integration
The business processes in AMI is complex, involves a lot of sub-‐systems and handles big
volumes of data.
Efficient operation of the system requires automated processes. Automation is much more
than just IT-‐integration. To keep track of processes, sub-‐processes and exceptions, a process
framework is needed that orchestrates procedures and handles branches in execution.
To have system flexibility for future changes in integration to third party systems or new meter
or product vendors, it is also necessary to have a unified data model. A unified model
translates meter values, events, alarms and work orders into a generic internal format that is
independent of meter supplier, entrepreneur or any other 3rd party vendor. This gives robust
business processes that can remain unchanged even though other parts of the system are
changed.
3.1.6.3 Based on international standards
Basing the solution and their interfaces on international standards with a common object
model as system core, significantly reduces integration and adaption costs as the system
evolves over time with need for new integrations and changes in architecture.
Relevant standards to consider are the IEC61968-‐x set of standards based on the CIM-‐
model, M/441 by CEN/CENELEC/ETSI and DLMS/COSEM.
3.1.6.4 Performance
The needs for performance will increase significantly in the future. This is both due market
demands for better meter data resolution and new services, but also because the number
of metering points increase over time as population increases and possibly new subsidiaries
are incorporated in the company.
Large investments in existing systems and upgrade into new measurement solutions is, and
will be, one on the main costs for energy utilities in the nearest future.

24. Collecting and handling hourly measurements has been a challenge for many system
providers of legacy applications, the aging technical architecture was not always
designed to handle high data volumes and high-‐speed transactions.
Going from one meter reading yearly to up to four readings per hour is of course a big
change. But system providers with experience of large installations and from other
industries know that it‘s primarily about scalability and system design.
3.1.6.5 Real-‐Time capabilities
But even with well-‐designed systems and architecture that meets the requirements of high
data volumes, the questions still remains when it comes to new services. Measurements are
today mostly used for monthly or quarterly billing and visualization purposes. Traditional utility
billing solutions are critical applications, but designed for batched based operation. This is
bad news since the architecture effectively hinders new services that are enabled by a
speedy transaction process, services such as prepayment and mobility (e-‐vehicles), price-‐
based consumption feedback and appliance automation.
Furthermore, to effectively influence consumer energy consumption patterns, current
research shows that communication must be based not only on energy consumption in
kilowatts. To be effective, the consumer feedback needs to be instant and based on pricing
information. In reality this requires close to real-‐time processing.
The current representation of the value chain for measurement data will be highly
questioned the upcoming years. The industry will need to develop new ways of handling
the measurement process in order to comply with future requirements of new services. This
volume challenge has already been solved in Telecom. Solutions for handling enormous
amounts of CDRs (Call Detail Records) are standard for every Telecom service provider. If
your prepaid subscription volume is empty, the call will be disconnected in seconds. You
can use self-‐service portals for viewing the exact status of your bill. This is the future we will
see in the utility business also, some more years down the road.
3.1.6.6 Integrated surveillance and monitoring tools
An AMI infrastructure is a complex M2M (Machine-‐to-‐Machine) system that requires
advanced surveillance and operation, and in some cases field work, to be stable, healthy
and well-‐functioning. The competence requirements and tools necessary for this should
not be underestimated.
Surveillance tools are needed to monitor and manage:
• Data collection and AMI service execution
• Meter and concentrator infrastructure
• Interfaces
• Events and alarms
• Work order flow

25. The tools need filtering functionality for sorting out important events and GIS support to be
able to identify geographical correlations. Handling big amounts of metering points,
including their related assets (meters, concentrators, antennas …), in an efficient and
flexible way and focusing on the exceptions, is crucial for operation and rollout.
Even though you may already have an asset management system, the needs of AMI is so
specialized that you probably will need a separate AMI asset management database, as
part of the AMI system.
An integrated surveillance system tailor-‐made for AMI will reduce the number of
employees necessary for operating the system and increase the quality of the
delivered services
3.1.7 Information-security
AMI and information security has been a controversial issue in several European countries.
The requirements for cyber security have traditionally not been given high priority in AMI
system design. The key elements that must be fulfilled are:
• Confidentiality
✓✓ Ensuring that information is not disclosed to unauthorized individuals or
systems
• Integrity
✓✓ Ensuring that information cannot be modified undetectably
• Availability
✓✓ Ensuring that information is available when needed
• Authenticity
✓✓ Ensuring that data and transactions are genuine and that the parties
involved are who they claim to be
• Non-‐répudiation
✓✓ Ensuring that a transferred message has been sent and received by the
parties claiming to have sent and received the message
Any AMI system must fulfill these basic requirements, and the matureness between system
suppliers varies significantly.
The severity of information breaches may be split in the following categories:
Severity 1 (serious)
Unauthorized information access, for instance meter measurement data or personal
information is accessed by unauthorized individuals.
Severity 2 (critical)
Unauthorized Information change, for instance meter measurement data or personal
information is modified by unauthorized individuals.
Severity 3 (fatal)
Unauthorized actions, for instance breakers are disconnected, software is
upgraded or configurations are changed by unauthorized individuals.
It is of uttermost importance that information security is taken seriously, not only on sub
system level but for the entire end-‐to-‐end business process.

26. 3.2 Rollout phase
The start of the rollout phase is the real kick off for the project, where the utility staff and
customers are exposed to the changes in business processes and infrastructure. Important
topics to focus on are discussed below.
3.2.1 Data quality issues
Data quality issues are a critical factor for a successful AMI rollout. It is a known problem for
most utilities that the customer data is of poor quality. If the address, coordinates or technical
information about the existing meter is wrong, this will impact the rollout. Data wash activities
before the rollout will improve the quality somewhat, but there will probably still be issues that
must be handled in the field. Routines must be prepared for that.
Remember also that the AMI rollout is a golden opportunity to greatly improve the data
quality. Work out a master data strategy defining which registers are masters and slaves.
Define processes and routines for correcting wrong data as part of the installers work list,
when changing the meter.
3.2.2 IT-systems readiness
A critical factor in all AMI projects is the IT-‐systems readiness. Even though every IT-‐system
works well stand alone, there is very complicated data flows to be handled in AMI rollouts.
Work orders are generated based on information in the customer information system and
sent to installers PDAs. After installation of the meter, information about both the old and new
meters is transmitted back to the central IT systems and used for updating various back office
systems. The potential for exceptions is high in these transactions and the data flow logic
must be able to handle this. In an AMI rollout a large amount of meters is changed every day
and any errors or exceptions will soon lead to a large backlog.
The best way to tune the dataflow is to do thorough testing of the end-‐to-‐end dataflow
before the rollout is started. Errors and deviations should be simulated to ensure that the
systems handle this in a reasonable and consistent way. In addition it is advisable to also run
a medium size pilot to test out the processes in real life. After fine-‐tuning of the processes
you are ready for the big rollout.
3.2.3 Rollout plan
A detailed rollout plan must be worked out, taking into consideration a lot of factors like
placement of meters (available or behind locked doors), availability of customers (at home,
at work, cottages), customer communication, rush hours in traffic, number of meters
changed per day per installer, dataflow in meter change process, documentation of
performed meter changes, training of installers, clothing of installers, delivery plan for meters,
etc.
The plan must also take into account the possibility of unexpected events like delayed
meter deliveries, systematic failures in meter batches, problems with fitting meters in small
cabinets, etc.
Depending on the number of installers you have available and your decision to insource
or outsource, the physical installation of the meters may be done by yourself or an
external company. Still there will be a need for thorough training of the installers and
detailed routines for how the work shall be performed. The better the preparations the
more smoothly the rollout will go.

27. 3.2.4 Rollout and handling of exceptions
In the actual rollout a large amount of installers is out in the field every day, meeting your
customers and upgrading your infrastructure.
The key to a successful AMI rollout is the handling of exceptions. Exceptions will occur,
probably more than you expect and in areas that you haven‘t expected. Some typical
exceptions have already been discussed like:
• Delayed meter deliveries
• Space limitations in cabinets
• Data quality errors
But there will also be others like for instance:
• Installers that doesn‘t follow agreed procedures
• Unexpected IT system downtime
• IT system performance limitations
The best preparation is to plan for the unexpected and implement control routines and
feedback loops that continuously improves routines and corrects errors as soon as
possible.
A very high level of automation and flexible processes are needed. For a utility with 1.000.000
meters 1% exceptions means 10.000 meters that needs to be handled.
3.3 Operations phase
Even though the full scope of the operations phase aren‘t reached before all meters are
rolled out, the phase still starts after the first meter is installed and delivering values.
Therefore the operations phase should be planned early in the project.
Ensuring a cost efficient and stable operation requires a competent staff with the right skills
and an optimal organization.
Integrated AMI surveillance and operations tools are important to operate the AMI
infrastructure in a good way.
Field work must be minimized using remote operations as much as possible, and when on-‐
site work is needed efficient processes and routines is necessary to minimize costs.
This chapter focuses on the efficient organization and split of work for the operational phase.

28. 3.3.1 Organization of operations
Efficient operations of the AMI infrastructure require competent and well-‐trained personnel
and a set of processes and routines adapted to the needs of AMI.
Experience has shown that ITIL, with some AMI specific adaptions, is a good framework to
base the organization of operations.
ITIL processes as basis for AMI operations
The Information Technology Infrastructure Library (ITIL) is a set of practices for IT service
management (ITSM) that focuses on aligning IT services with the needs of business. In its
current form (known as ITILv3 and ITIL 2011 edition), ITIL is published in a series of five core
publications, each of which covers an ITSM lifecycle stage. ITILv3 underpins ISO/IEC 20000
(previously BS15000), the International Service Management Standard for IT service
management, although differences between the two frameworks do exist.
ITIL describes procedures, tasks and checklists that are not organization-‐specific, used
by an organization for establishing a minimum level of competency. It allows the
organization to establish a baseline from which it can plan, implement, and measure. It
is used to demonstrate compliance and to measure improvement.

29. 3.3.2 Governance model
An AMI adapted ITIL governance model in shown in the figure below with a separation
between strategic, tactical and operational level:
The strategic level is the management group and overall responsible for the AMI operation.
Strategic management involves making decisions about what overall objectives should be
Strategic management's planning is long term and considers where the business wants to be
in two to three years‘ time. Strategic management has the highest authority.
The responsibility on the strategic level includes:
• Overall responsible for the operation
• Management of contracts
• Evaluate, recommend and decide new possibilities and opportunities
• Receive and evaluate KPI‘s from Service Delivery Manager
• Handle escalations from Service Delivery Manager
• Approve significant changes
The tactical level is responsible for the running of the AMI operation. Tactical management is
termed as intermediate management. They have lower authority than strategic
management. Tactical management involves making decisions about how an organization
should go about achieving the overall objectives determined by strategic management.
Tactical management decides what needs to be done within that year to implement the
plan of strategic management.

30. The following responsibility is included:
• Secure all elements included in the delivery including deliveries from own
organization and sub suppliers
• Follow up on key KPI‘s for the service delivery
• Create and maintain internal plans for the operations organization
• Plan and execute management meetings
• Handle escalations
• Commercial follow up (income and expenses)
• Proactive risk handling
• Report and reconcile SLAs to the customers Service Level Manager (SLM)
• Operational follow up on sub supplier services and agreements
• Follow up on internal deliveries on operational level (i.e. IT infrastructure operation
or IT application operation)
• Managing current service and IT configuration and controlled handling of changes on
services and IT
• Overall responsibility of all security related aspect in the AMI service delivery
The operational level consists of all key components necessary for delivering complete AMI
operations. This management translates the goal of tactical management into operational.
The daily routine based work is done by operational management. This is also known as
operating core.
The operational level is split into the following four elements or packages:
• IT infrastructure operation
• IT application operation
• Operation of meters and communication infrastructure
• AMI service operation
The operational level is described in more detail in the next chapter.
3.3.3 AMI operations on operational level
A simple overview over the operational level is shown below:

31. IT infrastructure operation consists of ensuring the availability and performance of the end-‐to-
‐end IT infrastructure (hardware, software and communication) in order to support the service
level requirements of applications. This may be done by the AMI service operations team or
outsourced to an IT-‐provider or internal IT department.
This include management, operation and maintenance of hardware, servers, network,
network components, firewalls, OS, basic software, databases and system components
with corresponding continuity solutions designed for high availability.
Risk and affiliations
--TBA
Application operation is the process of ensuring the availability and performance of all IT-‐
applications involved in a given AMI operation. This may be done by the AMI service
operations team or outsourced to an IT-‐provider or internal IT department.
The main tasks are:
• Surveillance of processes, batch jobs and message exchange
• Maintain, survey and clean up databases, log files and other storage areas
• Keep basic software and system components updated, install upgrades and updates
• Proactively evaluate and recommend actions to avoid incidents or security breaches
• Proactively evaluate and adjust parameters and configurations to optimize
performance and availability
• Survey and check backup
• Handle incidents and problems
• User administration
Meter and communication infrastructure operation is the surveillance and monitoring of field
placed devices. An AMI solution includes a large population of field placed devices-‐
meters, concentrators and other equipment. They communicate with the central IT solution
through various communication carriers like power line communication (PLC), radio
communication and mobile or broadband networks. The field equipment constitutes a large
Machine-‐to-‐Machine (M2M) infrastructure, which requires special competence and skills to
operate and maintain. Main tasks include:
• Survey the communication infrastructure and ensure that all field placed
devices are communicating and delivering values
• Handle incidents by remote operation or if necessary initiate field work
• Upgrade software and configurations of meters and communication infrastructure

32. AMI service opérations is the end-‐product, which is based on the underlying elements
(IT infrastructure operation, IT application operation and meter and communication
infrastructure operation).
The main tasks include:
• Follow up of service delivery according to SLA
• Incident and problem management
• Follow up and coordinate underlying elements (IT infrastructure operation, IT
application operation and meter and communication infrastructure operation)
The Service desk is the Single Point of Contact (SPOC) on the operational level and
normally organized as part of the AMI service operation. It is available for reporting
incidents and questions regarding delivery of services. It also handles 1st line of support.
4 Summary
In this white paper we have shared our experiences and recommendations, learned from
extensive experience in several AMI projects in various countries. AMI is a challenging
venture, but will give important business improvements and open up for new possibilities if
conducted wisely.
In this summary we would like to repeat our main recommendations.
Do a thorough analysis in the planning phase, involving cross-‐organizational teams, and
evaluate:
• Insourcing or outsourcing
• Business process changes
• Functional scope of AMI
• Technology choices and future IT-‐architecture
• Internal and external communication plan
In the rollout phase focus on:
• Data quality issues
• Detailed planning
• Handling of exceptions
For the operations phase, remember:
• The operations phase starts as soon as the first meter is rolled out
• Operational challenges should not be underestimated
• The right organization is a key to efficient operations
• Integrated surveillance and monitoring tools are essential
We hope that this white paper have been enlightening and has given a broader perspective
on AMI.
We are happy to help you and share our industry expertise from the utility sector. Please
get in touch if you are interested in our IT products, services or qualified advice on your
AMI journey.