Energy and Climate Change CommitteeWritten evidence submitted by Siemens plc (SMR125)

Executive Summary

Siemens has been in the UK for 170 years and now directly employs 13,520 people nationwide—8,000 of whom are involved in engineering and manufacturing. Turnover in 2012 was £3.2 billion. The company operates in its key Sectors of Industry, Energy, Healthcare and Infrastructure & Cities.

Smart metering is a critical aspect of the Smart Grid system as it allows consumers to actively participate in the energy market and, by providing information to galvanise behaviour change, to also make a contribution to climate protection. Siemens Infrastructure & Cities sector, through its Metering Communications & Services business unit, delivers metering solutions from consulting and managed services to utility field services, covering the complete metering value chain. Siemens is a keen supporter of the smart meter agenda and an active participant in various forums on the topic.

Siemens welcomed the announcement by The Department for Energy & Climate Change (DECC) on 10 May, delaying the roll out of the smart meter programme until Autumn 2015, with the completion of the national plan deferred from 2019 to 2020. The level of change involved in delivering a fully integrated Data and Communications Company (DCC) infrastructure is a major undertaking and this postponement should safeguard an effective delivery of this vital programme.

This submission focuses specifically on the need to address the issue of smart metering in Multiple Dwelling Units (MDUs). In most cases the installation of smart meters in MDUs is particularly complex and requires a different technical and commercial solution to “normal” single-dwelling houses to deliver secure and effective smart metering services. 5.7 million households (21.5%) fall into the MDU category. Consumers living in these properties have a higher tendency to be “fuel poor” and run the risk of being the “missing segment” losing out on energy saving opportunities.

If the smart meter programme is to be successfully implemented with all consumers having equitable access to smart metering service and associated benefits, delivering an effective and secure solution for MDUs is essential. The only truly viable way of meeting this market need, overcoming the technical challenges and ensuring that MDUs are “smart-ready” is a shared infrastructure; a single building area network which would house multiple logical HANs with no need for multiple physical HANs. With this type of approach, consumers within the MDU segment could be one of the main beneficiaries of the smart meter programme, and even key drivers of it. If a solution for MDUs are not taken into account, DECC’s business case and suppliers’ license obligations cannot be met.

Introduction

1. Siemens is a major UK employer and investor:

(a)Siemens has been in the UK for over 170 years and now directly employs 13,520 people nationwide—8,000 of whom are involved in engineering and manufacturing.

(b)We have 300 apprentices and annually take on 100 graduates

(c)Annual turnover of £3.2 billion in 2012, contributing significantly to the UK Treasury.

(d)The company supports more than 54,000 UK jobs through its business activities

(e)According to independent research, Siemens is 67% more productive than the average for the UK manufacturing industry

(f)We stimulate the creation of more than £3 billon gross value added

(g)In 2011, the UK trade deficit would have been more than 3% larger had it not been for Siemens contribution

2. In recognition of the economic importance of cities and the fact that technology holds the answer to many urban challenges such as climate change, Siemens has created the Infrastructure & Cities Sector to provide cities with solutions to tackle these challenges. Management attention is rigorously focused on cities and their infrastructures and the company pools its global expertise and activities to provide tailor-made sustainable technologies to cities of all sizes, at all stages of development, from one source.

3. The Infrastructure & Cities Sector comprises five divisions: Rail Systems (rolling stock), Mobility and Logistics (traffic, transport, and logistics management), Low and Medium Voltage (solutions for power supply systems and distribution networks), Smart Grid (intelligent power grids), and Building Technologies (building security, automation, and operation).

4. Siemens, through its Metering Communications & Services business unit (MCS), part of its Smart Grid division, delivers metering solutions from consulting and managed services to utility field services, covering the complete metering value chain. MCS leverages the power of Siemens products and IS solutions to provide innovative services across the smart market for electricity, gas and water, on a domestic, commercial & industrial as well as national transmission level. Smart metering is a critical aspect of the Smart Grid system as it allows consumers to actively participate in the energy market by providing information to galvanize behaviour change and make a contribution to climate protection.

5. Siemens is a keen supporter of the smart meter agenda and an active participant in various forums on the topic. Siemens has provided responses to consultations on various aspects of the smart meter programme including the following:

(a)Second version of the Smart Metering Equipment Technical Specifications.

(b)Foundation Smart Market.

(c)Stage 1 of the Smart Energy Code.

(d)Information Request: Provisioning HAN connectivity.

6. Siemens welcomed the announcement by DECC on 10 May, confirming that the rollout of the smart meter programme has been deferred until Autumn 2015, with the completion of the national plan deferred from 2019 to 2020. The level of change involved in delivering a fully integrated DCC infrastructure is a major undertaking and this deferral should safeguard an effective delivery of this vital programme.

7. As a comprehensive service provider, Siemens believes that the government has made significant progress towards stabilising the roll-out of smart metering, whilst recognising that a few challenges remain particularly around ensuring that there is a level playing field for all suppliers and that financing for meters is secured efficiently. However our response focuses primarily on the need to address the technical and commercial solutions required for Multiple Dwelling Units (MDUs).

Smart Metering in Multiple Dwelling Units (Mdus)

8. Siemens has identified a key gap in the Implementation Programme in relation to MDUs where the installation of smart meters invariably requires a different technical and commercial solution to “normal” houses.

9. To ensure all consumers have equitable access to smart metering services and associated benefits, addressing the technical solution for MDUs is crucial. The current market design leaves it to each energy supplier with customers in the building, to install their own separate Home Area Networks (HAN) equipment .This creates a significant amount of cost and complexity into the meter installation process, with the need for mass duplication of communication assets and multiple engineering visits. As such, this represents poor value for money and unnecessary consumer and landlord disruption. It also creates maintenance accountability issues, particularly after consumers have changed supplier. It should also be noted that these additional costs have not been included in the Smart Metering Impact Assessment.

10. Technically, the current design assumes that the electricity meter, gas meter and In Home Display (IHD) are within close proximity and readily connectable via ZigBee radio communications via integrated hub. In reality, MDUs typically have these assets dispersed across the building where this standard approach will not work.

11. The England, Wales and Scotland Housing surveys categorises MDUs into the following 3 groups:

(a)High Rise.

(b)Low Rise.

(c)Converted Buildings.

12. To establish the scope of the challenge, Siemens surveyed 1000 MDUs and carried out desk research on a further 900 to establish:

(a)The average number of properties per category.

(b)The propensity of Dual Fuel.

(c)Details on the physical location of the smart metering assets.

(d)Any practical issues that might be encountered ie ability to fit the communications hub.

13. Siemens’ findings show that over 60% of MDU properties cannot be served by the “standard” Smart Metering Equipment Technical Specifications 2 (SMETS 2) solution because of:

(a)The physical distance between the electricity meter, the gas meter (if dual fuel) and the IHD.

(b)Building fabric limiting radio propagation ie meter rooms in basements.

(c)Physical space limitations preventing the fitting of the communications hub.

14. From this research, Siemens estimate that, in Britain, 5.7 million households (21.5% of all households) fall into the MDU category. Given the size of the MDU segment and the significant number of households therein, if the smart meter programme is to be successfully implemented, delivering an effective and secure solution for MDUs is essential, from an energy efficiency, technical and ethical perspective.

15. Qualitative statements from charities, consumer and sustainability groups support the argument that residents in the high rise category of the MDU segment in particular have a higher propensity to be “fuel poor”. These consumers have missed out on energy saving opportunities to date. For a detailed exploration of these issues, please see the Green Alliance’s “Towering Ambitions” report. Without consideration of the MDU segment in the roll out, consumers run the risk being pushed to the back of the queue. At the very least, there must be equality in the smart meter roll out.

16. Based on the accepted assumption that those in the MDU segment have a higher propensity to be living in fuel poverty, adequately catering for this segment will expedite the benefits of the smart meter programme to the group that arguably need it most. Comprehensively addressing this segment will allow MDUs to be quickly and effectively targeted for the rollout of smart meters and related services.

17. The only truly viable way of meeting this market need, overcoming the technical challenges and ensuring that MDUs are “smart-ready” is a shared infrastructure; a single building area network which would house multiple logical HANs with no need for multiple physical HANs. In brief, the key benefits it brings are the following:

(a)Clear, singular accountability for the provision of the service.

(b)Consistent adoption of technology.

(c)Minimised cost—through reducing the number of communication assets needed, installed in a single visit.

(d)Minimise consumer and landlord disruption through a single site visit to make the building “smart-ready”.

(e)Utilising standard smart metering systems, providing full technical interoperability.

(f)Simplified, quicker meter installation process.

(g)Ensures a level playing field where no size or type of supplier is disadvantage.

In recognition of this market need, Siemens has developed an appropriate MDU communications solution, illustrated below. This demonstrates that the shared infrastructure solution required for the MDU segment does exist today.

18. For example:

(a)Community and building-based information could be fed into the In Home Display; maximising engagement and galvanising behaviour change

(b)“Pay as You Go” services are likely to be particularly popular for residents of MDUs—and an effective HAN solution must be established to support this.

(c)Linking the smart infrastructure with related Green Deal and Energy Companies Obligation (ECO) initiatives such as energy efficiency programmes.

(d)Providing a readily accessible, quick to install customer base for energy retailers to deploy smart meters into.

19. If a solution for MDUs are not taken into account, DECC’s business case and suppliers’ license obligations cannot be met. Evidence submitted to the inquiry by other organisations also point to the MDU challenge:

(a)P16 Q56: Audrey Gallacher of Consumer Focus specifically references blocks of flats and coordinated deployment approaches. “It is important to add to this that under the current market model the energy suppliers will have to build their own separate networks as well as installing the meters.”

(b)P23, Q74: Audrey Gallacher, and the need for end to end trials. “It is important to note that MDUs have not been trialled at all—this is a major gap.”

(c)P28 Q83: Sean Weir. “Providing WAN coverage to a meter is not the same as connecting smart devices in an MDU. They are two separate challenges. 

(d)In numerous questions to the smart meter roll out inquiry into, the committee has referenced instances in the US where smart meters have been externally connected (to the WAN) but not internally connected to the home. This is the crux of the MDU issue.

Conclusion

Siemens is of the view that significant progress has been made by DECC and other stakeholders to ensure a successful smart meter programme rollout. The rescheduling of the programme ensures that due consideration and further planning can be given to important aspects, such as MDUs, which require further technical consideration to ensure that all consumers have equitable access to smart metering service and associated benefits. By addressing the solution for MDUs in the smart meter roll out, DECC’s business case and suppliers’ license obligations can then be met.

May 2013