The Impact of Advanced Metering Infrastructure (AMI) on African Electricity Utilities

Kobus van den Berg (Pr Eng)

Principal Engineer

NETGroup

PIESA Workshop, Lilongwe, Aug/Sept 11

Overview

• Introduction

• What is Smart Metering

• International Business cases

• Business drivers for SM in Africa

• Building a business Case in Africa

• Financial model

• Risk management

• Conclusion

You have to be Smart enough to survive in Africa

Introduction• New metering technology implemented worldwide to

address

– Energy shortages

– Meter readings

– Revenue protection

– Customer service improvement

– Load management

• World face two major issues

– Greenhouse effect

– Shortage of generation capacity

• AMI or SM introduced to assist

• Demanding process for all role players

• Significant developments in SM arena

What is Smart Metering?

• The European Smart Metering Alliance (ESMA)

(Koponen, 2008) defined smart metering as follows:

• Automatic processing, transfer, management and

utilization of metering data

• Automatic management of meters

• 2 way data communication with meters

• Provides meaningful and timely consumption information

to the relevant actors and their systems, including the

energy consumer

• Supports services that improve the energy efficiency of

the energy consumption and the energy system

(generation, transmission, distribution and especially

end-use)”

Smart Metering System

Back office

systems

Customer

Internet

Controlled

load

Customer

In-house

display

Meter

Website

Billing &

Consumption

Smart meter

server

LAN

Communication

Medium

Main International Business drivers

• Asset utilization

• Energy efficiency

• Customer Service

• Operational efficiency

Wisdom and watchful eye of the African Scops Owl

Main Business Drivers in Africa

• Low electrification levels

• Legislation

• Managing networks

– Outage

– Load control

– Maintenance and extension

• Improved meter reading/ billing

• Improved cash flow

• Improved customer services

• Reduction in energy losses

• Energy conservation

Electrification Levels in Africa

• In 2009, an estimated 585 million people had no access

to electricity in sub‐Saharan Africa. Unlike many other

regions of the world, under current assumptions, that

figure is expected to rise significantly by 2030 to about

652 million – an unsustainable and unacceptable

situation. (Baziliana et al, 2011)

• Despite African government policies that kept electricity

prices low, some 550 million people, or almost 75 per

cent of the population of sub-Saharan Africa, still do not

have access (Kimani, 2008)

• South Africa and Egypt have the continent’s highest

electrification levels at approximately 70 %, while the

average for the SADC region is only 20 %.

Legislative Drivers

• The South African Government (Department of Minerals

and Energy, 2008) published a notice R773 on 18 July

2008. With reference to SM it stated in short that:

• “ An end user or customer with a monthly

consumption of 1000kWh and above must have a

smart system and be on a time of use tariff not later

than 1 January 2012”

• In Europe SM implementation mainly regulatory driven

• African regulators need to play an active role.

Network management

• Feedback from customer consumption point

• Supply Failure visible via SM systems

• Dispatch maintenance teams timeously

• Load control and limiting

• Network maintenance and extension information

available

Meter reading and billing

• Improved meter reading accuracy

• Timeous and correct billing

• Synchronize billing with calendar months

• Motivation to customers to pay bills

• Improved utility cash flow

Improved Customer Service

• In-house display inform customers

– Consumption

– Tariffs

– Cost

– Load limiting

– Payment reminder for pending disconnections

• Remote connection/ re-connection

• Download Prepaid credit

Customer information display

Look for opportunities like the Grey Heron

Non- technical losses

• Incorrect metering

• No Metering/ malfunction

• Incorrect meter readings

• Tampering with meters

• Bypassing of meters

kW

h

Commercial losses

• Incorrect billing

• Incorrect tariffs

• Ineffective revenue collection

• Administrative losses

$$$

?

Total Electricity losses in Africa

Source data: USA, Energy Information Administration

SM facilities to support Revenue Protection

• Tamper detection/ reporting

• 1/2h Profile readings stored

• Meter failure reported

• Communication failure reported

• Automated energy balancing

• Consumption pattern anomalies detected

• Remote disconnection if bill not paid

Energy balancing

Supply to substation

SM SubS

SM1

SM2

SM3

SM_n

Customers

Substation

Substation SM units = Sum customer SM units

SM requires new RP methods

SM

More Data

NEW RP methods

New approach to Revenue Protection

processes:

• Fewer sweep audits

• Frequent meter readings will flag meter tampering

• Field work more directed at specific cases

• RP meter data related rather than field work

• Automated energy balancing

• Tariff problem detection

• Reading problems and non payment problems detected

easily

Energy conservation

• Customers more aware of their consumption

• Research studies indicate that customers can, by

becoming aware of electricity usage, lower their

consumption by up to 10%. (Wood, 2011)

• Customers relate to consumption and cost of electricity

and tend to used electricity more efficiently.

• Time of Use tariffs can be implemented to assist with

demand control and generation shortages.

Building a business case in Africa

• Strategic approach:

• Investigate and interact with utility management to

determine the view, strategies, future vision for the

specific utility

• Carefully determine and evaluate specific challenges in

the utility

• A viability study with the following deliverables will have

to be performed:

– Determine the functional needs of the utility.

– Investigate and propose a technological solution.

– Investigate the financial viability and propose a financial model

for this solution

Financial Model Cost elements

– Initial capital investments

– Operational cost

– Training and appointing new skilled personnel

– Adapting internal processes

– Conversion of existing billing and other computer

systems

– Stranded costs e.g. scrapping of existing metering

equipment before the end of their usable operating

life

– Loss of revenue due to lower electricity sales

– Shorter life span of newer technologies

Financial Model savings for Utility

– Avoided costs where tasks are not required any more or

reduced

– Reduced electricity theft

– Improved network control

– Electricity outages restored quicker and thus less energy sales

lost

– Remote control of networks and demand control

– Improved cash flow due to timeous bill payments

– Reduced losses due to non-payment

– Improved capital expenditure on network maintenance and

extension

– TOU tariffs can be used to improve cost reflectiveness of

electricity.

– Accurate readings and bills

Financial Model, Customer savings

– Improved energy efficiency due to information

feedback to customer on in-house display

– More accurate readings and bills

– Reduction in energy cost by using energy in low cost

TOU time slots

Need the skills of the Pied Kingfisher

– a master at flight

Risk Factors

• Technical reliability

• Unreliable communication infrastructure

• Lack of skills to install and maintain

• Financial viability

• Standards and technology aging

• Cyber Security

• Customer related issues

Conclusion

• Smart Metering can play a financially viable roll in

African electricity utilities

• A detailed unique business case needs to be developed

for each utility.

• It is vital that an effective financial model be compiled to

reflect the cost and expected savings within the utility

when SM is implemented.

• The necessary skills be acquired or contracted to plan,

manage and operate the systems

• The risk factors be managed well to ensure the

successful rollout of systems

Contact Details

• Kobus van den Berg (Pr Eng)

• Principal Engineer

• NETGroup South Africa (Pty) Ltd.

• Tel no: +27 11 845 3734

• Fax no: +27 11 845 3753

• Mobile: +27 82 427 3428

• e-mail: k.vdberg@netgroup.co.za

Africa will reward you with its natural beauty