January 2021 | Point of View

Modern AMI for utilities: Maximizing value from smart metering

Advanced metering infrastructure is an inevitable part of the future for utilities, but extracting full value from it remains an issue

The number of smart meters deployed across the United States has grown steadily from just over 5 million meters in 2007 to more than 100 million across electric, water, and natural gas utilities today. Deployments have accelerated over the last decade, with 2013 marking the first year when electric advanced metering infrastructure (AMI) meters outnumbered automated meter reading (AMR) devices.

AMI meters currently make up more than 60% of the electric meters, with several more major electric utilities looking to deploy AMI in the coming years. Beyond electric, an increasing number of water and gas meters across the country have also transitioned to AMI technology. The business case for cross-commodity AMI has become stronger than ever through technology improvements and a growing list of potential customer and operational benefits.

As utilities and regulators increase the emphasis on modernizing America’s infrastructure to help create jobs, increase energy and water resiliency, and reduce our environmental impact, AMI has become a critical component for building greater transparency in customer usage and utility operations.

Despite these trends and the increasing capabilities of AMI, recent industry commentary has suggested that this technology is seldom leveraged to its fullest potential. It’s also argued that many utilities that have deployed AMI are not realizing the full value of the investment, particularly as it relates to the financial and operational benefits of advanced rates, operational analytics, and customer programming.

While some utilities may limit the scope of their AMI functionality due to budget targets, specific state policies and regulatory decisions, or technology availability at the time of deployment, modest strategic targets have also contributed to a potential shortfall in benefit realization.

Utilities can be categorized into four main stages in their AMI journey:

  • Stage 1: Strategic and Regulatory Planning
  • Stage 2: Approved and Currently in Deployment
  • Stage 3: Fully Deployed
  • Stage 4: Deployed and Mature

While circumstances for every utility are unique, utilities undertaking each of these four stages share many common challenges and value opportunities related to their AMI investments. By recognizing that there is room to better utilize AMI, utilities across all stages have an opportunity to leverage best practices and successfully execute against their AMI program objectives. 

Stage 1: Strategic and Regulatory Planning

There are still tens of millions of meters that have not yet been transitioned from legacy solutions. This includes utilities that have continued to maintain and operate dated, manual “walk-up” meter reading, as well as those that made the transition to AMR in the late 90s and early 2000s and wish to delay the sunsetting of that investment.

But as the need for grid-edge visibility and control has increased for electric utilities, and as the business case for water and gas AMI has improved, these utilities are increasingly looking to leverage the latest AMI technology to catch up to their early adopting peers.

For utilities in this stage, effectively strategizing, planning, and obtaining regulatory approval is critically important. A comprehensive effort with engagement from all levels of leadership, business, and customer stakeholder groups is required for success.

Stage 2: Approved and Currently in Deployment

Once utilities receive approval to invest in AMI, the focus shifts to preparing customers and the organization for transformation, deploying it efficiently, and integrating AMI technology into the business. AMI deployments typically take place over multiple calendar years and manifest a new way of doing business for nearly all elements of utility operations—with significant impacts to customer operations and engagement. 

The scale of field and back office investment and change must be considered, and history has shown that traditional methods of managing scope, schedule, and budget alone isn’t enough. Active, transparent, and collaborative leadership and execution is required across working groups to ensure that the AMI investment will deliver on the promised quantitative and qualitative benefits. This includes effective integration of systems, tools, and business processes aligned to a shared vision for future state operations.

Stage 3: Fully deployed

Following a full AMI deployment, utilities will often declare victory after the long, expensive, and labor-intensive efforts taken to complete the program. While there is certainly reason to celebrate and recognize this important milestone, utilities must avoid the temptation to consider the program “done” and move on to the next effort.

One of the most exciting elements of an AMI transformation is the wide range of opportunities that exist to further improve the customer and employee experience, optimize operations, and identify incremental value to be delivered after the completion of deployment. A recent ACEEE survey suggested that most electric utilities surveyed who had deployed AMI were underutilizing the investment for core customer, operational, and energy reduction use cases. 

One specific example of AMI being underutilized was revealed in 2019 EIA data that showed that more than two-thirds of electric utilities with at least 100,000 AMI meters have less than 1% of customers participating in dynamic rate programs of any kind. Dynamic rates are only one of many additional value-adding opportunities that AMI enables, but by remaining focused on such use cases, deriving value from data, and implementing greater functionality, utilities will be well positioned to greatly exceed initial business case benefit delivery targets.

Stage 4: Deployed and mature

For utilities that have seen success leveraging their AMI investment, there are opportunities and challenges that still must be addressed. Aggressive greenhouse gas reduction targets and advanced customer programs around electric vehicles, energy efficiency, and demand response have many technologically mature electric utilities looking for more innovative ways to leverage AMI usage data and other distributed sensors. Water and gas utilities are also in the early stages of exploring more advanced AMI and distributed sensor capabilities and can look to build off key lessons learned in this space by their electric counterparts.

In the coming years, early adopters of AMI will increasingly see meters approaching end of asset life or network service agreements requiring extension and renegotiation. Major advancements in AMI technology over the last 15 years will play a crucial role in how utilities look to potentially upgrade their existing infrastructure, as well as what options they have available regarding support and warranty agreements.  These considerations make it clear that AMI is not simply a one-time investment, but rather a new and integral part of the operating infrastructure for a utility that must be proactively monitored and managed.

Conclusion

Regardless of where a utility stands with their AMI and broader grid modernization journey, thoughtful planning and execution are key to maximizing the benefits delivered by this transformational technology. The pressure to deliver and articulate these benefits to internal, customer, and regulatory stakeholders is also increasing, raising the bar on how utilities define and reach success. 

 

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