Utilities are starting to think about how they will upgrade their billing IT infrastructure as smart grids are rolled out. A new set of billing system providers from the telecoms industry is seeking a slice of this market, posing a threat to traditional utility billing vendors. But vendors approaching the utility sector from the telecoms industry must be aware that utilities are more risk-averse than the customers they are used to serving. A different approach may be required. The questions being considered by utilities include:
At this key inflection point in their history, some utilities may choose to follow the roadmap of their existing suppliers, such as SAP or Oracle, but others may break away from their legacy approach and choose a new type of supplier. The smart grid and billing challenges facing utilities are multiple. Smart grid charging and billing challenges To make the most of smart metering, utilities will need modern billing, charging and customer care systems that can:
Utilities should install systems that will enable them not only to cope with the immediate challenges of rating and charging based on smart meter data and introducing simple time-of-use (TOU) tariffs, but will also provide them with a long-term strategic tool to realise operational efficiencies, create innovative services, and improve customer care. Utilities should invest in systems that have sufficient flexibility to cater for their uncertain or unknown future needs, and can be adapted to new challenges without expensive customisation. They should consider such investments strategically, taking into account not just the short-term imperative to meet regulators’ requirements relating to smart meter deployment and tariff evolution, but also the medium- and longer-term revenue and customer service opportunities that such billing systems can support. Vendors must position themselves in light of the questions that utilities will be considering:
Despite recent relaxation of smart meter investment requirements in some countries the shift to smart grids is continuing and spend on smart grid billing systems is growing. We estimate that the global capex on smart grid billing systems will be worth USD440 million in 2012, growing to reach USD1.2 billion in 2016, of which new entrants to the utility sector, rather than existing utility market suppliers, will take 15% over the next five years. Innovation Observatory's 42-page report Smart Grid Billing Outlook 2012-2016 assesses both the demand for smart grid billing systems / customer information systems (CISs), and the supply-side of the market, identifying and characterising four types of supplier, and profiling ten example vendors. It additionally provides five-year market forecasts for capex and maintenance spend on billing systems and other IT infrastructure globally, and the regional split of this spend in 2012 and 2016. For more information please see Smart Grid Billing Outlook 2012-2016.