Via SmartMeters.com, a report encouraging utilities to investigate alternative revenue generation opportunities from their smart meter infrastructure. While enthusiastic proponents of innovation and markets, we are sanguine to this article’s premise. First, we believe smart markets primarily engage, reward, and motivate consumers – not utilities. Second, we encourage the development of alternative revenue streams, but not to help underwrite meter costs. Shouldn’t smart meters yield benefits in conservation that will have adequate ROI to justify the investment? Why can’t alternative revenue streams be channeled into things that make our world more sustainable?
As the article notes:
“…A new report from Ovum urge utilities to reduce the significant costs associated with deploying smart meters. In Profiting from Smart Meter Communications Networks, Ovum says utilities need to find ways to generate additional revenues from smart meters because “the business case for rolling out expensive smart meter networks is often thin, so utilities need to find ways to manage costs to retain financial stability.”
To that end, the report advises utilities to upsell the communications network of smart meters to other industries. Stuart Ravens, report co-author and Ovum principal analyst, explains, “For some utilities, the business case for rolling out smart meters can be thin, with high capital costs and questionable revenues as a result. Utilities need to think outside the box in order to investigate potential revenues from non-traditional business models. By selling network capacity on to enterprises in other industries, utilities could potentially offset the considerable impact of costs associated with smart meters.”
Ravens admits the strategy poses challenges. “It is questionable whether utilities are up to the task of running alternative revenue business models. However, we believe utilities need to investigate them regardless.”
According to Datamonitor, the global smart metering market for residential customers will reach $5.7 billion by 2015; a 350 pe cent increase from 2009, reflecting the huge investments being made.
While selling network capacity could help utilities recoup some of the huge outlays they are making, Ovum’s report acknowledges regulators could present a major road block to such a plan.
Ravens notes that, “Utilities wishing to investigate alternative revenue generation opportunities from their smart meter infrastructure will need to engage early with regulators. However, we believe the necessary involvement of regulators is a significant risk for utilities considering such approaches.”
Even so, utilities need to look at their network as a potential revenue-generating asset now, even if they don’t currently have a vigorous business model yet. Ravens adds: “The implementation of smart meters provides the opportunity for utilities to break out of that mold. They should consider alternative opportunities when planning rollouts, working with regulators and testing technology.”
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