Smart metering is set to play a central role in the next phase of water sector transformation in the UK. As AMP8 accelerates the rollout of smart meters, network sensors and IoT devices, water companies have an opportunity to gain a richer, more granular view of demand, consumption, leakage and network performance.
But, as the energy sector has shown, value does not come from the meter itself. It comes from how the data is used.
In this episode, CGI Utilities experts Rich Hampshire, Stuart Brand and Luke Eeles explore how water companies can move beyond data collection to deliver actionable insight, improve operational performance, build customer trust and make better long-term investment decisions.
They discuss the lessons water can learn from energy smart metering, and why operating models, data governance, standards, privacy and customer engagement need to be considered from the start – not added on later.
Key takeaways from the episode
1. Smart metering value comes from actionable insight, not meters alone
Smart meters will give water companies access to more granular data, but the value lies in how that data is used. The discussion explores how smart meter data can support better planning, maintenance, workforce optimisation and customer-facing services.
“Leading with value rather than talking about meters or data. For me, value accrues from actionable insights that can be created from the data produced and generated by smart meters,” says Rich Hampshire.
2. Water companies need to think beyond rollout and focus on the operating model
Smart meter deployment is only one part of the challenge. To unlock value, water companies need to consider the operating model around the data, including how it supports leakage reduction, demand management, customer service and capital planning.
“The meter is about the data or it creates the data, but it’s really about the operating model. So, if we’re talking about value creation, it’s the operating model. It has to be considered on an end-to-end basis,” explains Stuart Brand.
3. The water sector can learn from energy — but should not copy it directly
Energy smart metering offers valuable lessons, but our experts explore why water may have more in common with downstream gas than electricity, and why the sector needs to apply lessons carefully.
“I would suggest that for the water sector, there’s possibly more similarities with the downstream gas sector. The dynamics of the system are similar. Both are fluids. For starters, both can be stored,” says Rich Hampshire.
4. Decisions made now could shape future innovation
Some of the most valuable use cases may not be fully visible at the start of the rollout. The episode draws on experience from energy, where future uses such as flexibility and greater network visibility emerged over time. For water, this means today’s decisions on architecture, standards and access should not limit tomorrow’s opportunities.
“An important thing to consider at this stage we’re at now is to make sure we don’t design out those opportunities. So decisions we make now mustn’t preclude some of the things that we may not believe today, but are very likely to happen in the fullness of time,” says Stuart Brand.
5. Standardisation will be critical to avoiding siloed data
The discussion highlights the risk of water companies rolling out smart metering in different ways, creating fragmented implementations and data sets. Establishing common standards for data access and control will be important if the sector is to maximise value from the rollout.
“There is a risk that we end up with siloed implementations or siloed data sets,” explains Stuart Brand. “These meters are going in the ground today. So, we’re building up that meter debt, that infrastructure debt.”
6. Privacy, security and trust need to be designed in from the start
The podcast closes with a strong message on governance. Data access, consent, privacy, cyber security and customer trust are not secondary considerations. They need to be built into the ecosystem early, so consumers understand how their data will be used and why it matters.
“Some of these harder questions are not technically about the technology. They’re about access, consent and standards, and ultimately consumer trust,” says Stuart Brand.
Learn more
CGI works with utilities organisations to transform operations, improve customer experience and drive cost efficiencies across the sector. Our UK utilities experience spans electricity, gas and water, with decades of involvement in major market and technology change.
Visit our Utilities, Water and Energy Networks pages for more insights.
Get in touch with our Utilities team to discuss how we can help your organisation deliver for PR24 and beyond.
- Transcript
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Luke: It's an exciting time for the UK water sector. I'm Luke Eeles, lead SME at CGI. I've spent the past 15 years working across the sector, working on a diverse range of digital data and technology-related roles. We're well into AMP8, with around £104 billion worth of investment on the table, driving a major push on infrastructure, resilience, and digital transformation. That includes roughly 10 million smart meters being rolled out alongside an expansion in network sensors and IoT devices, helping us build a holistic digital view of our water networks.
On top of that, there's a growing shift towards AI automation and advanced analytics to actually make sense of all that data we are now collecting. The opportunity is huge, but also is the challenge. How do you turn all of that data into real operational value? Today, I'm joined by Rich Hampshire and Stuart Brand to delve into this. Before we get into it, Rich, I'll come to you first. Do you want to give a quick intro, and then Stuart will come on to you?
Rich: Good morning, everyone. Pleased to join you today. I'm Rich Hampshire. I work for CGI's utility business, working predominantly with our utilities clients to help them understand how digital innovation can support them succeeding in their chosen markets and to better meet their regulatory obligations.
Luke: Thanks, Rich. Stuart?
Stuart: Yes, thanks, Luke. My name is Stuart Brand, and I'm a vice president in CGI's UK business with responsibility for our work in the utility networks sector. That means the network businesses, the pipes and wires businesses, if you like, in water, electricity, and gas. I've been with CGI for over 30 years, pretty much all of it in and around the utility sector. In fact, my first project in the water sector was actually in AMP1, which makes me feel pretty old as we march into AMP8.
Luke: Thanks, both. [chuckles] Let's start with energy. Rich, I'll come to you first on this question. Looking back now, the smart metering has been in place for a while across the energy sector. What's actually delivered value in practice, and what hasn't?
Rich: Thanks, Luke. I'm really pleased that you asked the question in that way, leading with value rather than talking about meters or data. For me, value accrues from actionable insights that can be created from the data produced and generated by smart meters. It's easy to look at the cost side of the cost-benefit analysis. We all know that is only part of the story. Smart meter data provides insights deeper into the infrastructure than utilities have been able to see before, and to be able to see the dynamics of the way the infrastructure is actually used.
That can help with investment planning. Over time, you can build a history, and that can help with planning where those investments are made. It can also help to plan maintenance and optimise workforce utilisation. That's great as that goes to operational infrastructural cost optimisation, which will flow through to customer bills. What will the customer actually feel? One of the important aspects of the new vision for water is consumers having access to their data.
There's an opportunity for water companies to offer consumers meaningful new services and help them manage their consumption by giving those of us who want to engage and access information to do that usefully. That's something that's been happening in energy for quite some time now, from consumers having access almost immediately via in-home devices, which many people will have in their kitchens on their surfaces, and subsequently, with new business models being developed where organisations will take that data, provide added value analytics onto that data to help customers decide how and when they use energy.
I'd also suggest that, for water companies, the installation process presents an opportunity to put a human face to their utility. In reality, how many of us have any form of human relationship with our utilities? That's something that the energy companies put a lot of effort into when rolling out smart meters.
Luke: Thanks, Rich. Yes, some really interesting points. I guess, on that, then, in terms of those first meters being installed, from your knowledge there, what's the time lag we saw when the energy market moved to that? When they were installing those first meters, how long before we started seeing the real value?
Rich: Gosh, great question, Luke. The key thing here is to break down where the value accrues. If you're looking at networks businesses, then relatively low penetrations of smart meters are not necessarily going to give you an awful lot of insight on a particular network. You need a volume of smart meters out in the market and deployed on the network so you can make material decisions.
If you look at it from a customer perspective, then that transition for a customer takes about an hour, and then they have access to the data in their homes. The ability for the retail market or the customer-facing side of the market to begin to offer an individual consumer something different is almost immediate.
Luke: It's really interesting. Thank you. I'm just going to shift the focus slightly now. I suppose this touches on those points there, Rich. Thinking beyond the meters themselves, obviously, in Amp8, installing 10 million smart meters is a massive challenge. Beyond the actual installation, I guess what outcomes should water companies actually be targeting from the data? Stuart, do you want to come in there? What's your thoughts there around the actual targeting that the company should be doing from that data?
Stuart: I'm just going to go back, I think, a little bit to the previous discussion. Maybe a controversial point of view. I think you asked at what point after the start of the rollout did the energy sector start to see value? We could debate whether we even reached that point. I think it's interesting to note that we have, I don't know, north of 40 million meters out there, and yet the take-up of things like smart time-of-use tariffs are incredibly low.
For me, I think the meter is about the data, or it creates the data, but it's really about the operating model. If we're talking about value creation, it's the operating model. It has to be considered on an end-to-end basis. If we talk about the outcomes that the water sector is targeting, I think there's some obvious stuff here around things like water efficiency, demand reduction. There are some statutory obligations now on the sector to reduce consumption on a per capita basis, and the industry's super focused on that.
I think that is a really important outcome. I think leakage, anomaly detection, so more of the operational benefits, I think, again, will be things that are really front and center in terms of objectives for the water industry. In fact, I think the EA has explicitly linked the smart meter rollout to better leak detection. There's work going on through ACWR to look at how smart meter data can support a more ambitious program of leakage reduction. I think we'll see that.
Probably, the third thing is, and Rich touched on this a little bit as well, I think, is better planning and better capital allocation. Better ability to forecast demand, better visibility of peak demand, and the ability to make more targeted interventions. Not looking at it as a blunt area-wide response, but more targeted, more local. I think that's probably three key things. Again, the fourth, and we mentioned this as well in the context of energy, is something around trust and confidence from a consumer perspective.
Fewer estimated rates, better identification of some of those operational incidents, and probably more relevant and targeted customer service in the context of things like proactively pointing out that you might have a leak or providing more targeted water efficiency advice, those kind of things. I guess that would be about my initial thoughts.
Luke: Thanks. Yes, really interesting points there. Just coming back on that, then, what do you think creates the most value operationally? You touched on leakage and demand reduction, I guess, but from an operational standpoint, from a smart metering, what do you think creates the most value there?
Rich: If I can come in and just pick up on something Stuart said, which, for me, having worked with smart metering throughout the rollout in energy, is key, is his point about the business model innovation. This isn't simply about deploying smart meters. It's about how, as an organisation, you become much more data savvy and understand how that data can be used to drive value for customers and in your business, but it's not necessarily just within an organisation.
What we've seen in energy is a whole plethora of wider industry change initiatives to support release of that value. Things like change to the way the wholesale market and the balancing markets are settled, moving from interval reads to much higher-frequency reads to help release that value. I would suggest that when we look at the value of smart metering in the water sector, water companies should also be thinking about, "How can I create more value from the data I have access to? What are the regulatory or industry code barriers that currently prevent me from delivering a meaningful new service to my customers?"
I think if we have that cultural shift, it will be really beneficial in changing the game and the relationship with the customer.
Luke: Great. Thanks, Rich. I guess there, then, the real key point from that is moving from the data itself to those actionable insights you're going to gain from the data. Moving on then. How different is this in water compared to energy? We've touched on a lot of those points there, but I guess what are the key things that don't translate directly from the energy market into water? Probably an open-ended question there. Rich, I guess, what I'm looking for there is the lessons learned from energy, but what didn't or what do we not expect to translate directly across?
Rich: I'm going to play semantics, Luke. You've used the word energy, and I want to break that out between electricity and gas because I think there is a difference between the two. The industry discourse in energy is predominated by electricity, and that's largely because there's a broader market transition going on that relates to the adoption of electric vehicles, policies around moving, the way we heat our homes away from gas and towards electricity, all with a view of taking meaningful action on climate.
I would suggest that, for the water sector, there's possibly more similarities with the downstream gas sector. The dynamics of the system are similar. Both are fluids, for starters. Both can be stored, and that enables the supply side to manage peaks and troughs in demand more effectively. At a high level, we can use the framing of what's in the new vision for water white paper around what does it mean for consumers? What does a fair deal look like for consumers? What does it mean in terms of ensuring that supplies of water are safe and secure? What does it mean for the wider environment?
Overarching that, ensuring that the way the market is structured is a way that attracts investment. Going back, my take with respect to those four things is look at the gas sector and look at where they are driving value from smart meter data.
Stuart: Rich, just to comment on that, it's interesting, I think, to probably a couple of thoughts from the-- It's hard, I think, in the start of this kind of rollout program to second-guess all the factors that may come downstream. I think, on the energy side, a lot of the objectives of the program, when it was kicked off, and I don't know when did we start doing energy smart metering in the late 2000s.
Rich: 2006.
Stuart: The late 2000s it is then. We were probably talking about things like more accurate billing and saving money on sending meter readers out, and that sort of thing. I don't really recall conversations about things like energy flexibility or discussions about some of the things we're now seeing the network operators achieve because of the visibility they now have over the infrastructure. I think sometimes these value cases evolve and emerge for all sorts of reasons.
I think, at the moment, we probably are very focused on those operational, environmental benefits and value cases like demand reduction and leak reduction and drought resilience, and so on. I wouldn't rule out, though, that we may well see some of the things that we are seeing in energy now around smart tariffing and flexibility. The dynamics are different, and the physics are different. I think that there will be some of that stuff in the fullness of time. An important thing to consider at the stage we're at now is to make sure we don't design out those opportunities. Decisions we make now mustn't preclude some of the things that we may not believe today but are very likely to happen in the fullness of time.
Rich: Building on what you've just said, Stuart, as well, I'd be interested in your view on this. The thing that we've seen over the last few years is how data from smart meters can be combined with other datasets to create more societal value. We've seen data scientists, innovators, coming into the market and using the data to drive broader value outcomes. There's examples of how the data is being used in the finance sector to help compliance with some of the climate-related financial reporting rules.
There's examples that we're working with energy companies on in terms of identifying leading indicators of customer vulnerability so proactive action can be taken. There's lots of things that do evolve once data is available.
Stuart: That's the key thing, isn't it? It's making it available and visible. I think some of the decisions that were made at the early stages of the energy rollout around developing standard protocols, standard formats, standard mechanisms for data access and control, there maybe is a bit of a concern that we're not seeing the equivalent activity quite yet, certainly at a domestic level in water.
I think the water wholesalers are marching forward with the rollout, but they're doing it on an individual basis. I think there is a risk that we end up with siloed implementations or siloed datasets. At a non-household level, it's not so much the case. I think we have the advantage, if you like, certainly in England, of having a central market operator for non-household in MOSL. With some of the work that they've been doing around the impact of smart metering, including the creation of the smart meter read hub, that is creating a de facto standard for smart meter data at a non-household level. That doesn't extend to household.
I know MOSL has written extensively on this. We do need to address that, I think, because these meters are going in the ground today. We're building up, if you like, that sort of, I don't know, meter debt, that infrastructure debt. If we don't address the question of standardisation and access to the data on a more, if you like, more standard basis, then I think we do potentially create some challenges.
Luke: Thanks, both. Really interesting. It sounds almost like, to me, it's almost like, coming back to that, I wouldn't want to call it a single digital architect, but it's almost having that in place early so that we can maximise the value from those smart meter installs. It's really interesting points. Moving on. We touched on this as well, around operational visibility. Water networks traditionally have been less instrumented, so less sensors and IT devices we're now seeing being rolled out alongside smart meters. Again, we've touched on this. What changes when you start to improve that? What do you think is the immediate effects of seeing those installs?
Stuart: I don't know. I think maybe the industry would slightly disagree with your point about instrumentation and monitoring. I think we've had telemetry in the sector, certainly, on the clean water side, for a long time. I think we worked with water companies, probably in the '70s, certainly before my time with the company, but I know we did, to deploy electronic and computer-based monitoring of systems. I think that has been happening.
I think that the material change that you get with smart metering or automated metering is just the level of penetration and the granularity of the data. You're not just measuring a metering area level or an individual works or item of plan, you really are measuring at the endpoints. I think that does give you the ability to combine data from lots of different things. Not just operational data, but customer data as well. I think by bringing those things together, then there's certainly opportunity.
A lot of that will be in the operational efficiency space. We've talked about faster detection of leaks and proactive detection of network problems. Getting ahead of the problem, not waiting for the customer to call in. Being able to mobilise crews to fix things more quickly and identifying persistent and underlying problems. Looking at trends and applying data science techniques to look at what the network is telling you. Ultimately, that of course then feeds through into things like the prioritisation of investment.
Deferral of reinforcement, for example. That can be pretty significant in terms of pound note benefits. I think those are the kinds of things I'd probably think about.
Luke: Great. Thanks, Stuart. Rich, any thoughts on that at all?
Rich: Yes, I think Stuart is spot on. The only thing that I would possibly add to what Stuart has said is it gives you more insight into the way your infrastructure is being used. To loop back to what Stuart says, if you can see the way it's being used, you can understand where additional capacity may not currently be being utilised. You can feed that back into network design or planning the investment in new or replacement networks based on actual information.
I think we all know that we design and we invest based on peak capacity. We can start to think about water efficiency interventions, which some of the energy companies are now doing in terms of energy intervention, energy efficiency interventions, to try and create capacity headroom rather than investing in reinforcement. That sort of insight can make more informed decisions. Obviously, that then has consequential impacts on consumers' bills. Those consequential impacts are often beneficial in terms of affordability.
Stuart: It's pace as well. There's a lot of discussion about how much water we have available to meet demands in the medium to long term, or maybe even in the short term in some parts of the country. Very often, I think that discussion pivots to, well, we need to invest in more reservoirs or more. It's capital-intensive schemes to improve things that, if you like, the production side. This is completely analogous to the debate that's going on in the energy sector about constraints and whether or not the energy system operator is able to give you a connection if you're trying to build a new data center or whatever.
I think deploying more of a smart network approach does create some opportunities to act much more quickly than, for example, building something new. I think we're probably not really having that debate enough yet. Maybe we need to get further down the rollout to get to the tipping point, if you like, where we can start to achieve that. I suspect in some regions where penetration is already fairly high, there is an opportunity to do more of that and to pivot off the back of the smart meter rollout to help more directly defer significant capital schemes and address the sustainability challenge in a shorter timeframe.
Luke: Yes, great point there, Stuart. It's really interesting. We spoke a lot in this conversation about data and more data being generated from all those devices and smart meters being installed. There's always a balance, though, isn't there? What should the water sector be thinking about longer term in terms of data access, privacy, security? How far do you go with those discussions at this stage? Any thoughts on that at all?
Rich: If I go back 20 years to the early stages of smart metering in energy, there were legal challenges in the Netherlands and in Australia, which stalled their smart metering programs for years. Those challenges were actually under human rights legislation because privacy is a human right. It's something that has to be taken seriously. The key for me with this is consumers need to understand the benefits. There's quite a lot of evidence of this. Organisations like the Citizens Advice Bureau, as was back then, were doing surveys with consumers.
Consumers did not necessarily equate value with being monetary, and they were prepared to share data where there was a societal good, where their neighbours and people in their community also benefited. Thinking through what matters and communicating that to the stakeholder groups is absolutely key with this, but recognising that, ultimately, it's the consumer's data, and that potentially there are risks, and putting appropriate controls in place to give consumers confidence to accept a smart meter and to allow their data to be used for agreed purposes.
Stuart: For me, an important point here is governance. I think some of these harder questions are not really technical, about the technology; they're about access, consent, standards, and ultimately consumer trust. Rich touched on that. The one thing that the energy sector did too is it put a formal framework in place from the get-go around who could access the data, for what purposes, and what the associated consent requirements were. I think the water industry needs to get some of that stuff done a little bit more upfront because once you've embedded that system-wide architecture, if you like, system-wide governance framework, it becomes really hard to change it later on.
We're seeing some of that happening now in the non-household space with the Smart Meter Read Hub. If we can extend that across the domestic space, I think that'll be super helpful. Also, building on the trust angle, there is a competition thing here as well in terms of the use of that data and seeing as a commercial side of that. If we go back a couple of years, there was a case of what ruled on with Thames Water, and that was directly related to the mechanisms for access to smart meter data and how that potentially could affect competition.
I think these things need to be considered in that governance framework. Privacy and cybersecurity, super critical things, right? The world we live in today, we've got to engineer in the security framework from the start. You can't bolt it on after the fact. It's great to talk about all these sort of data analytics benefits that we can see, but we also need to be having those conversations about designing in the security and privacy architecture across the ecosystem, not just in the smart meter technology, right from the start, before we get too far down the road.
Rich: Building on that point on governance, Stuart, I think there's an important point here that the water sector can benefit from. I mentioned Australia and the Netherlands earlier, but in energy, there's 20 years of experience with smart meter data now. Ultimately, it's around the level of risk. There's plenty of information now that allows that risk to be better assessed in a way that wasn't around when energy smart metering was originally being done in the mid-noughties.
Luke: Thanks, both. Really interesting points. I guess it comes back and loops back to those earlier points, doesn't it, around governance and standardization. It's been a great chat. I think, to wrap up then, there's one thing to take away from the conversation. I guess it's that technology on its own doesn't create the value. It's what you do with that data, the governance, the standards, and also the customer interaction right at the beginning of the program is hugely important and clearly was very important across the energy sector.
Really, for me, it's been a really good chat today. I'd like to thank you both for joining. I really enjoyed that. Yes, speak soon. If you've enjoyed this conversation today, then you can learn more about CGI on our website.
