In the face of climate change and population growth, investment in smart water metering solutions is vital to meet ambitious targets for reducing water demand.

Data from smart metering will play a key part in delivering water demand reductions.

With the UK government setting 2038 targets of 37% leakage reduction, consumption reduction from 154 to 122 litres per person per day and a 9% reduction in non-domestic consumption, the latest independent research by Frontier Economics and Artesia evaluates the risks and opportunities around investment decisions on smart metering solutions.

In our analysis we found that for smart metering to deliver savings, the data and insights that can be derived from it needs to be timely, provide sub-daily consumption patterns, and provide reliable data returns to customers and the water company from a high proportion of properties. Additionally, this will bring customer and operational improvements which are transformative, sustained and maximised.

Reductions in capability across these dimensions can have considerable impact by reducing the potential for benefits to materialise. Building on analysis undertaken in our previous report, Unlocking the benefits through data and metering, we have estimated how the benefits from smart metering can vary depending on the functionality of the Advanced Metering Infrastructure (AMI) solution.  This is presented in our report, showing that the scenarios with lower functionality for the AMI solution will only deliver between 50% and 67% of the benefits of the highest performing AMI solution.

There are a range of smart metering or AMI solutions, and these have a spectrum of capabilities. However, at the current time, and unlike in energy, there is no defined smart metering standard in the water sector – this means there is no common definition for the performance of a smart water meter.

As Ofwat assesses the companies’ investment plans as part of the PR24 price review, it will need to be careful and consistent in how it compares the different proposals. When setting out their investment plans, water companies could define the level of performance they are expecting from the smart water metering systems they plan to deploy, and when that level of performance will be delivered.  

Given the early stages of deployment of smart water metering and the increasing challenge that water companies will face in meeting the ambitions that have been set out, there is merit in considering these issues in the context of Ofwat’s adaptive planning framework and the potential for delivering a consistent and good level of customer experience, to encourage customer engagement with the technology, and ensure the delivery of the benefits.

This analysis was commissioned by Arqiva, a technology and managed communications service provider rolling out smart water metering in the UK.

Click here to read our full report, Smart water metering: making the right decisions SMART WATER METERING:
MAKING THE RIGHT DECISIONS