It’s time to “get smart”: how technologies alter housing and utilities sector

It’s time to “get smart”: how technologies alter housing and utilities sector

European will not understand Ukrainian anguishes related the beginning of heating season. In the countries, where utilities services are the market, rather than a game of subsidies and monopoly, consumers get heat when they want it, and they exercise control over the heating intensity by themselves. The same situation may be seen with water and electricity – utility providers are not interested in putting spokes in the wheels of the consumers, since the breakdown is the shortfall in profits. Expenditures and losses of housing and utilities services are being thoroughly monitored, demand is being studied and projected, data is being transmitted in automated mode. Some countries even restrict the human participation in the process by the law. Innovation House is providing insight into how housing and utilities sector has become smart in developed countries, what Ukraine has already implemented, and where the market will move.

Technologies in housing and utilities sector

Utilities services technologies allow for the accounting automation of delivery and consumption of resources – electricity, gas, and water. Internet-connected smart meters collect and transmit data in an automatic mode, and force out manual accounting, which is more expensive and, less accurate and less reliable.

Internet-connected smart meters Infrastructure equipment for the delivery of services via sensors makes the suppliers be aware at what stage the losses occur. Consumers, in their turn, do not pay for the short-received resources. Collection and analysis of this information affords an opportunity to make accurate forecast of the demand for the services in the near future and to see the problems as a single package, namely where the infrastructure is outdated and where maintenance shall be done, where the load is increasing and when each of the resources has “peak season”.

Moreover, market without borders cannot be formed without the smart accounting of resources utilization – it needs transparency and accuracy that cannot be achieved by accounting performed in an old-fashioned way.

Ukraine on the starting blocks

As of today, Ukraine is at the cutting edge of smart housing and utilities sector. Nevertheless, energetics is one of the most active consumers of smart accounting systems in our country. “They are interested in everything – from new data processing centres construction to the development of specialized software,” – Sergey Yakovlev, Commercial Director of IT Distribution Division at MTI, said. Even the user’s dashboard, which is offered by Ukrainian consumers of electricity, may be considered as investments in IT. These are automated data transmission meters, networked infrastructure, servers, analytical programs, powerful storage facilities and information output servers.

Energetics is one of the most active consumers of smart accounting systems in our country

Meters having SIM cards are primarily installed in hard-to-reach places – in the basements of the houses, when it comes to heat supply, or in water distribution hubs, when it comes to this resource. Data is transmitted via the mobile network. Additional antenna is installed for places having weak network coverage. Sometimes it makes sense to connect meter to the Wi-Fi, rather than to mobile network. For all intents and purposes, radio technology is of no importance and is determined by the company that installs the equipment.

Meters having SIM cardsMeters operating in mobile network use special thermal cards or thermal chips. Usual SIM card will work nearly a year under extreme conditions. Distinguishing feature of thermal cards is that they may work several-fold longer. Thermal SIM cards look just like usual ones for the consumers, except that they are made of heat-resistant and high-strength plastic, need no special protection against heat, moisture, dust, vibrations. Thermal chips have the same properties, but they are portable, they are soldered, rather than inserted, they cannot be removed from the connecter like a usual SIM card.

Telecoms operators have special tariffs for M2M-connections. Such tariffs cover packets of traffic, messages, voice minutes and even CSD-traffic minutes. This type of connection is becoming a thing of the past around the globe, but in our country it is still used, mostly as a emergency channel. “Ukrainian market has sufficient amount of devices that use CSD-channel. Therefore, we shall consider all the nuances in our M2M tariffs,” – Tetiana Skrychevska, lifecell B2B Marketing Manager, said.

“Thousands of our SIM cards are already being used in Ukrainian housing and utilities sector,” – the press service of Vodafone Ukraine reported. Kyivenergo PJSC is one of the customers of telecoms operator. It equips building-level heat meters with thermal SIM cards. Kyivgaz PJSC installs equipment having SIM cards in private detached homes.

lifecell company also has cooperation history with lots of Ukrainian regional power distribution companies and water utility companies.

“Major water utility companies and regional power distribution companies is not the exhaustive list of companies we are working with,” – Tetiana Skrychevska said. As quoted by DTEK, Ukraine’s largest energy group, Kyiv city has about 4,000 houses equipped with mobile network connected meters. One of the most popular cities for the tourists, located in the south of Ukraine, is using the network of telecoms operator to manage its smart street lighting. “Ukrzaliznytsia company is one of our major business customers. It is using M2M-services in addition to other services rendered by lifecell,” – Tetiana Skrychevska said.

Kyiv city has about 4,000 houses equipped with mobile network connected meters

Volodymyr Harazd, Dolyna city mayor, has visited Kyiv Smart City Forum and shared the successes of his ancestral lands. Dolyna is the only city in Ukraine having ISO 50001 Energy Management Certificate. Several years ago the city hired the energy manager, developed single energy consumption platform in state-funded organizations that collects data on a day-to-day basis. Almost immediately the city made it clear that electrical power is used off the books by the kindergartens – for illegal events or for other personal advantage. The platform has become one of the stages to cut energy consumption and to switch to “green” technologies.

Network is needed

Network is one of the stumbling stones of smart consumption accounting. Thus, lifecell company said that existing networks transmit data with no technological limitations for the smart accounting of electricity, water, and gas consumption. But there is still a long haul ahead for Ukraine to have such number of sensors that is used by the developed countries. This means that the load is not so heavy as it could be. Netherlands, Singapore, South Korea are building networks for the internet of things with national coverage. Firstly, this is being done to cover all the country. Secondly, to avoid network capacity problems. However, these countries have another population density and another purchasing power level.

Monthly connection fee for one smart meter is less than $5

Huawei and ZTE companies say that GSM networks are breaking the budget of the internet of things. When it comes to the enterprises, their monthly connection fee for one smart meter is several dozen UAH (less than $5). This is quite a reasonable price, but economically disadvantaged Ukrainian cannot afford it. Сompanies have diverse judgements upon the selection of communication standard type. Thus, ZTE company said that the cost of implementation of solutions driven by various technologies shall be calculated case by case to choose the most favorable one. LoRaWAN or SigFox will probably be suitable for low population density localities, NB-IoT may cover megalopolises.

Huawei is developing 4G-based NB-IoT technology. Ukraine will soon have this communication generation, telecoms operators will receive advanced equipment compatible with NB-IoT. Therefore, we need no large-scale investments to deploy the network – all it will take is to activate the relevant opportunities. Moreover, technology is standardized by 3GPP collaboration and is operated within the licensed spectrum part. However, there is no more talk about the nationwide coverage, considering the situation with 4G-frequency tenders in Ukraine – neither 1800 MHz, nor 2600 MHz are suitable for the coverage of underpopulated regions of the country. For that to happen, we need lower frequency ranges that are occupied by other standards in Ukraine, namely by analog television and special users.

Netherlands, Singapore, South Korea are building separate networks for the internet of things

“Is there any need to build separate network for the Internet of things? It depends on how the state treats the information about the volumes of gas, water, electricity consumption. It is one thing to consider the information about how much resources were produced and consumed within the country, but an entirely different thing is to calculate such indicators within each separate enterprise. What will happen if someone sees that some defence company started to consume more resources and, it is obvious that it has something on order?”, – Alexandr Diadenko, Adviser at Huawei, said. The company said that we can start thinking about the technologies, when the state has the answer to the aforementioned question, since this will affect the cost of the project. It is highly likely that this will not be a business case, because we will have to build encrypted channels that will be terminated on certain servers and in certain data centers only. From a technical point of view, we may create combined solution, when the enterprises that are more sensitive to the confidentiality have their data read off almost manually, and in households and small businesses – in automated mode.

Who will cover the modernization expenses

Subsidies amounting to UAH 50,7 bln. ($1,81 bln.) for the housing and utilities sector were included into the budget for 2017, which is about 15% of the projected revenue for the year. Accounting of services rendered to the subsidized consumers would project this expenditure items more precisely. However, the dialog partners share consensus of opinion that Ukraine will never switch to the smart accounting of utilities consumption without the political will. Governments of developed countries were modernization drivers in housing and utilities sector.

Thus, in Norway and the UK, the state has bound the service providers by an obligation to equip all the households with smart meters by 2019 and 2020, respectively. This does not exist in the Republic of Turkey, but the country has lots of small and medium-sized businesses. Turkcell telecoms operator is offering Smart Energy solution – it is an additional meter installed behind the main one, which collects detailed information about the consumption. Consumer has its own dashboard, where all the data is displayed, and may see the energy consumption of every device and may control over the reactive energy consumption, which is very expensive in Turkey. lifecell company said that Ukrainian customers see no personal benefit in installing such sort of equipment. Meter comes at a price, purchasing power is weak, so far electricity is not so expensive to make us analyze where we can cut costs.

When it comes to the cost-cutting, at this very stage it is more evident for the service providers. The same electricity market is the day ahead market – regional power distribution companies place orders for it for the period of 24 hours, considering the anticipated demand. Gas market is the month ahead market. Fines are paid both for underconsumption and overconsumption. It is interesting to note that the fine for underconsumption is even higher. “Smart platform allows us to analyze consumption based on preceding parameters, as well as depending on the outside air temperature and day of week,” – Volodymyr Khanachivskyi, Integrated Solutions Manager at ZTE, explained the operation principles. Temperature sensors and meteorological stations may be connected to the platform. Meteorological stations will deliver the forecast that will affect gas and electricity consumption forecast. When it is cold outside, people stay longer at their homes, they eat, watch TV, bathe, consumption is growing. As soon as we have the consumption history, the forecast quality will be improved, which will lead to the minimization of fines.

Ukraine has old infrastructure, which is marked by the losses. If one half or one third of resources are “lost” somewhere on the way over, then this means that the city is wasting its money to no purpose. In addition to the leakages, unauthorized network connections and breakthroughs also exist. “Therefore, we need digitization of water pipes and consumers behavior simulation. When the sensors are installed, you will be able to see in a timely manner, where the breakthrough occurred. You will understand how and when the load on the water pipe increases,” – Alexandr Diadenko said.

Yet another example is the load distribution throughout the network. Ukraine has day-time and night-time tariffs for the electricity. You may connect to them if you wish so. Regional power distribution companies see the load peaks and with the use of flexible tariff setting they may shift the consumption to another time interval. Or may build another electric power transmission line if this is deemed feasible.

In spite of the fact that modernization benefits are obvious, there is still an open question who shall pay for the implementation of smart accounting systems for the utilities consumption. Logic suggests that, service providers shall deal with this, but once again this is the matter of purchasing power and amount involved. If you take an unbiased look at the households, you will see that as of 2014 there were about 17 mln. (inclusive of Crimea Peninsula and Sevastopol city) of them in Ukraine. Each household needs several accounting tools, data transmission, storage facilities and processing centers. Wireless subsystems infrastructure comes at a price too. Moreover, payback period for the big city and settlement consisting of 20 houses will differ. “These are powerful infrastructure projects that shall be supported by the state. It shall also smear expenditures between fast-payback and slow-payback territories,” – Volodymyr Khanachivskyi said. The company is ready to invest in the Ukrainian market and to raise funds from Chinese banks, but this is impossible task without the state guarantees.

In addition to the lack of guarantees, we are lack of standardization too. “To implement smart solutions in the housing and utilities sector, we need all the sensors to transmit data in one unified format for this format to be perceived by several different platforms. ZTE company said that regional power distribution companies, water utility companies, regional gas distribution companies, in their turn, will choose one of such systems,” – Volodymyr Khanachivskyi explained. As of today, Ukraine has more or less standardized electricity, but there are some of the finer points with gas and water. Such issues cannot be resolved in the blink of an eye – legislative framework is needed.

In broader terms, various parties shall be involved in the project: equipment manufacturers, telecoms operators, state. “Some market participants shall take on the task of unified system creation, combining the database of subscribers, billing system and unified platform that will collect all the information. When this is done, everything will be integrated in this platform. All the service providers and market participants will be there and competition will emerge,” – Alexandr Diadenko said.

Someone else’s experience is not going to help

All things considered, modernization of Ukraine may already be launched, but this process may last for years without the initiative of the state reflected in the legal requirements and standardization. Georgia has implemented smart accounting systems throughout the country within six years – and these are 2,4 mln. consumers. Pilot projects are already launched in Belarus, Azerbaijan, Russia and Uzbekistan. Equipment manufacturers and mobile operators have cooperation experience in various countries, but this is not to say that it may be copied and pasted in Ukraine. “Up to 80% of cases need localization. There is no guarantee that water consumption meter, used by Huawei in Australia, will be suitable for Ukraine. Kyivvodokanal JSC may say that this meter fails to meet the some requirements,” – Alexander Serbin, Development Director at Huawei Ukraine, said.