How ailing municipalities can solve electricity payment crisis

2017-05-22 15:46 - Matthew le Cordeur
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Shahriar Khayyam, vice president for Siemens Energy Management in South East Africa. (Photo: Matthew le Cordeur)


Cape Town – An energy and technology company has adapted the way it can supply municipalities with smart meters to improve electricity payments without charging them hefty upfront costs.

The roll-out of smart meters in South Africa is essential to improving the ability of municipalities to collect payments of electricity, as it puts the onus on customers to pay before receiving electricity.

However, installing meters into the homes of residents and businesses is highly costly, especially for ailing municipalities that have failed to collect these fees.

Their failure has seen Eskom cutting off their power to punish defaulters, as municipalities have failed to pay the power utility for the bulk power supplied to them.

READ: Municipalities default on Eskom bills despite intervention

The Energy Management division of Siemens has come up with an innovative way to bring down costs of the meters, while also ensuring municipalities don’t have to pay them any upfront costs for the technology.

Shahriar Khayyam, vice-president for Siemens Energy Management in South East Africa, told Fin24 that the firm has fined-tuned the “ownership and procurement of smart metering assets into a new model, to make it easier for utilities to roll out these technologies”.

Speaking on the sidelines of the African Utility Week last week, Khayyam said normally the power utility or municipality “covers the cost of procuring and installing the meter and then recovers that through the selling of electricity”.

“The customer (Eskom or municipality) only pays for the meters as their revenue gets collected,” he said. “It transfers the risk to Siemens.”

Siemens Energy Management Digital Grid technical expert Martin Kuhlmann told Fin24 that “they would only pay a percentage of their revenues”.

“We are transforming the traditional Capex business model to an Opex business model,” he said. “So the upfront costs are absorbed by Siemens. It allows ease of payment, which makes it accessible.”

Martin Kuhlmann (left, digital grid technical expert) and Shahriar Khayyam (right, vice president, South East Africa) from the Siemens Energy Management division at African Utility Week on 17 May 2017. (Photo: Matthew le Cordeur)

Moving smart meters to the phone

Kuhlmann said Siemens has reduced the cost of the meter, as a lot of the intelligence has been moved to the cloud, with the normal keypad and screen removed. Customers will now use their smart or feature phone to request information and to recharge their electricity.  

“There is an Internet Of Things centre to measure consumption, any tampering and to transmit information via some form of communication to the back end system,” he said. “The back end adds immense value and access to information. The utility get real time data that it can use to manage its networks better and to provide better service delivery.”

“As it generates advanced and secure revenue, it provides financial feedback to improve delivery,” he explained. “The advance in payment to large users also changes the cash flow of utility from 155 days debtor collection.”  

Kuhlmann said 13 000 meters have been connected to Siemens system since 2013, but they are aiming to connect between two to three million users to their smart meter cloud technology by 2020. The ambitious goal is agnostic of their hardware and focuses on smart meters linking up to their cloud solution.

In addition, they said their system is not limited to electricity meters and can link up to gas and water payments and usage.

Ultimately, Khayyam said it will empower utilities and the municipality to negotiate for better tariffs with the regulators and energy generators.

Eskom partners with Huawei

Eskom, which has started a smart meter roll-out programme in Gauteng, is currently paying the upfront costs of smart meters and is passing on the costs through cost recovery via higher electricity tariffs.

It announced last week it had partnered with Huawei to develop smart grid innovations to deliver energy more efficiently to customers.

Smart grids rely on the infrastructure of traditional grids coupled with cloud computing, BigData, mobile and IoT, to deliver the services more efficiently.

Sean Maritz, chief information officer of Eskom, said last Wednesday that the utility’s 2030 vision is to implement a smart grid ensuring safe, reliable and energy efficient operations to enhance customers experience.

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