Cost-cutting on heat metering at the installation stage can be a false economy, but there are ways to avoid the pitfalls, as Anthony Coates-Smith of Insite Energy explains.
When housebuilders and developers strive to minimise initial construction costs, they can sometimes overlook factors that will make site maintenance and running expenses much higher. Nowhere is this false economy more apparent than in the specification and installation of heating systems and networks.
Unnecessary financial pain can be experienced as a result of early cost-cutting decisions to agree restrictive contracts with the providers of heat metering, billing and payment services, as well as from poorly designed systems and from cheaply acquired equipment such as heat interface units and meters. These mistakes can be seen too often, typically when receiving requests to retrofit metering and billing systems to rectify previous mistakes made.
A common problem is that decisions about metering technology are taken by people with insufficient technical and operational knowledge. The risk is that they’ll get the building owner tied up for years with a metering, billing and payment provider that looks good on paper but limits the choice of billing type and/or meter technology. It’s too easy to end up with a system the construction team likes but the end operator vehemently dislikes. Or, worse still, a system that’s not even fit for purpose.
Because a low-efficiency heat network will cost significantly more to operate, the additional costs typically have to be covered in one of two ways. One approach is to charge residents more, which from a social and political point of view is inadvisable and open to the risk of significant reputational damage. The alternative, if the additional energy costs are not passed on to or recovered from customers, is for the building owner to endure lost revenue.
By failing to install systems that are fit for purpose, owners of residential housing (often housing associations) expose themselves to debt risk from customers who don’t want to pay, or tie themselves into suppliers’ services that are so expensive they enrage residents. In contrast, where high quality metering solutions are used, resident complaints tend to disappear and it has been shown that tariffs can be reduced from around seven pence to as little as three pence per kilowatt of heat.
Choosing the right provider of heat network metering and billing services is easier than some suppliers would have you believe, but beware what you’re told. There are metering suppliers out there who proclaim that their systems are ‘open protocol’ and can be used in any circumstance, but this is often not the case. There are also suppliers who aim to convince developers that there are no open protocol transferable products available, and that a specific meter product will require one supplier to operate it, but this is misleading.
In fact, there are a handful of products for pay-as-you-go metering that are genuinely transferable and can be used by more than one metering and billing operator. This gives the heat network operator the choice of who they employ to carry out metering and billing services.
To ensure specifications are correct, the ideal time to start engaging with technical and electrical consultants on heat metering is up to 12 months before the build starts. Some companies, such as Berkeley Group and Telford Homes Plc, have started the process earlier still, at the pre-tender stage.
To make these processes run exceptionally smoothly, companies have adopted a number of initiatives to improve communication between development and operation teams. One of these is the provision of free of charge, written technical specifications for metering systems. Some companies will also engage in specification reviews and in the review of design and build contracts covering metering systems, advising clients on what to change to deliver a more efficient system.
A good energy supplier will willingly sit down with different individuals or departments and talk through best practice for metering and billing solutions, giving examples of past failings and how they can be prevented. Firms have successfully steered numerous developers, big and small, on the journey to achieving the best practice approach that costs a little more initially but then makes the kind of savings, in energy and resource costs, that pay back many times over.
Anthony Coates-Smith is business development director at Insite Energy