Pay-as-you-use principle in the energy industry and smart connectivity

Hello Sven, welcome to the IIoT Use Case Podcast. I warmly welcome you. Glad you took the time to join us today. I would start right away with a round of introductions. Would you like to briefly say a few points about you as a person and maybe tell us a little bit about what exactly you do at Telefónica in terms of core business?

Sven

Yes, with pleasure. My name is Sven Koltermann. I’ve been working in IoT at Telefónica for pretty much eight years now. Before that, I spent two years in the E-Plus KPN Group, also in the IoT area – so a total of 10 years in this field. I head the IoT division – both product management and sales – at Telefónica. Our main focus in the IoT area is the whole topic of connectivity. How do I connect IoT devices via our traditional mobile networks and our partner networks? This includes the whole topic of integration: How do I integrate this communication into my solution, i.e., also the whole management of the SIM cards, the various technologies, the secure connection of the data in the VPN, right through to customer-specific solutions, such as the topic of 5G, private networks, where we are also equipping the automobile factory at Daimler in Sindelfingen, for example, with a private network.

Who are your classic customers? Is there a classic customer at all, or do you have segments? You are probably broadly positioned.

Sven

Yes, we are really very, very broadly positioned. There are segments in which we are very strong, for example in logistics. By now, almost every second truck has toll collection, track & tracing and a SIM card from us in use. But also in the energy sector with intelligent metering systems, smart metering, in the regulated area for electricity meters, we are very strong there, but also in the unregulated area, i.e. heating cost meters such as at Minol Zenner, for example. Our customer perspective is relatively broad. Away from these classic topics, we now have a new, interesting customer who uses our SIM cards to monitor, for example, that no chicks die. It’s really new use cases that are being added all the time. And that makes it really exciting what solutions you can enable with connectivity.

Today, we have chosen the energy sector as the topic for a detailed discussion of the IoT and its added value. Now you had just said smart metering: Could you explain that for the listeners who are not from that area?

Sven

Smart meters are generally not a new topic. If you look at Scandinavia, Italy and Spain, most electricity meters there have been networked for years – either via Powerline or via SIM cards. In Germany, the energy suppliers never really felt the need to network the whole thing. Most meters in Germany are still these somewhat older Ferraris three-phase meters, so they are really very analog. That’s also because our energy networks have always been very, very good and very crisis-proof up to now. Of course, that’s all changing now because of the energy transition, because of decentralized energy generation. Here, too, there is an EU directive that stipulates, for example, that these electricity meters should all be provided with connectivity in the future. Also for the consumer, that he has the visibility. I don’t just get a bill once a year, but I can really see how much energy I’m using. In Germany, we always do it very precisely. Other countries now simply have meters with SIM cards inside. In Germany, we have intelligent metering systems – that is, an intelligent meter with a gateway in front of it. This gateway is certified by the BSI. There are currently a few legal issues here as well, but I’ll leave them out of this. This gateway is certified that the data is also transmitted securely. Several electricity meters can be attached to it. We can now see that the subsidies are making themselves felt. There’s also the issue of wallboxes – the power grids are not designed for charging an electric car in every street. You need smart grids for that. And with these smart meter gateways, the infrastructure is being created so that these grids can be intelligently controlled. That took a little longer in Germany. But I believe that we have a much more comprehensive solution that not only measures meter data, but can also control it later and cover much more, especially in critical infrastructures.

Now I would like to talk more specifically about smart metering and move on to Use Case 2. Can you tell us which customer you are working with in the field of smart metering and what the challenges of your customer are?

Sven

As I said, we have different ones – be it an AFR, Mainzer Netze or the co.met. Perhaps using the example of co.met: This is a service provider for municipal utilities, e.g. Stadtwerke Saarbrücken, which introduces smart metering systems. There is an EU directive, which is also mandatory in Germany, that electricity meters must become intelligent. In other words, the end customer will receive current meter readings and not, as is the case now, a advance billing and will have to read the meter himself once a year. In other countries, this has been implemented for years. As i just said, for example in Italy or Scandinavia. In Germany, things have been made a bit more difficult, a cost-benefit analysis has been carried out, and a BSI protection profile has been developed for this purpose. But I think we have a very good, future-proof solution for this, especially for the energy transition. If you look now, in other countries meter readings have long been transmitted via SIM cards. Perhaps not yet so in Germany, except perhaps for a few commercial customers. The smart metering system that is very often talked about consists of two devices – the classic electricity meter, which is perhaps still this three-phase Ferraris meter, which would then have to be replaced by a smart, digital meter. However, it is not yet networked with this. Networking then does not run via a SIM card, which is simply installed as in the case of Lackmann, for example, networking runs via a separate gateway. This gateway is additionally mounted in the meter cabinet. In this meter cabinet is then ideally one of our SIM cards inside. And the electricity meter is then connected to the gateway via Wired or Wireless M-Bus and can then exchange information with the gateway accordingly.

I’d like to talk about connectivity again. Now you had just mentioned such a technical term. How exactly does this work now? I have the electricity meter plus an external gateway – how exactly does the data get to the cloud here at this point?

Sven

That was not so easy in this case, because first of all these gateways are certified by the BSI. That means they encrypt the data pretty heavily, too. In addition, we have developed a solution with the energy suppliers so that this data, which is now also being transmitted at Lackmann via our mobile network in the normal way, does not go into the cloud. The BSI stipulates that this data must go directly to a certified data center. And then we offer the possibility that this APN – as I just explained to Lackman – transfers the data from us, from our transfer point via IPsec or mostly via MPLS, i.e. via its own direct site connection, to the co.met data center, in this case to Saarbrücken. And co.met then operates the so-called gateway administration system there, which controls both the gateway, i.e. the entire certificate exchange, but of course then also unpacks the data and can transmit it to the various market participants. There are various market participants in the electricity sector – and that must not be overlooked. Unlike a closed system like Lackmann’s, you then often have the metering point operator, which can be the municipal utility, for example. However, if I now want to switch to another brand with my electricity contract, the distributor is different and both are entitled to receive this data. This means that co.met is responsible for ensuring that this data is only exchanged between market participants as permitted. And very often in Germany it is now the case that it is not always the municipal utility. Often there are many customers who have switched. And that, of course, makes it arbitrarily more complicated with around 900 market participants. And what was also added for the gateway manufacturers, such as co.met, is the certification of the hardware. There’s a handful of providers on the market, you can buy from, and they need their SIM cards in there. However, in order to have this certification process, the SIM card must already be included in the production process at the manufacturers. And we have agreements with co.met and all gateway manufacturers in the field, which means that we supply them with SIM chips that are soldered directly into the gateways. When they’re in delivery, we’re notified and then we transfer the activation data to co.met so they can enter it into their system. If the gateway manufacturer wants, they can then perform the hardware tests etc. on site so that the cards are then activated accordingly. Because you have different players, it was important for us to set up the processes so that those are appropriately usable for our customers, the gateway administrators who are integrating that, not the end customer. The co.met itself usually does not sell the meters. It is often the case that the municipal utility chooses one of these 5 hardware manufacturers and orders the meters there – depending on how they want it – and ultimately this logistics chain behind it. In the end, it must be possible to clearly assign which SIM card is in which gateway for the co.met in which meter, and that they can later also be assigned to the metering points.

Here in the podcast, I primarily talk about the added value of IoT. I would like to understand again the added value for the end user here. Can you summarize, what is the added value for the end customer through such a digital solution in the end?

Sven

It is a small advantage. I have my smartphone, I look it up in there now and I can see what the power consumption is. What you’ve also honestly observed – I know a lot of utilities that have done pilots – that customers do that initially, it’s still fancy then. They take a look and see how it works. That means that there is also a bridge to be built: How do I encourage the customer to use it? The nice thing is that you can really see how my energy consumption is, how it behaves. I heard on the news earlier that energy consumption in Germany has increased by about 5% on average due to Corona, because people are in their home offices more. Such tendencies could be read relatively quickly there as well. Or if got a new garden pump, sauna or the like, you can quickly see what a cost trap that can be. Of course, the energy suppliers also have to look at how they can bind the customer to it and how they can aggregate it. Just looking at what the power consumption is isn’t fancy, customers don’t do that. It really gets more exciting with the topic of the energy transition and electromobility. That is, how can I charge my car? Maybe I have a solar system on the roof. When it comes to the car store, it’s also one of those things. After all, the power grids are not designed for this. If my charging station is there in the street with 11 or 22 KW, then probably three, four cars can charge at the same time, plus the normal power consumption, and then the local power station runs out. That’s where it’s important that these wallboxes are also controlled, and that’s an important feature. This box is future-proof. In the future, I can then really say that the topic of e-mobility is being thought about intelligently. Perhaps even further thought and the car battery taken as a buffer for the normal current. That is, to say: Okay, I’m now feeding back from the car battery and I’m using the entire charging management system, my driving behavior, to correlate this data between the market participants as well, to determine when I can drive off and what percentage of the car battery I can now use. The whole thing then combined with a solar system and its own generation – that’s where I think it gets really exciting.

Finally, could you summarize what services you’re offering now from a mobile perspective and with what end result for your customers?

Sven

So our focus is really on connectivity – how do I connect IoT devices. Of course, there are also local technologies such as LoRa, Bluetooth, Low Energy etc. Our core here is of course in the area of cellular networks, i.e. 2G, 4G, NB IoT, LTE, 5G, in order to network the customer’s solution in the best possible way. And we clearly operate our own mobile networks, but also work with multi-roaming solutions here. We have an administration platform for the customer, Kite, I mentioned it earlier. There the whole management of the cards is carried out. One very, very important point that many people fail to take into account, which we also discussed earlier in connection with smart metering, is the integration of communications into the solution. How do I pack the mobile radio in there sensibly? How does he become a part of it? What challenges do I have there? Be it in the basement, for example, as is currently the case with smart metering, but also in roaming, for example. Where do I have to look out for it? Because especially with LTM or NB IoT, the networks in Germany are a bit different and work differently than that in the UK or Spain, for example. And here we really bring a great deal of expertise to the customer for his solution development – what he has to pay attention to and then, of course, how he can optimally get his data into his application. Be it to the cloud, as with Lackmann, or via a secure fixed connection via MPLS directly to the data center of choice. And that often sounds very simple, but nevertheless there are many pitfalls and I think that’s where we see ourselves as a partner, as an enabler, to take the customer along on the journey.

Now when you say management of SIM cards, in the case of co.met, that’s probably thousands and thousands of SIM cards that are installed somewhere in the field. I mean, theoretically, each basement with the individual cabinets has a SIM card installed there that has to be managed somewhere with the individual data from the respective electricity meter, right?

Sven

Exactly, it can also be, for example, that a municipal utility says, I want my own section now. I don’t want the data to go through one data center, I want it to be in another data center and then you can manage all the access through that platform. That’s when you can say, okay, that’s the client. So you can create clients and you can say please put the data in there. You can also make breakouts, you can store alarms. It used to be known from prepaid cell phones that they say this cell phone only works with the SIM card. Conversely, with this portal we can also say, for example: The SIM card only works with the device. And they say, if you take the SIM card out of my device, if it’s not already soldered, you can’t put it in your smartphone because the network recognizes that that’s another device. I do not allow that. Or if you see that any thresholds are exceeded in a day or in a month, there is an abnormal behavior, then you can make alerts, have the card blocked, set automatisms, send another tariff. So a whole, whole lot of possibilities. And the more cards you have, the more important this becomes.

Perhaps to conclude: If I am now a listener in the field of smart metering or perhaps even an energy supplier, how should I imagine working with you? What is the best way to get in touch with you?

Sven

Just get in touch – feel free to contact me personally via LinkedIn. Otherwise via our homepage iottelefonica.de. We are also very happy to offer our customers test installations, i.e. they can simply start with a handful of SIM cards and get to know our applications. We offer a very, very large number of webinars on the topics, which you can now also watch again in the follow-up. Especially with regard to the points that I had just mentioned – be it security, connectivity, optimization of hardware. That’s also where we can win the customer. But also workshops, that is, when a customer says, I have a project now, I have a challenge here, how do you imagine that? Just have a look at our homepage under references. We really have a lot of references and a lot of use cases.

Last question for today: How do you see the transferability? I mean, we’ve talked about two use cases now. How is the transferability to other customers? You are really broadly active. How can I use these solutions – both Lackmann and co.met – for myself now, when I am perhaps in a completely different business in terms of core business?

Sven

We have now just referred very strongly to the energy market. But the two solutions already show the biggest challenges at their core. One is the topic of integration in the cloud. How do I get the data in there? How can I automate the management of SIM cards via the cloud? The issue is coming more and more. Many large companies are now also moving to the cloud for their application – be it AWS, Azure, Google Cloud, etc. I think that’s where we can really add value with the full integration that we deliver directly. And on the other hand, when the customer starts to expand his solution in the mobile area. I think that’s where we can keep him out of a lot of nasty pitfalls that he doesn’t necessarily have to do himself, if we go into the exchange there. As I said, we have learned a lot in the area of smart metering, and I believe that this is one of the toughest issues in the area of mobile connectivity in the basement with BSI protection profile, connection of data centers, and so on. But I believe that many other customers in completely different industries also benefit from the experience we have gained.

Great, thanks for your views today and the two use cases you brought.