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


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IoT Use Case Podcast #42 O2 Telefónica

The digitalization of the energy sector is in full swing. This is illustrated by the 42nd episode of the IIoT Use Case Podcast. The communications company Telefónica, represented by IoT expert Sven Koltermann, will be our guest and will present two innovative solutions from the energy sector.

Podcast episode summary

The first use case is about a prepaid solution in power supply, which Telefónica implemented together with Lackmann, a leading system provider of energy metering. With an intelligent IT infrastructure for metering point operation and prepaid payment instead of the usual advance payments, energy suppliers no longer have to make advance payments and can thus reduce their financial risk enormously. Time-consuming and costly on-site electricity blockages are no longer necessary, as the digitization and connection of the electricity meter via mobile communications and a global IoT SIM card not only enables monitoring, but also remote access to the meter. This is not only advantageous for the energy supplier, but also for the end customer: Delinquent electricity payers, for example, can still draw electricity in emergency mode for the time being. They can also view their electricity consumption on an app and calculate their costs. How exactly the meters are connected and how the data transfer and connection to the cloud takes place is explained in detail in this podcast episode by Sven Koltermann.

Telefónica also brought along a customer from the energy sector for the second use case: co.met is one of the largest metering service providers in Germany and a partner of many municipal utilities and energy supply companies. The company offers flexible and digital solutions to support measurement processes. The focus is on data, system and process services along the entire metering value chain. Keyword: Smart Metering. It is about smart meters that are integrated into a communication network and generate added value by receiving and sending data.

Other topics in this podcast episode are: E-mobility, wallboxes and the energy transition.

Podcast interview

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?


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.


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?


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. 


Do you also see new topic areas or new business models opening up in the field as a result of these data-driven topics? 


Of course, this starts with smart metering. In the classically regulated area, of course, you’re always a bit tied down. But there are now also customer solutions and customer portals. For example, we have a customer, Discovergy, who also does the whole visualization thing. In other words, they use artificial intelligence to look at phase utilization and see what kind of devices they might be using. We also use the same in our network to see what controls are in place and what loads we have on our base stations. But also for end customers, you can use the example of the refrigerator or vacuum cleaner to see when it comes on, what power consumption it has – there are many approaches. And on the other hand, in the energy sector, we are of course also seeing other areas that are now growing strongly. Here’s a good example: We have a project with the Lackmann company. The challenge there was completely different: It’s about the whole issue of prepaid electricity meters. People don’t know how much electricity they consume, and then they get the big surprise. And Lackmann has developed an interesting solution for energy suppliers, too, to provide an opportunity to offer such prepaid models, for example, to prevent customers from coming under pressure to collect. In other words, you have to block the customer at some point because he can no longer pay the costs. This also takes a lot of pressure off the energy suppliers. All this blocking is also very dangerous. Imagine if they cut off your electricity – refrigerator, etc., nothing works anymore. Some of the young people have small children. But the energy supplier can’t do anything else at some point. And then it’s really difficult and a huge expense. You have to see how you can get it switched on again, and then you have to pay him money again, etc. And with prepaid electricity meters like these, you can offer really good alternatives, because you can say: Okay, you pay prepaid from now on and you can continue to use the whole thing. You can buy a card like a cell phone, and then you can also set a certain basic load for the refrigerator, for example, so that it will continue to work. So don’t get it wrong, it’s not about locking everyone off and just making it prepaid. It’s about giving people the option of continuing to use electricity and simplifying the process chain for energy suppliers. It’s also about taking the risk away from the employees when it comes to shutting them off that there will be acts of violence, which unfortunately have already happened. 


What is Lackmann’s core business? Are they the hardware manufacturers of these smart meters or how do you have to imagine that? 


So the Lackmann offers virtually the complete solution. One is the hardware part, the meter that they offer for the utilities, which is then equipped with our connectivity. And on the other side, it’s the back-end system that the utility can use to do all the management, what’s connected, or do the activation. Of course, this all has to be integrated as well. This solution also runs on the cloud, for example, on AWS (Amazon Web Services), etc. We are also seeing more and more – not only in the energy sector, but also in other areas – that applications are moving to the cloud at more and more companies. That’s why we also have a product feature called Cloud Ready. Just imagine, if customers have thousands, tens of thousands, hundreds of thousands of SIM cards, they have to be managed. We have a management tool for this, the Kite, which has also won several awards. But it gets even more interesting when the whole thing is then integrated into the cloud. This means that if customers are already using AWS, Azure or Google Cloud, then they can also use Cloud Connect to get their data directly into the cloud. That means they don’t need to build their own APN or VPN to any router, but can virtually book a feature directly that the data goes directly from the SIM cards to the cloud and can also use rudimentary functions for SIM card management etc. in some cases. And that’s what Lackmann is doing now, for example. This also saves a lot of time – keyword Time to Market. You don’t have to do much with IT integration projects anymore, customers benefit from data center coupling that we have in the background and they can just order the feature and bring their data directly from the SIM to the cloud. 


What data is of interest to Lackmann and its customers, and what is the added value of this data? 


Lackmann has several areas. If we now stay with the solution for the prepaid meter issue, then of course it’s mainly about electricity consumption and that the electricity meter transmits data in near real time. This data is then analyzed in the cloud. Accordingly, it is looked, from the power consumption, whether this works. And there are also further features planned so that the customer can also always look via app, how is my power consumption? The customer can check how much balance he still has, how much he has already used up. And Lackmann makes this correlation in the cloud. And we are responsible for connectivity on the one hand. Here, we also rely on a global SIM card in the solution. This means that in the IoT market in particular, it is now also common to use SIM cards that work in as many networks as possible. And we have that here, too: We have been offering that since 2013, i.e., that the SIM cards for such IoT use cases use all networks. This means that if reception is poor, especially in the basement, we can use the Global SIM to ensure that we have several networks available. There is then simply the possibility that another network can be used if ours should not perform that well – or vice versa. 


So the data we’re talking about is primarily electricity consumption. After all, they come out of that electric meter somewhere. Exactly how is this data already available? I mean, not everything is digital these days. And how exactly does the data get to the cloud?


In this case, the meter must be replaced. So this Ferraris meter, you can’t get it smart anymore. The Lackmann company also has its own meter, so our SIM card is virtually already pre-assembled there. The energy supplier gets this as a complete part of the solution, which is whitelabled for them, and then installs a new meter there, so to speak. Informs the customer that the contract is on a prepaid basis, and then this meter is exchanged and the data is available accordingly. The meters are sort of pre-configured to log in exactly with the connectivity immediately and that they send the data to the cloud. 


That means I have a SIM card installed somewhere in this new electricity meter, which is then replaced. That comes from you, which can then be managed with appropriate connectivity and management in the cloud. Via which network? So how do you have to imagine it? How does this SIM card radio to the cloud?


Think of it like this: First of all, the card uses the classic mobile networks that already exist. That is, 2G, 3G and LTE and can transfer data via them normally. Behind this in our core network, we have built our own APNs, i.e., our own access points, for our IoT customers, as well as for Lackmann. Customers may remember it from the past, when you might have had to enter E-Plus and Internet in your cell phone. Nowadays, you don’t have to. There is a redirect on consumer cards. That’s why it doesn’t matter what you type, it always works. It’s not like that with IoT – we could do that, but usually with IoT solutions we have dedicated APNs for the customer that are set up. And with that, we also separate the traffic after the base station, so that doesn’t come together in our normal end-user traffic. And from our network elements, we then transfer the traffic, for example, via an MPLS network, VPN to the customer in the data center or at Cloud Ready. At Lackmann we hand over the data, there this APN terminates directly at AWS. This has the advantage that the customer does not have to worry much about network, integration, etc. And he then has his data virtually right there on the spot. From there, Lackmann can then back-end in the cloud. It then sees the meter, can address it individually, has its own IP address for the meter, if desired, so that it can also switch later, for example. Of course, this is also important, especially with this prepaid solution. Because if the customer does not pay, then it is no longer this classic reading, but then it is also the switching of this meter, for example, to emergency mode or shutdown mode. 


One more quick question: There are various other stakeholders in this conglomerate besides Lackmann. So how interesting is data like billing data or certain other bureaucratic issues that don’t come directly from the electricity meter, but then can also be addressed via the cloud, perhaps by others in that supply chain? Are there approaches there where you say billing data can also be provided directly to someone else? It’s that cloud-to-cloud topic, isn’t it? 


The Lackmann solution is a closed solution. There is the issue of prepaid electricity meter solutions for the energy suppliers and also, so to speak, for the customer, who may have payment problems and who is offered a solution so that the electricity is not switched off. If you now look back to the regulated market – that’s the topic we just had, intelligent metering systems, control of the energy networks – there’s currently the regulation that in the future an intelligent metering system must be installed in all households over 6,000 kilowatt hours per year. This is then a gateway plus smart meter. The energy suppliers are already starting to do this. And for many of our customers, our connectivity is no longer in the electricity meter, but in the gateway. In principle, it works the same way there as it does right now. However, it is often the case that the data is not in the cloud because these GWA systems, i.e. gateway administration systems, which are certified by the BSI, are also in special secured and certified data centers. When you say the data is routed over the cellular network into the transport network and then it doesn’t go into the cloud, it goes over an MPLS, so it goes over a direct connection, directly into the gateway administration data center. For example, we have co.met from Saarbrücken, who is one of our customers. They have their own data center there, so to speak, and collect the data via the MPLS. Especially with the gateway, it is also intended to do much more than just read the meter. It’s also about the topic of switchable loads, the topic of e-mobility, but also other things in the future such as solar systems, controllable feeders, that is also increasing more and more. The power grids must be kept stable. And if too much is being fed in at the moment, it can sometimes happen that the solar plant is not allowed to feed in, because otherwise somewhere the power grid is no longer stable. In the future, this task can also be performed by an intelligent metering system, a gateway. In addition, this gateway is also intended to work in a multi-segment manner, i.e. it should then be possible, for example, to read gas meters or heating cost meters via it. 


Lackmann’s example is now a very concrete example from the field of prepaid metering. 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? 


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?


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?


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?


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? 


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? 


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? 


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.

Please do not hesitate to contact me if you have any questions.

Questions? Contact Madeleine Mickeleit

Ing. Madeleine Mickeleit

Host & General Manager
IoT Use Case Podcast