SMART Solutions – Great! But not now
August 4, 2020

Municipalities in South Africa have not been receiving the required focus and resources they require for maintenance and expansion purposes in the last 25 years. The current state of Eskom and most municipalities are enough proof thereof. The recent drought and current Covid-19 pandemic have made matters even worse. SMART Solutions are Great But not now

Public and private sectors came to realize the power of technology in its full might during the Covid-19 pandemic. Municipalities limped along and requested citizens to own their consumption readings and present them digitally. Life goes on. Technology: the saving grace.

One could conclude that South Africa should utilize the current state of affairs and embark on a full-on SMART solution to manage and maintain our utility providing systems in municipalities. Yes, but now is not the time. There are key parameters required to be in place for SMART to work. The dismal state of the infrastructure, the lack of capital – to name but a few factors – point towards a more feasible, cost-effective, and smarter solution for South African municipalities right now.

SMART Solutions

The ‘SMART Solution’ is where the Internet of Things (IoT) enables councils to predict, plan and deliver a utility and citizens to be (almost) in full control of the consumption thereof. Sensors are placed in and around the supply network and measure variables such as pressure, time of use,flow rate, etc. The big data generated from these data points are then used in complex algorithms to generate models of consumption behaviour as a function of time, that is used to predict and plan for future behaviour. For maintenance planning and executions, network performance and expansion indicators and customer care purposes, this is a powerful tool.

The ‘SMART Solution’ is where the Internet of Things (IoT) enables councils to predict, plan and deliver a utility and citizens to be (almost) in full control of the consumption thereof

There are cities globally that have tested, implemented and adopted some elements of the SMART approach[1] – [13]. They all follow the same methodology: Measure, Transfer Data, Process and Analise, and provide Feedback to Customer. Some of the major benefits are that they reduce labour costs (no manual reading required), enhance network efficiency and improve maintenance and demand forecasts planning [12]. The knowledge on end-use, why, when and what for, also leads to optimal tariff structures, or dynamic pricing, in order to modulate peak periods [22].

In an era where urbanization rates increase significantly and water (and electricity) as resources are diminishing, a SMART solution is an option. However, comparing the requirements for the SMART to the current state of affairs reveal the contrary.

Reality Check: Requirements?

Technology is indeed part of the solution to the problem of utility management in South Africa. However, the problem is that, apart from the significant benefits, there are key requirements and fundamental basics that need to be available and in place, before a municipality can even start thinking of fully implementing the SMART solution to solve all utility-servicing related problems. Research in which management was interviewed[15] and other case studies[7], [2] – [5] revealed four basic requirements:

  1. Capital – to stabilize and optimize the infrastructure, especially that of water.
  2. Capital – to purchase the technical equipment, i.e. SMART meters and computer hardware required for the Big Data collected and to run the algorithms
  3. Capital – to remunerate the SMART human resource experts, and
  4. Capital – to fund the abstract impact and uncertainties that SMART may bring.

Capital. The one thing that South African Municipalities do not have at the moment. Although the current ‘SMART Cities’ around the world are reporting much-required benefit, some openly stated that they are yet to see the full financial benefit due to the rising price of the utility and the cost of capital[15].

The other significant added advantage that some of the current ‘SMART Cities’ have is a partner in the private sector with a mutual interest in the success of the solution. In China’s Shenzhen district, where the supply of water and gas has historically been a challenge, China Telecom and Huawei have partnered with Shenzhen Water and Shenzhen Gas to demonstrate the benefits that Narrow Band-IoT connected smart meters would bring to both utility companies[7]. In Alicante, Spain, the company Aguas Municipalizadas de Alicante, Empresa Mixta (AMAEM) and its ownership is divided into equal shares between the City Council of Alicante and the private company Hidraqua, Gestión Integral de Aguas de Levante S.A., a subsidiary of Aquadom (Suez). Although under the supervision of the public partner, Hidraqua in Alicante enjoys ample autonomy in technical decision-making [19].

Furthermore, water companies with mixed public and private capital have experienced an important expansion in the last decades on the Spanish Mediterranean coast following this division of responsibilities in which the technical aspects of management (from delivery to billing) tend to remain under private control, while the public part plays mostly a role of general supervision and is responsible for investments in the water cycle infrastructure[20]. It pays to have a private partner.

Interim Solution

Here is the interim solution for a municipality to raise capital to become SMART: Get a private partner and follow the same four principles that SMART schemes follow: Measure, Transfer Data, Process and Analise, and Communicate with the Customer. But do so in a cost-effective way, with the current resources and skills at hand:

  • Measure actual consumption as often as humanly possible. South African Labour is relatively cheap and in times like these, a great necessity to prevent ultimate starvation. South Africa’s high youth unemployment rate of 55.1% in 2019 Q1[16] provides ample opportunity to boost the economy and prevent starvation by employing youngsters at market-related entry-level remuneration packages to do actual readings. Yes, going SMART will also eventually boost the economy as the demand for SMART solutions increases: jobs are required to design, manufacture, install and enhance these meters. But that will take time. Going SMART right now, will kill jobs. In addition, the uncertainties around the other requirements needed in place for SMART solutions to work (a stable infrastructure, capital, to name but two) emphasizes the need to do the basics right, first, before going SMART all the way.
  • Transfer Data by utilizing the cellular networks already in place.
  • Process and Analise the data with products that have been tried and tested and worked for many years. South Africa’s free market has invoked thrive competition that resulted in a choice of quality products at significant competitive pricing. Municipalities should utilize their expertise and competitive cost structures to produce reliable and accurate data.
  • Communicate with Customers by providing accurate bills calculated from accurate actual readings.
  • Partner with Private Companies that have a shared interest in the success of the municipality. This requirement might seem as being an obvious one and a criterion that all service providers will meet, whether big or small. The test lies in the size of capital the private partner is willing to invest in the partnership to make their product work and deliver the solution as promised.

• Partner with Private Companies that have a shared interest in the success of the municipality

Closing Remarks

The lack of capital is restricting municipalities to adopt a full-on blanket SMART approach for utility management. There are many local companies with capital, skills, experience, and products who’d be willing to partner and provide immediate solutions with great success. Some of these have a track record doing so for the last three decades. Some of these solutions have been built specifically to support and centrally manage disparate solutions already in place. They effectively allow gradual growth towards a smarter future whilst still enabling the simultaneous use of cheap legacy solutions.

The level of technology utilized in the municipalities varies, with most of them having the vision to adapt the SMART approach eventually. Various municipalities have already embarked on the technology-route with SMART-type meters, some form of automated meter reading and advanced metering infrastructure systems in place and now have a hybrid of conventional and SMART-type meters. Others are planning a pilot with SMART-type setups and plan for a gradual expansion as and when capital becomes available. Then there are municipalities that are still reading on pen and paper. It does not matter where a municipality is on their SMART journey, there are excellent fit-for-purpose products on the South African market that have stood the test of time.

When capital is scarce and the uncertainty hovers COVID-like in the air whether citizens will be able to pay for the utilities consumed, now is the time to follow the basic principles and partner with experience.

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