Smarting up rural energy…

On Friday 27th July 2012 we blew the ordering capacity of a supplier. If you’re ordering a huge amount of OIL and expecting one small supplier to have the capacity then, of course, that would not be a surprise. But this was not a small supplier. This was one of the three biggest suppliers. The three biggest suppliers are so much bigger than the fourth, fifth, sixth and beyond that this is actually a huge issue. Of course we placed the order elsewhere and, as it turned out, across four different suppliers. This is not unusual given we have split a single order across as many as six in the past, however, what is unusual is that we did not split this order by choice we split it because of a huge flaw in this industry. We are in the middle of summer – finally – which simply acts to magnify this flaw and it outlines, with a deep sense of irony, that this industry doesn’t know the one critical piece of information it really must.

What went wrong?  Firstly, I should add it really did go a very long way wrong. The supplier could not guarantee the delivery until the end of August – that is a remarkable amount of capacity that had disappeared. How is that possible?

  • It was not as if they didn’t know it was coming – this was a regular order that this company knows it will be negotiating for on that specific Friday of the month.
  • It was not as if they are ambivalent about this order – this company normally falls over themselves to win it and have done so several times in the past two years.
  • It was not as if the order was too much for one area – it was across NINE counties!
  • It was not as if the order was too big to handle – it was two thirds the size of the order that we placed last month, which, ironically, they won.
  • It was not as if there were supply, weather, strike or any other issues – we are in the middle of summer, the time when the industry and its trade body, the FPS, have been telling us we must order to alleviate supply issues in the autumn and winter months, the time we have spent money educating our members that they should be buying, and yet it seems, rather ironically, the industry still can’t get itself organised enough to respond to the orders that they are asking us to supply! Interesting.

So given all that, what was the problem?  It was too hot!  OK so what that meant was summer arrived and, apparently, that resulted in them being inundated by orders from farms, in particular, that they had not expected.

And there lies the flaw:  the one critical piece of information that the industry does not know is: what it is doing!  How can it not know what it is doing? Let me explain. Nobody in this industry knows what they are doing, on either side of the fence – supplier or buyer. How can it – nobody knows when they are going to order? Therefore, without knowing when the orders will come in the industry cannot possibly know what it is doing. They cannot plan for any of their users – home heating OIL, farmer or corporate account – because the user doesn’t know when they are going to order. What more evidence is required than one of the behemoths of the industry being unable to fulfil an order that was planned and meticulously organised, because it had taken so many orders from users that are not planned or organised? Do I need to point out the irony one more time – the industry asked us to get organsied, we did, it let us down! It now must be obvious to the industry that it really shouldn’t be looking to solve supply issues by telling users when to order – that clearly is a non-starter – it should be thinking about what it doesn’t know: when people are going to order!

The solution: solutions have been sought – gauges, monitors, auto-topup schemes and on and on – but everyone of those is also flawed. There is only one solution: SMART METERS. The Department for Energy and Climate Change (DECC) has completely grasped the enormous benefits of putting smart meters in every home for the use of electricity and gas with a huge roll out to come, but they have only recently understood that it is even more critical for those of us that use rural energy. That was as a result of that meeting with Mr Cameron – who could see it in an instant – and passed us via Greg Barker to Charles Hendry. By the time we meet with Mr Hendry in a few weeks we will have installed, connected and begun to manage the natural evolution that will create a rural revolution.

The UK’s very first Rural Energy Smart Grid:  one thousand homes, farms and businesses will represent the UK’s very first Rural Energy Smart Grid and every owner of one of the tanks that has been connected up to the grid will know the following:

  • what level of fuel they have in that tank at all times – via the web
  • when they should be buying – because these users will be “informed” with live information of the level and the live price we have negotiated
  • when they should not be buying – ironically the orders that have come in from the farms that have proved the need for the smart grid would not have been placed this week, they would have been placed as part of the perfect storm order four weeks ago – see previous entries below – that would have saved all those farmers a huge amount of money!
  • and among a plethora of other information the smart grid will produce, the tank owners know they will never run out again!

Both the complexities and the overall advantages for every stakeholder in the industry are too numerous to cover here, but for the supply industry itself – the FPS and its members – the supply issues that they seek to alleviate, by adopting flawed solutions like advising people when to buy, will no longer be necessary. The Rural Energy Smart Grid will create a high-tech solution to these issues and, of greatest importance, the supply industry will finally know when people are going to order, therefore, the supply industry will finally know what it is doing!

Addendum: want to be part of The UK’s very first Rural Energy Smart Grid? It appears lots of people do, but we’d love to involve more and it would be great to hear from you: tell us how or why you or your organisation want to be part of this revolution at thinking@community-buying.com