Gazprom Marketing and Trading has taken a major step towards delivering smart metering by acquiring an equity stake in TruRead. The rationale is to raise Gazprom’s presence in the UK gas market and ultimately expand its UK customer portfolio. At a superficial level, this is a win-win situation for its UK customers; however, there are deeper strategic implications if other firms fail to follow. Gazprom has acquired an unspecified equity stake in TruRead, a leading UK smart metering company that specializes in automated reading services and delivers technology in the gas, power and water markets. Significantly, this move highlights the fact that Gazprom is prepared to take the risks needed to realize its overall corporate strategy, distinguishing it from its fellow utilities firms.

Vitali Vasiliev, Gazprom’s UK marketing and trading chief, underscored the firm’s strategy, stating that: “Smart metering is the technology of the future. This is in line with our goal to be leader of diversified energy services.” This policy is especially pertinent, given the rising public and regulatory concern regarding energy consumption.

Smart metering is widely known for its demand management and energy efficiency advantages, particularly its ability to reduce consumption and, therefore, CO2 emissions. However, one of the key sticking points in rolling out this key innovation has been the important question of the cost of delivering smart metering. UK energy regulator Ofgem has made its position clear, putting the onus on suppliers. Meanwhile, the Energy Retail Association has voiced its members’ concerns over the financial risks involved in such a large-scale project and the need for guarantees given the possibility of failure.

Prudently, Gazprom has set the standard for smart metering activities early, and has used its massive financial resources to establish its reputation, expertise and brand in the metering market. This strategy will also facilitate a number of key cost saving synergies with the gas monopoly’s existing assets, mainly Pennine Natural Gas. At a policy level, it appears that the energy market has delivered in providing suppliers with the incentives needed for this undertaking, albeit at a cautious and limited level.

However, the success or failure of technological innovation has been determined by standards, interoperability and ultimately the diffusion or uptake of services. As yet, there is no firm dominating technology or standards in the smart metering market. Furthermore, in the absence of any real competition for Gazprom, the wholesale development of smart metering in the UK lies in the balance.

Related Research: Smart Metering in the Energy and Utilities Sector