How utilities can prepare for the AMI 2.0 era

Utilities can shape the smart grid future by enabling the technical foundation for Advanced Metering Infrastructure (AMI) 2.0.

In brief

• Engaging customers early in the AMI business case development is crucial for utilities to secure regulatory approval for modernization initiatives.
• Utilities should focus on interoperability and flexibility in AMI systems, seeking compatibility with both existing and emerging technologies.
• Linking AMI investments to broader grid modernization goals is essential, promoting cross-department collaboration to enhance operational efficiency.

As the electric distribution sector evolves, smart meters have become a focal point for utility technology modernization. Early smart meter implementations were largely successful in replacing legacy automated meter reading (AMR) systems, and collecting meter reads over the air. As Advanced Metering Infrastructure (AMI) technology has developed, advancements in meter and IT capabilities have led utilities to pursue more ambitious use cases in their AMI transformation programs. The pursuit of these advancements has introduced new challenges for utilities, most notably from an IT perspective, in standing up the technical foundations needed to enable new AMI technologies. While core AMI functionality continues to be implemented at scale across the US, more advanced AMI use cases have sometimes struggled to live up to their potential of improving operational efficiency and meeting customer expectations.

Evolution of smart meters and AMI technology

The advent of AMI 2.0 technology has enabled a new era for utilities, promising improved operational efficiency, enhanced customer interaction with the grid and modernized power grid applications. However, in some cases across the US, early and recent AMI implementations have fallen short of these ambitious goals. 

The initial foray into smart metering was marked by a focus on transitioning from AMR to remote reads over the air. While this functionality has become commonplace across US utilities, the more ambitious goals of advanced analytics and customer data access have been challenging to fulfill and require a renewed focus to enable the promise of AMI 2.0 technology. The latest EY Future of Energy Survey reveals that the most significant trends anticipated to have a positive impact on the industry are the adoption of new technologies, especially operational technology, coupled with the evolution of the workforce to effectively support these advancements.

Thus, an AMI 2.0 era brings new advanced capabilities for AMI, positioning it as a critical component for broader grid modernization efforts. Electric meters have evolved into sophisticated devices that enable utilities to modernize operations and foster innovation. The rise of distributed energy resources (DERs), distributed intelligence “at the edge,” and increased customer demands for energy information have accelerated the need for utilities to evolve and enable these use cases. As many utilities now seek funding for AMI 2.0, they face growing demands from regulators and ratepayers to justify the substantial costs involved in pursuing these upgrades.

To capitalize on the promises of AMI 2.0 technology and successfully execute on digital transformation, utilities must lay a robust technical foundation to support advanced AMI use cases that will enhance customer satisfaction, increase interoperability among utility business capabilities and improve operational efficiency.

Understanding the past, embracing the future: AMI implementation challenges and goals for AMI 2.0

To succeed in the AMI 2.0 era, utilities must acknowledge insights and lessons learned from previous AMI implementations. Let’s look at where early and recent AMI implementations fell short and how a new approach to AMI 2.0 programs can help address these challenges.

AMI implementation challenges

The first generation of smart meter implementations were largely focused on remote reads, remote disconnect and integration with outage management. While many utilities also implemented customer-focused programs related to online billing presentment and usage alerts, challenges in understanding the true nature of customer desires, pain points, incentives and barriers to adoption limited some AMI customer benefits.

Further, many early and recent adopters of AMI did not anticipate the additional investments in IT infrastructure needed to enable access to data across the enterprise and support AMI use cases. This lack of preparation meant that foundational IT work related to infrastructure, cloud, data warehousing, cybersecurity, network, middleware, development and testing were often underfunded.

Additionally, the exponential increase in data volumes from AMI meters did not have corresponding data governance plans or appropriate changes to data architecture and master data management, which led to stress on core systems and IT infrastructure during and after implementation. Many utility business functions developed their own “shadow IT” data platforms replicating the same AMI data across the enterprise. This often resulted in project schedule delays, IT workarounds and scope reduction.

Lack of performance-based contracts and vendor lock-in further hampered the flexibility and scalability of AMI systems. Contracts with vendors often lacked performance-based incentives and did not account for supply chain issues or limitations in solution capabilities.

Internal readiness was another significant challenge, as many utilities were not adequately prepared for the new business-as-usual (BAU) model required to manage and operate the advanced functionalities of AMI. Insufficient socialization of new BAU roles and responsibilities led to infighting and departmental “kingdom preservation” during implementation, as the necessary systems, personnel and processes were not in place to handle AMI program changes.

Finally, a lack of AMI system interoperability led to restricted integration of utility capabilities, such as distribution automation, distributed intelligence, Distributed Energy Resource Management Systems (DERMS), and Home Area Networks (HANs). Reliance on single vendors for the entire network and hardware footprint further limited business flexibility, and opportunities for shared utility network infrastructure investments were missed. The inability to integrate various systems and technologies across open standards limited the overall effectiveness and benefits of the AMI rollout. 

The promise of AMI 2.0: goals for future AMI implementations

Moving forward, it is imperative that utilities garner lessons learned from past implementation challenges to fully harness the potential of AMI 2.0 technology. Today, the power grid is anything but predictable, with ongoing shifts driven by variability. On the generation side, rooftop solar, wind farms and distributed generation inject power into the grid in ways far less controllable than traditional power plants. On the consumption side, electric vehicles, home batteries and smart appliances are creating wildly diverse load profiles, even between neighbors who appear to have similar lifestyles. Moreover, the embedded intelligence of AMI meters empowers customers with granular insights into their energy usage, enabling them to make informed decisions, manage their consumption, and actively address rising expectations for transparency and control. With the advent of AMI 2.0, the drive for electrification and integration of DERs and other third-party applications into the grid makes addressing these developments even more urgent.

With significant advancements in power grid technology, utilities are well-positioned to leverage AMI 2.0 capabilities, including enhanced grid enablement, real-time data analytics, and customer data access. Seamless integration with other grid technologies like an advanced distribution management system (ADMS), DERMS, and an outage management system (OMS) are paramount to realize the full potential of AMI. The rich waveform data generated by these meters unlocks advanced capabilities like preventive maintenance, load disaggregation and anomaly detection, paving the way for a more resilient and efficient grid.

Before embarking on AMI 2.0 modernization initiatives, utilities should consider aligning themselves around several core goals.

By addressing these challenges in the early stages of modernization initiatives, AMI 2.0 implementations can be better positioned to achieve the goals of the smart grid era.

The path forward: a new implementation paradigm for AMI 2.0

It is clear that in the AMI 2.0 era, a new implementation paradigm is needed to enable the promise of emerging smart grid technologies. Below summarizes the key steps at each stage of the AMI 2.0 implementation journey designed to avoid historic implementation challenges and future-proof utilities for further smart grid innovation.

Planning stage: The AMI business case

The modernization roadmap starts at the business case, where regulators are applying increased scrutiny to AMI 2.0 proposals. The role of utility regulatory commissions is rapidly evolving, with the difficult task of evaluating ambiguous forward-looking grid modernization investments that don’t fit into the traditional cost-benefit models of legacy AMI deployments. To boost the likelihood of regulatory approval for AMI 2.0 business cases, utilities must engage with customers and wide variety of business stakeholders early in the process — through focus groups, pilots, and consultations — to understand their unique desires and pain points. Transparency and detailed planning in regard to the cost/benefit ROI are crucial to gaining regulatory approval. The business case needs to clearly articulate tangible benefits for customers including real-time energy data availability, demand response programs and DER integration.

Utilities must also transition from traditional cost-benefit models to more flexible approaches that accommodate future power grid investments. Performance-based ratemaking and contracting are one way for utilities to align vendor interests with outcomes, promoting synergies and adding rewards or penalties based on the achievement of benefits. Balancing meter capital depreciation with the need for modernization, and communicating opportunities for backward compatibility with existing infrastructure are also essential in gaining regulator buy-in. Benefits should be defined in a way that they can be monetized, or at the very least, quantifiable metrics should be established to assess and prove these benefits.

The final key to business case success is the facilitation of cross-departmental collaboration. Utilities need to clearly link AMI investments with broader grid modernization goals and opportunities for shared investments in network, application and hardware interoperability. Sector leaders should be transparent about the additional investments needed to enable advanced use cases and align ambiguous investments in IT and network infrastructure with specific operational and customer benefits related to AI and data analytics. Most importantly, utilities should have a clear understanding in the business case stage of required investments in the entire IT landscape to achieve the goals of the transformation effort. This includes having a holistic understanding of data and IT infrastructure needs. Utilities can demonstrate this knowledge by conducting cloud FinOps, enterprise architecture, and data strategy assessments before regulatory proceedings to show the required investments needed to enable the AMI 2.0 solution in its entirety.

Planning stage: AMI 2.0 program governance foundations

Once your business case is approved, it’s time to set the foundation for success in your AMI 2.0 implementation. This means establishing the AMI 2.0 program governance plan to implement the new capabilities, processes and skills needed for the new BAU to operate and manage in the smart world. The first step in this process is determining what core Minimum Viable Product (MVP) functionality looks like and building an incremental program plan that avoids "doing too much too fast" and sequences the implementation to address core MVP first. The overall program plan should set the technical foundation for core MVP and advanced use cases before field deployment to ensure implementation success.

Organizational change readiness is another critical aspect of the new transformation paradigm. Preventing organizational churn requires driving a business-led Responsible, Accountable, Consulted, Informed (RACI) definition and obtaining buy-in from key stakeholders before implementation begins. Conducting a comprehensive review of enterprise architecture and business processes can also help determine new system requirements or process changes needed to enable the new BAU.

Finally, the successful implementation of AMI 2.0 requires not only technological investment but also the development of the right talent, collaborative ways of working and a culture that fosters innovation. To fully capitalize on the benefits of AMI 2.0, utilities must proactively identify potential capability gaps within their workforce and implement necessary personnel changes to the workforce in concert with the AMI program plan. 

Planning stage: systems and data foundations plan

Establishing the IT systems and data foundations plan is essential for the successful implementation of AMI 2.0. Before embarking on any field asset replacement plans, the current and target state enterprise, information systems and technology architecture should be established as a single source of truth to identify integration points and data exchange protocols for the entire AMI solution. By mapping each layer of architecture to relevant smart grid open protocols and standards, and documenting data exchange requirements, you can create an enterprise-wide blueprint for interoperability.

In addition to architecture, IT leaders should leverage the cloud FinOps and data strategy assessments from the business case stage, to build out foundational master data management, infrastructure, cloud, cybersecurity, data warehousing, middleware, integrations, development, testing, and system change plans to set the foundation for both core MVP and advanced use cases. A modernized data governance plan should also be put in place to account for increased data volumes and workloads needed for data analytics use cases.

Putting the plan into action: the implementation stage

Once the program, systems and data foundations plans are finalized, the implementation stage begins.

Core functionality – systems preparation:

IT and systems preparation work should be sequenced before the implementation of core MVP and advanced functionality to ensure technical foundations are in place before field asset replacement. This includes standing up the necessary IT infrastructure and cloud foundations, building out middleware, data warehouse and integration platforms, conducting load and performance testing, and establishing data workflows and processing applications.

Implement core functionality:

After laying systems foundations for core MVP, the implementation of core functionalities, such as the head end, meter data management system (MDMS), customer information system (CIS), and billing systems can begin.

Advanced functionality – systems preparation:

In parallel to core MVP implementation, technical resources should commence advanced IT and systems preparation work to optimize the business case funding runway. This includes standing up the necessary IT infrastructure and cloud foundations, building out middleware, data warehouse and integration platforms, conducting load and performance testing, and establishing data workflows and processing applications for advanced functionality. Separating systems preparation work for core MVP and advanced use case efforts can focus finite technical resources during the implementation, and avoid churn associated with regular project challenges.

Implement advanced functionality:

The final step is the implementation of advanced functionality. This involves systems implementation of advanced use cases, such as cloud applications, data analytics platforms, AI/ML solutions and integrations with other systems such as DERMS and ADMS. While important for core MVP, it is imperative that any efforts toward advanced functionality have the necessary IT and data foundations in place to enable AMI technology advancements.

This comprehensive approach from business case ideation to implementation can ensure that utilities are well-prepared to modernize their operations, enhance customer satisfaction, and promote innovation in the evolving US power market. Through careful planning and execution, utilities can build a robust technical foundation, improve interoperability and deliver tangible benefits to customers, ultimately enabling the transition to AMI 2.0.

Charting a course for AMI 2.0 success

Before embarking on AMI 2.0 implementation efforts, utilities should focus on the following key steps:

By learning from past challenges and adopting a novel IT and customer-centric AMI 2.0 implementation paradigm, utilities can successfully implement the next generation of AMI technology. The future of the smart grid depends on it.

A version of this article was originally published by POWER Magazine on March 20, 2025.