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SEC Strategic Plan

Version 4.0

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Change History

VERSION STATUS ISSUE DATE AUTHOR COMMENTS

0.1 Draft 05/09/2019 SECAS Initial Draft Release for SEC Panel review
Amended following comments received from
0.2 Draft 13/09/2019 SECAS
BEIS and the SEC Panel
1.0 Final 24/09/2019 SECAS Final Document for Publication
Amended to incorporate projects identified in
1.1 Draft 12/06/2020 SECAS SEC Panel Budget 2020-23, and latest
industry developments
1.2 Draft 06/07/2020 SECAS Amended following SEC Panel review
Updated as part of quarterly Strategic Plan
1.3 Draft 09/10/2020 SECAS
review
Updated to reflect a focus on longer term
1.4 Draft 06/06/2022 SECAS
strategic issues
1.5 Draft 08/07/2022 SECAS Minor amends to update status of events
2.0 Final 15/07/2022 SECAS Final Document for Publication
2.1 Draft 06/02/2023 SECAS Updated as part of quarterly review
2.2 Draft 10/02/2023 SECAS Updated following SWG review
3.0 Final 28/02/2023 SECAS Approved by SEC Panel
3.1 Draft 25/09/2023 SECAS Updated as part of six-monthly review
Updated following feedback from SWG and
3.2 Draft 29/01/2024 SECAS
to align with SEC Panel Budget 2024-27
3.3 Draft 20/02/2924 SECAS Updated following feedback from SWG

4.0 Final 28/02/2024 SECAS Approved by SEC Panel

Document Controls

REVIEWER ROLE DATE

SEC Panel Document Approver 19 June 2020

SEC Panel Document Approver 16 October 2020

Strategic Working Group (SWG) Document Reviewer 6 June 2022

SEC Panel Document Approver 15 July 2022

Strategic Working Group (SWG) Document Reviewer 6 February 2023

SEC Panel Document Approver 28 February 2023

Strategic Working Group (SWG) Document Reviewer 2 October 2023

Strategic Working Group (SWG) Document Reviewer 5 February 2024

SEC Panel Document Approver 27 February 2024

Date of next review: August 2024

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Contents
Purpose and Scope ......................................................................................................................... 5
1. Approach .................................................................................................................................. 6
2. Roadmap .................................................................................................................................. 7
3. Strategic response: Engage .................................................................................................... 8
3.1. Regulatory Changes ................................................................................................................ 8
3.1.1. DCC Licence Extension ...................................................................................................... 8
3.1.2. DCC Procurement (DCC 2.0)............................................................................................... 8
3.1.3. Ofgem Price Control – DCC Ex Ante .................................................................................. 8
3.1.4 Code Reform ....................................................................................................................... 9
4. Strategic response: Manage.................................................................................................. 10
4.1 CPA Future Scheme............................................................................................................... 10
4.2 CSP North............................................................................................................................... 10
4.3 Market Wide Half Hourly Settlement ..................................................................................... 11
4.4 DCC Programmes .................................................................................................................. 12
4.4.1 Comms Hubs and Networks ............................................................................................. 12
4.4.2 Data Service Provider ....................................................................................................... 12
4.4.3 Future Service Management ............................................................................................. 13
4.4.4 Enduring Key Infrastructure ............................................................................................. 13
4.4.5 Test Automation................................................................................................................ 13
4.4.6 Enduring Change of Supplier ........................................................................................... 13
4.5 Asset Life ............................................................................................................................... 14
4.6 Performance Assurance ........................................................................................................ 14
4.7 Quantum Computing ............................................................................................................. 14
4.8 Data Protection and Digital Information Bill ......................................................................... 15
4.9 Artificial Intelligence .............................................................................................................. 16
4.10 Charging Methodology ..................................................................................................... 16
5. Strategic response: Monitor...................................................................................................... 17
5.1 Net Zero Initiatives ................................................................................................................. 17
5.1.1 Net Zero: Demand Side Response ................................................................................... 17
5.1.2 Net Zero: Dynamic Time of Use ........................................................................................ 18
5.1.3 Net Zero: Gas Decarbonisation ........................................................................................ 18
5.1.4 Net Zero: Heat Electrification ........................................................................................... 19
5.1.5 Alt Han (Alternative Home Area Network) ........................................................................ 19
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5.1.6 Future System Operator ................................................................................................... 19
5.2 DCC Services ......................................................................................................................... 20
5.2.1 Elective Communication Services ................................................................................... 20
5.2.2 Value Added Services ....................................................................................................... 20
5.3 Policy Changes ...................................................................................................................... 20
5.3.1 End of Transitional Governance....................................................................................... 20
5.3.2 Data Sharing Developments ............................................................................................. 21
5.3.3 No WAN Coverage ............................................................................................................ 22
5.4 Trends .................................................................................................................................... 23
6. Strategic response: Do Nothing ............................................................................................ 23

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Purpose and Scope

The purpose of this Strategic Plan is to:

1. provide a Roadmap of material events that are likely to impact the SEC and provision of
services under the SEC; and
2. outline the SEC Panel’s approach in preparing for such events.

The scope of this Strategic Plan is to include material strategic events over a rolling ten-year period.
The Strategic Plan supports the Mission statement for the SEC and achievement of the General SEC
Objectives:
SEC Mission Statement

“To ensure that the Smart Energy Code, and how it is fulfilled, remains relevant and fit for
purpose in an evolving GB energy market”

General SEC Objectives1

• The first General SEC Objective is to facilitate the efficient provision, installation, and operation,
as well as interoperability, of Smart Metering Systems at Energy Consumers’ premises within
Great Britain;
• The second General SEC Objective is to enable the DCC to comply at all times with the General
Objectives of the DCC (as defined in the DCC Licence), and to efficiently discharge the other
obligations imposed upon it by the DCC Licence;
• The third General SEC Objective is to facilitate Energy Consumers’ management of their use
of electricity and gas through the provision to them of appropriate information by means of
Smart Metering Systems;
• The fourth General SEC Objective is to facilitate effective competition between persons
engaged in, or in Commercial Activities connected with, the Supply of Energy;
• The fifth General SEC Objective is to facilitate such innovation in the design and operation of
Energy Networks (as defined in the DCC Licence) as will best contribute to the delivery of a
secure and sustainable Supply of Energy;
• The sixth General SEC Objective is to ensure the protection of Data and the security of Data
and Systems in the operation of this Code;
• The seventh General SEC Objective is to facilitate the efficient and transparent administration
and implementation of this Code;
• The eighth General SEC Objective is to facilitate the establishment and operation of the Alt
HAN Arrangements.

1
SEC version 67 section C1
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1. Approach

The starting point in identification of relevant, material events was the original Strategic Plan, and a
more recent list of Strategic Events identified by the Strategic Working Group (SWG). This is refreshed
every six months.

The appropriate strategic position or response to these events, has been considered in a manner
analogous to risk response (usually avoid / mitigate / transfer / accept). This has been adapted slightly
so that the mitigation is more nuanced and informative, as follows:

• Engage – active, undertaking direct action to influence and/or respond to the event;

• Manage – active, managing near-term event through existing governance;

• Monitor – passive, periodic monitoring of the event / risk, to flag any increase in score for
potential impact or change in expected proximity;

• Do Nothing – take no action in relation to this event.

The Strategic Plan is reviewed and updated bi-annually by the SWG and approved by the SEC Panel,
who use it as an input to the SEC Panel’s budgeting and planning process for the following financial
year. Such reviews will consider:

• Roll-forward of the ten-year time horizon by one year

• Continued relevance of events mapped to the current baselined version of the Strategic Plan
• Updates to events’ treatment, including such factors as impact, timing and response (if any)
• Consideration of new events that need to be added to the Strategic Plan

The SWG and the SEC Panel Sub-Committees will recommend strategic priorities to the Panel. The
Panel will consider the most appropriate SEC Panel Sub-Committee to lead on the approach for
responding to the event, with that Sub-Committee seeking approval from the SEC Panel where
decisions are required. Alternatively, the SEC Panel may retain ownership for the event.

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2. Roadmap

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3. Strategic response: Engage

The Panel has identified the need to engage proactively on the following significant events, affecting
the smart metering industry and SEC Parties, over the next ten years. These largely relate to policy
areas led by Ofgem and the Department for Energy Security and Net Zero (DESNZ).

3.1. Regulatory Changes

3.1.1. DCC Licence Extension

Timeframe: 2025-2028

The DCC Licence will expire in September 2025. Ofgem is currently undertaking a full review
of the DCC Licence ahead of this being reprocured, and its decision on the first, scoping phase
was published on 25 August 2023. Ofgem has acknowledged that an extension to the current
Licence term of between 12-36 months will be needed to allow it to complete its review before
undertaking a full competitive re-procurement for the new Licence. This would move the expiry
date to between September 2026 and September 2028. Ofgem’s decision on the length of the
extension will be made in Summer 2024.

3.1.2. DCC Procurement (DCC 2.0)

Timeframe: 2024- 2029

Ofgem is expected to commence a Tender for the DCC Licensee. Ofgem held a stakeholder
workshop in November 2023, which SECAS attended. The key issues that were discussed
centred on DCC’s governance, the scope of its mandatory business and its budgets and cost
scrutiny, for example, the make-up of new DCC Board and how better oversight and scrutiny
of DCC costs can be provided whilst balancing commercial sensitivities.

Ofgem is expected to consult further on issues of governance and regulatory changes during
the first quarter of 2024, and Ofgem has indicated a preference to move some elements of DCC
costs to an Ex-Ante regime from April 2025. DCC has commenced work to prepare for this.

Following consultation, confirmation of governance and regulatory changes, and approach to

cost management, is expected to be confirmed by end of 2024.

3.1.3. Ofgem Price Control – DCC Ex Ante

Timeframe: 2025

In its decision document in August 2023, Ofgem confirmed a move to an Ex- Ante Price Control
regime is planned from April 2025. Further details are expected to be consulted upon during
2024. DCC is commencing work to prepare for the changes and has committed to keep SEC
Panel updated on its work.

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3.1.4 Code Reform
Timeframe: 2023 - TBC

The SEC and DCC Central Systems are within scope of Ofgem’s Code Reform, which is
currently under consultation. Such reform will see Ofgem assume the role of Strategic Oversight
Body, responsible for setting the strategic direction of Codes. Panels will be disbanded, with
Code Managers appointed to perform the roles presently performed by Code Administrators
and Panels. Stakeholder Advisory Groups will need to be established to ensure Industry
engagement.

The Panel has identified the need to ensure that Ofgem is fully appraised of the full suite of
services provided under the SEC, to ensure that its complexities are catered for in any new
model. SECAS has provided initial information on this, and highlighted other key dates which
could impact SEC Code Reform timescales (e.g. DCC Licence Review, Network Evolution,
DESNZ Transitional Governance handover).

Ofgem issued an open letter in December 2022, inviting further feedback on its proposals, to
which the SEC Panel responded, noting a preference not to merge the REC with the SEC.
SECAS and the Panel Chair have since attended a series of stakeholder workshops held by
Ofgem and DESNZ in May and June 2023, gathering input on: the process for selecting Code
Managers; budgets, charging and incentives; and the Code change process. The next round of
consultations on Code Consolidation and on Code Manager selection are expected in Winter
2023/24.

Ofgem’s latest view on timescales is that it is unlikely the first Code Managers will be appointed
in 2024. At this point the proposed timeframe for any changes to be made to SEC arrangements
is unknown.

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4. Strategic response: Manage
The events described in this section are those with short-term impacts and/or those that are already
being dealt with via the SEC Panel or its Sub-Committees. The strategic approach is to therefore
manage the events via the existing governance mechanisms.

4.1 CPA Future Scheme

Timeframe: 2024

The plan is to make significant improvements to the existing Commercial Product Assurance
(CPA) Scheme in 2024.

DESNZ selected the CPA Scheme for the security assurance of smart metering Devices in
2012. The National Cyber-Security Centre (NCSC) is the CPA Scheme Owner, but in 2020
decided to close the CPA scheme for all types of technology and move towards a new Principle
Based Assurance (PBA) Scheme. NCSC agreed to maintain the CPA Scheme for smart
metering Devices pending transition to a Future Scheme. Various industry working groups,
sponsored by the SEC Security Sub-Committee (SSC), made it clear that there was no smart
metering industry appetite to depart from the principles of the CPA Scheme and compliance
with agreed CPA Security Characteristics. However, there was strong dissatisfaction with the
management and administration of the CPA Scheme by NCSC.

In accordance with SEC obligation G7.20(d), the SSC alerted the NCSC in April 2021 the need
for improvements to the governance, management and administration of the CPA Scheme to
ensure that it remained fit for purpose. This was supported by an SSC survey of Suppliers,
Manufacturers and MAPs to establish an evidence base for the areas that needed
improvement. Over the past two years, discussions to agree a Future CPA Scheme have taken
place between DESNZ and NCSC with the involvement of the SSC Chair on behalf of the SSC.

It has been agreed that DESNZ will continue to be the CPA Scheme Sponsor and will publish
a SEC consultation in early 2024 that proposes the SSC will become the CPA Scheme Owner,
with existing ownership transitioning from NCSC starting in 2024. Subject to consultation, it is
proposed that the SSC will initiate the procurement of a CPA Scheme Operator under a SECCo
Ltd contract with a technically expert Assessment Team to oversee the day-to-day
administration and management of the CPA Scheme for Devices being evaluated and to review
recommendations from Test Labs and award CPA Certificates as appropriate. The transition
should start once the Scheme Operator has been appointed and should conclude in early 2025.

4.2 CSP North

Timeframe: 2029 - 2033

Arqiva provides the communications network and communications hubs for Communication
Service Provider North (CSPN) region, using a dedicated radio network operating at 420MHz,
with EDMI hardware for direct connection to the radio network.

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 The UK’s Mobile Network Operators have confirmed that they will not be offering or providing
2G or 3G Networks beyond 2033 (and potentially as early as 2029, subject to contract extension
negotiations), which means the SMETS1 devices currently operating on 2G/3G mobile
networks in the CSPN region will require replacement with SMETS2 devices.

This will constrain the network and its ability to cope with SMETS2 meter traffic if all the
SMETS1 meters are replaced. To mitigate this, it was agreed at SWG_15_0210 that this issue
should be picked up at the Communications Transition Group (CTG), as one of the CTG’s
purposes is to facilitate the execution of the transition to next generation smart metering
communications, so as to maintain continuity and minimise the impact of smart services to
consumers.

A parallel activity is underway through an initiative formed as part of a triparty working group
between the DCC, Arqiva and DESNZ. This initiative seeks to model the performance of the
CSPN Radio Network solution at scale, and the DCC has developed an optimisation and
scaling plan for the CSPN network with the aim of ensuring that the network scales efficiently
and effectively, thus providing confidence for its future use.

The CSPN Scaling and Optimisation project is planned for completion in 2025, and progress is
being monitored via the SEC Panel’s Operations Group (OPSG) as the DCC seek to identify
and address the gaps between the original contracted design, and the current and known future
requirements which have evolved materially over time.

4.3 Market Wide Half Hourly Settlement

Timeframe: Full transition is expected to be complete by October 2025

Market Wide Half Hourly Settlement (MHHS) is seen as a crucial milestone towards achieving
the legislated UK Net-Zero targets by 2045. By introducing elective half-hourly settlement in the
small business and domestic market, MHHS aims to derive benefits from load shifting, supply
forecasting certainty, and reduction of network reinforcement costs, through access to smart
metering data. This is an Ofgem-led project with Elexon in the lead role.

The decision to implement the MHHS Target Operating Model (TOM) has the following main
impacts from a SEC perspective:

• it will necessitate a new User Role to allow third-party agents to retrieve half-hourly data
from smart meters, with the associated User Entry and Security arrangements needing to
be defined;
• there is the potential to reduce the available capacity of DCC Systems, because of a daily
transfer of profile data. This may affect performance of Core Communication Services; and
• the implementation of the HH Settlement infrastructure misaligns with the DSP recontract
timescales, potentially driving up costs.

The SEC changes for the new User Role have gone through the SEC Modification process
under SEC Modification MP162 ‘SEC changes required to deliver MHHS’ which is approved to
go live in the June 2024 Release. In December 2023, the DCC raised MP256 "SEC alignment
with DCC SMETS1 MHHS capacity requirements" which is a housekeeping change to
recognise that the DCC is planning to utilise data caching capability of their SMETS1 Service
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 Providers (a technical feature which is already in existence), to support the DCC MHHS
solution. This change is due to go for approval in January 2024 and will then be implemented
alongside MP162. SECAS and the DCC continue to engage with the MHHS Programme on the
delivery of MHHS to ensure co-ordination.

4.4 DCC Programmes

Timescale: 2020 - 2026

4.4.1 Comms Hubs and Networks

This DCC workstream was established to mitigate the impact of the 2G/3G sunsetting risk to
Smart Meter communications by introducing a new, 4G Communications Hub. 2G is due to be
switched off by end of 2033, while 3G will start to be switched off from 2025. The
Communications Transition Group (CTG) has been established to oversee this area. The
SVTAD for the CH&N aspects of Network Evolution introduced changes to expand the Testing
Advisory Group’s (TAG) remit to prevent DCC from exiting both PIT and SIT if the testing
undertaken is not considered to be sufficient. The Testing Approach Document (TAD) has been
approved, the Test Coverage Document (TCD) has been baselined, and DCC Pre-Integration
Testing (PIT) is close to conclusion. The final PIT Exit Report is expected to be presented to
the TAG in January 2024.

Systems Integration Testing (SIT) is scheduled to commence in January 2024 and complete in
June 2024 and User Integration Testing (UIT) to follow in August 2024 and conclude in October
2024. 4G Comms Hubs are forecast to be in the Supply chain from June 2025.

4.4.2 Data Service Provider

The current DSP contract expires in October 2024 with an option to extend for 12 months. This
Programme has been established to identify, procure, develop and deliver the future DSP
arrangements. The Total System Systems Integrator (TSSI) contract has also been included
within the scope of this programme. The DSP SI contract is due to expire in October 2024.
Given the anticipated growth of the DCC ecosystem over the next 15 years, an enhanced SI
service for the new DSP and end-to end system integration is required. It will manage
operational responsibilities, such as market entry testing, as well as delivering change
programmes and integrating new functionality. The objective of this programme is to engage
with the market to find a service provider who can deliver these SI services.

The DCC has produced an Outline Business Case for DESNZ. The preferred option from DCC
was to move the DSP Data Systems into the cloud. In December 2023, the Department wrote
to DCC saying they had not identified issues with the OBC that would constitute grounds for
withholding a future non-objection, subject to certain conditions being met and the Full Business
Case which is due in September 2024.

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4.4.3 Future Service Management
The DCC Continuation of DSMS will be undertaken by the Future Service Management (FSM)
Programme. The proposed scope of the programme will be to deliver a replacement for the
existing DCC Service Management System, relevant changes to the business processes within
DCC that will improve the customer service experience and consideration of a new enduring
Order Management System for Comms Hubs.

User endorsement of Programme Business Needs was received in December 2023 and the
Programme Strategic Outline Case was shared at December SEC Panel and submitted to
DESNZ on 22 December 2023 for a non-objection decision. The Outline Business Case is due
for submission to DESNZ in March 2024 and the RFP is due to be issued in April 2024.

4.4.4 Enduring Key Infrastructure

The DCC recently completed work on the extension of the current contracts supporting the
Smart Meter Key Infrastructure (SMKI) platform. The Outline Business Case (OBC) was
submitted in November 2023. The Request for Proposal is expected to be issued in January
2024.

4.4.5 Test Automation

The objective of this programme is to deliver automated testing of the SEC releases enabling
them to be completed at lower cost and more quickly. The SEC Panel’s TAG has reviewed the
proposed improvements to testing and has provided feedback to DESNZ via the Panel. The
SSC has reviewed the Test Automation Framework (TAF) proposals, The SSC Chair has
confirmed that there is a route to delivering the outstanding security actions via the security
assurance plans, the latest optimistic update is that final security assurance reports will be
delivered in February 2024.

The Design Build and Test (DBT) phase of the programme has been replanned with expected
delivery in March 2024, and go-live in April 2024.

4.4.6 Enduring Change of Supplier

Timeframe: May 2024

The Enduring Change of Supplier (ECOS) programme objective is to improve DCC network
security by replacing the current Transitional Change of Supplier (TCOS) systems and process,
with new, enduring systems and processes, provided by a new service provider. The
programme will deliver the new ECOS arrangements and decommission TCOS. The
programme went live in June 2023, delivering the migration capability, but not the new ECoS
Certificates for the manufacturing pack (to be used in the manufacture of new devices). The
delivery of the manufacturing pack will be part of a new DCC programme in 2024. The
governance of the readiness approach towards the delivery and execution of the manufacturing
pack will be undertaken by the SEC Panel and relevant Sub Committees. The manufacturing
pack is expected to be delivered in Q4 2024.

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 The DCC has delivered a plan for the Private Key Transfer of the TCoS private key to the ECoS
Hardware Security Module (HSM). This will result in energy suppliers still being able to initiate
a successful Change of Supply process once the TCoS service has been switched off for
devices that have been unable to have their TCoS certificates changed to ECoS. TCoS to ECoS
migration is expected to complete in April 2024.

The SEC Panel has a requirement to review and provide DESNZ with an assessment of the
DCC’s engagement with SEC Parties throughout the ECoS migration process and will monitor
migration of Devices via the SEC Operations Group and will provide a recommendation on
readiness to switch-off the TCoS service to DESNZ.

4.5 Asset Life

Timeframe: 2024

A project has been initiated by the CTG to review the different approaches and costs associated
with supplier replacement of SMETS1 and SMETS2 assets, which will be required as a result
of 2G and 3G decommissioning and transition to 4G. The project will model different
approaches that maximise the life of already installed assets, thereby reducing premature
replacement charges. The project will also provide an industry level view of forecast costs.

4.6 Performance Assurance

Timeframe: 2024

The SEC Panel has identified the need for a Performance Assurance Framework (PAF) to be
established which would give confidence to all SEC Parties that the obligations set out in the
SEC are being fulfilled; that Parties are not being disadvantaged by the failure of any SEC Party
to meet its obligations, and that performance risks and issues are dealt with in a standardised
manner. There also needs to be consideration of whether mechanisms are required in the SEC
to provide assurance that the DCC is complying with its obligations.

A project was completed to lay the groundwork for such a PAF which includes the design,
development, and introduction of a PAF, and the preparation of any supporting modification
proposal required. This activity is now being progressed through the modifications framework
via MP224 ‘SEC Performance Assurance Framework’. This modification is targeted for
implementation in an ad hoc Release in July 2024. Following acceptance of the modification, a
further piece of work would be commissioned by the Panel to introduce a Performance
Assurance Board (PAB) to oversee the PAF and to develop and implement the supporting PAF
methodology.

4.7 Quantum Computing

Timeframe: 2030

Technological advances in quantum computing pose a long-term threat to the security of the
public key cryptography which requires all organisations that rely on existing public key
algorithms, including smart metering, to review the impact for the security of business
transactions. The likely impact for the SEC would be: updates being required to the security
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 requirements; SMKI specifications; security architecture; SMETS / GBCS; and operational
implications to support migration to new crypto standards for SMKI and DCC Key Infrastructure
(DCCKI). Additionally, the redesign of metering equipment may be required.

A Quantum Computing project with Queen’s University Belfast (QUB) kicked off in April 2023
and is due to complete this quarter. The current work is considering quantum resistant
algorithms recommended by NCSC as having potential for use in smart metering and provide
an indication of their performance and specification requirements.

Once quantum resistant algorithms and standards are developed, proposed and agreed, these
will need to be embedded into existing specifications for SMETS, CHTS, SAPC and GBCS
which will involve SEC consultations. While the quantum threat is currently estimated by NIST
and NCSC to materialise from 2030 onwards, due to industry timelines for design, build and
test of Devices with new cryptographic capabilities prior to CPA certification and production,
work needs to continue in the next three years.

The DCC Certificate Management Strategy, as reviewed by SMKI PMA and SSC, has taken
account of the likely changes arising from Quantum Computing and these are reflected in the
future proposals including the Manufacturer Pack.

4.8 Data Protection and Digital Information Bill

Timeframe: 2022 – May 2024

The new Data Protection and Digital Information Bill is now being discussed at the House of
Lords and is currently on track to achieve Royal Assent by the end of May 2024, unless an
early election is called (which may postpone or terminate the bill). The Bill aims to replace the
UK GDPR and Data Protection Act 2018. Its changes will include:

▪ changing obligations in relation to data protection officers, records of processing

activities and data protection impact assessments, which will require a review of SEC
I governance requirements and updates to SECCo & Panel policies
▪ specifying certain legitimate business interests and research purposes that can be
more easily relied on to process data, which is likely to require an investigation into
potential industry usage of smart meter data for innovation hubs, such as under the
Smart Meter Energy Data Repository
▪ changes to the controls needed for automated decision-making (involving the use of
AI), which should factor into the Panel’s planned consideration of suitable controls
around the usage of AI and consumer profiling in a smart metering context

More widely, the Bill will impact on data protection arrangements with the DCC, and SECCo’s
sub-contractors, which will need to be reviewed, and any changes identified and
implemented, to ensure compliance.

Given the growing number of developments in this space, SEC Panel has identified a need to
establish a Privacy Sub-Committee, through which all such matters will be discussed. This
group is expected to be stood up in early 2024.
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4.9 Artificial Intelligence
Timeframe: ongoing

Artificial Intelligence (AI) presents both opportunities and risks for the SEC. SEC Panel has
identified the need the consider the implications of AI and whether the SEC has the right
controls in place. Impacted areas could include the SEC Obligations, Agreed Interpretations,
Security and Privacy Control Frameworks. It is proposed that a risk assessment be carried
out of existing and potential uses of AI on consumption and smart metering data and that the
applicability of AI governance models be researched. Meanwhile the SSC has highlighted a
requirement for the DSP re-procurement to include the option to use Machine Learning/AI to
inform Anomaly Detection Thresholds as assistance to Users.

4.10 Other Users

Timeframe: 2023-2025

In light of increased Other User numbers and usage of the DCC system, a Modification
(DP218) has been raised to review the DCC’s Charging methodology and determine whether
any changes should be taken forward to ensure a fair charging methodology.

Smart Energy Code (SEC) Section K ‘Charging Methodology’ sets out how the DCC charges
SEC Parties, including how the types of Fixed Charges are apportioned between DCC Users,
and how communications services (the sending of Service Requests) are charged.

Work is currently being undertaken by the DCC to better understand and plan for demand
forecasts. In addition, as part of a horizon scanning activity to identify impacts on the SEC
over the next ten years, SECAS has issued a User Needs survey in order to better
understand the type of user and their intended use of the system moving forward.

A change in system use may necessitate a review of governance, to reflect such changes.

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5. Strategic response: Monitor
The Panel has identified the need to Monitor the following significant events affecting the smart metering
industry and SEC Parties over the next ten years. Once Policy direction and other factors become
clearer, the SEC Panel will firm up and adjust its approach to managing these.

5.1 Net Zero Initiatives

5.1.1 Net Zero: Demand Side Response

Timeframe: 2024 (Government Consultation), implementation TBC

An increasing number of financial incentives are being provided to customers to turn down non-
essential processes during times of peak-demand, thus allowing the grid to remain balanced
without the need for additional generation. Many of these processes that can be turned down
involve devices which have the potential to be connected to the smart metering infrastructure,
such as electric heating, heat pumps and other non-essential equipment. Therefore, there
needs to be consideration of whether the current Smart Metering arrangements, in particular,
load control functionality, meet the current and future needs of SEC Parties wanting to provide
Demand Side Response (DSR) services.

From a regulatory policy standpoint for DSR, DESNZ consulted the energy industry via its
Smart and Secure Electricity System consultation in summer 2022. The consultation introduced
the options for regulating organisations who will be involved in the control of load, as well as
the timeline for further regulation of smart energy appliances. The outcomes of the consultation
in relation to DSR policy development stated the following:

1. the government confirmed its plans to develop a new licensing framework for organisations
carrying out DSR, focussed on domestic and small non-domestic consumers;
2. there would be particular focus in any future licence on the relationship between domestic
and small non-domestic consumers and demand-side response service providers
(DSRSPs);
3. the government also committed to develop the licencing framework on the design principles
set out in the consultation, with additional suggestions from stakeholders being kept under
review.

However, other areas were highlighted as needing further consultation, these were:

a) how the industry can define small non-domestic consumers and load control actions to
include in the licensing scope;
b) how to define a proportionate approach for licensing conditions depending on the extent of
risks posed to consumers and the grid;
c) any additional protection requirements for consumers and their data privacy; and
d) cyber security provisions for any load controllers that are below the threshold (300MW) of
the Network and Information Systems (NIS) requirements.

The SEC Panel will consider the findings of the consultation to understand the impact of the
proposal and security challenges on the SEC and highlight the impact for any SEC Parties
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 involved in the long-term management of the electricity grid. There are likely to be additional
cross-Code implications (e.g. for BSC and DCUSA).

The strategic response could potentially merge with Dynamic Time of Use (DTOU) policy
development (described in Section 5.12 below). SMETS has the capability for Dynamic Time
of Use DSR, but how and when it is used is potentially dependent on Parties developing
products that will use the functionality. The strategy is to monitor product development, and if
changes need to be made to SMETS and the SEC, these can be managed via the SEC Sub-
Committees as Issues or a potential SEC Modification.

5.1.2 Net Zero: Dynamic Time of Use

Timeframe: 2023 (post implementation of MHHS)

A Dynamic Time-of-Use (DTOU) tariff offers a different price per unit of energy depending on
the time of day. The times and rates can change daily, and the rates that apply being dependent
on trends.

The current penetration of DTOU tariffs is low, but this will change as the energy framework
incorporates further learnings. The impact of such a change could require DCC system changes
to facilitate the configuration of DTOU tariffs, or changes to legislation to ensure DTOU tariffs
are offered as products to the energy consumer.

The SEC Panel will be triggered to act when the UK energy system evolves to support the use
of DTOU tariffs, and when the enabling technologies are integrated into the DCC and business
models. At this point the SEC Panel may investigate how DTOU tariffs can be proliferated using
the Smart Metering Infrastructure.

5.1.3 Net Zero: Gas Decarbonisation

Timeframe: 2026 (Government decision), implementation TBC

The government's intention is for low carbon alternatives to replace natural gas as part of its
strategy to decarbonise heat in buildings. Subject to further evidence on costs, benefits, safety,
feasibility, air quality impacts and consumer impacts, this could include using hydrogen as an
alternative.

DESNZ has several projects underway in this area including Hy4Heat, HyDeploy and H21. The
SEC Panel will be monitoring the outcomes of these projects in order to identify if a SEC Project
is required to look at the metrology used in gas meters, their suitability for measuring the gas
mix, and any related Code and business process changes required (e.g. the amendment of
Calorific Values and Conversion Factors).

SECAS will also work with other Codes to identify any cross-Code impacts. As the conversation
around hydrogen develops, this area may move up into the ‘Manage’ category.

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5.1.4 Net Zero: Heat Electrification

Timeframe: TBC

With the ongoing success of renewable electricity generation, the Government is aiming to
increase considerably the use of electric heating methods, such as heat pumps. This is subject
to political considerations and decisions being taken around the cost impact of this transition
and the distribution of where costs fall. The extent of the rollout will be affected by the level of
support for hydrogen as an alternative.

The electrification of heat should have little impact on the SEC. The appliances installed should
fit into the existing SEC framework, and there will be no change if all that is needed is
measurement of electricity consumption. If Smart Metering interaction with heat pumps goes
beyond increased energy consumption, this could have SEC impacts. It should also be noted
that there may be an impact on the capacity of the Smart Metering System, if heat pumps trigger
at a similar time of day, to, for example, overnight meter readings.

5.1.5 Alt Han (Alternative Home Area Network)

Timeframe: 2024

Large volume installations of Alt Han Solutions are due to take place in 2024, following a Safe
Launch. The roll out will be monitored, and Panel will act should Alt Han Solutions not deliver
HAN Connectivity as expected, or a Security or Operational deficiency is found.

Safe launch of Alt HAN concluded successfully in Summer 2023, with the Alt HAN Forum
confirming that mass rollout should commence.

The Alt HAN mass rollout has commenced and is ramping up. To date c.1,300 premises have
had Alt HAN installed. SECAS, Alt HAN and DCC have agreed to add Alt HAN monitoring to
the Business Process Indicator reports provided to OPSG, to monitor the performance of the
Alt HAN solution. An initial set of reports were provided to OPSG in November 2023, and will
be developed further as the Alt HAN volumes increase through the rollout.

5.1.6 Wholesale Market Design

Timeframe: Future System Operator is expected to become operational in 2024

Ofgem and DESNZ are creating a new, independent Future System Operator (FSO). Once
operational the FSO will in future be known as National Energy System Operator (NESO) and
is expected to be launched in the Summer 2024. The NESO will be responsible for planning
electricity and gas networks and operating the electricity system in G.B. as an impartial, expert
body designed to manage the transition to Net Zero and ensuring energy security.

The role of the NESO is being consulted upon and necessary licence and regulatory changes
are being progressed. It is expected that the activities will include existing roles and
responsibilities of National Grid Electricity System Operator (NGESO), in addition to several
new roles and responsibilities across electricity and gas, which include taking a whole energy
system approach when operating, planning, and developing the network.
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 Ofgem is currently engaging with the affected Energy Codes and industry stakeholders on the
required Code changes via a dedicated Cross-Code Workgroup (CCWG). SECAS has
engaged with Ofgem on this programme both bilaterally and via the CACoP Forum. Neither
SECAS nor Ofgem sees any impact on the SEC arrangements, or any changes required to
SEC documentation arising from this programme of work. SECAS will continue to keep a
watching brief on this as the full suite of Code changes is developed.

5.2 DCC Services

5.2.1 Elective Communication Services

Timeframe: TBC

The DCC may provide Elective Communication Services (ECS) in line with the DCC Licence
and SEC. ECS allows the DCC to enter into bilateral agreements with Users for the provision
of bespoke Communication Services relating to the supply of energy using the Smart Metering
Wide Area Network (WAN).

To date, there has been little uptake of ECS. SECAS therefore surveyed SEC Parties in Q2
2022 to ascertain why this could be the case. The results of the survey indicated a lack of
appetite, and a clear indication that the DCC should focus on delivering its core service more
effectively before evolving its ECS offerings. As a result of this view from SEC Parties and DCC
Users, the DCC has confirmed it will not progress any further work on ECS at this time, agreeing
its priority is instead to focus on delivering its core service more effectively for its customers.

5.2.2 Value Added Services

Timeframe: TBC

Under its Licence, the DCC may provide Value Added Services (VAS), which are services that
do not relate to the supply of energy. These must not have a detrimental impact on the Core
Communication Services provided under the SEC.

VAS would sit outside of SEC governance but would require a process to be put in place to
manage and assess requests and their impact on SEC Services, likely via either the Panel or
its Sub Committees. This would involve consideration of possible changes to the Charging
Methodology, as well as consideration of operational impacts and technical and security issues
picked up by the Security Sub-Committee (SSC) and Technical and Business Architecture Sub-
Committee (TABASC). VAS can only be provided with the consent of Ofgem, who have
indicated that it is unlikely that any will be considered ahead of the re-issuing of the DCC
Licence (covered in Section 3.1.1 of this document).

5.3 Policy Changes

5.3.1 End of Transitional Governance

Timeframe: TBC
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 As part of the end to DESNZ Transitional Governance activities, residual responsibilities will
transfer to the SEC Panel as part of enduring governance. This includes those responsibilities
of the Technical and Business Design Group (TBDG), Technical Specification Issue Resolution
Sub-Group (TSIRS) and the Home Area Network (HAN) Wide Area Network (WAN) Working
Group (HAN WAN WG). It is assumed the Enrolment & Adoption (E&A) Sub-Group will come
to an end.

TBDG manages changes to the baseline technical and business design products (covering
DCC Releases 1, 2 and 3) developed prior to inclusion in the SEC, and this responsibility will
move to the TABASC. TSIRS supports DESNZ in reaching agreement with industry (where
possible) on the interpretation and implementation of the specifications, and also manages the
Issue Resolution Process. The HAN WAN WG owns and maintains the HAN Model and
supports issue resolution relating to HAN radio-frequency issues. TSIRS and HAN WAN WG
will fall under the TABASC Sub-Committee.

Transition dates are as yet unknown but will need to be planned for from a governance and
SECAS resourcing perspective.

5.3.2 Data Sharing Developments

Timeframe: ongoing

There are several developments arising in the data sharing space. One such development is
the DESNZ Smart Meter Energy Data Repository programme, investigating the feasibility of a
common and secure platform for the storage and retrieval of smart meter energy data in a
central cloud repository. The purpose of this programme is to determine the technical and
commercial feasibility of such a platform. The programme will only develop a proof of concept,
with the outcomes informing potential future policy and regulatory decisions. It will not produce
a ‘final product’. DESNZ provided the Panel with an update on this programme in July 20232
and is scheduled to present again in January 2024.

The rules regarding management and access to the data have yet to be set, so how the creation
of such a database would affect the SEC is uncertain. It is assumed there will be some ‘Privacy’
control, plus consideration of how the data would be acquired and updated, and who may be
responsible for performing the collection and administration of the database.

The response is to Monitor activities such as the above until the role of the SEC becomes clear,
including the TABASC having reviewed for technical and business impacts, and the SSC
similarly from a security perspective.

RECCo also presented an overview of its Open Data & Consumer Consent project to the SEC
Panel. SECAS has inputted to this project via the CACoP Forum. RECCo sought SEC Panel
feedback and advice regarding its approach to consumer consent and data access with
particular focus on the CSS and Switching data and the Smart Meter Inventory (SMI) data.

2
Please see SEC Panel Paper SECP_118_2507_06 (Green) for full details. This paper also noted the other industry
programmes looking at data repositories, including the DCC’s Secure Publish & Subscribe (SPS) programme and the MHHS
Data Integration Platform (DIP), and concluded that no further work was needed by the Panel in this area at this time
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 Developments will be monitored through the newly established Privacy Sub-Committee,
mentioned in 4.8 above.

5.3.3 No WAN Coverage

Timeframe: On-going

The DCC Wide Area Network (WAN) communication rollout targets for Communication
Service Provider (CSP) contracts were achieved by 31 December 2020; CSP Central and
South achieving 99.25% and CSP North 99.50% WAN Coverage respectively.

Following SEC Panel approval, the DCC has been requested to provide ongoing reporting to
the OPSG on current WAN Coverage levels (a modification has been raised to facilitate this).

SWG raised concerns about activities the DCC is taking to potentially increase WAN Coverage
within each CSP region. DCC Licence (Condition 17 Appendix 1) requires DCC to provide an
annual Statement of Service Exemptions which provides some insight.

Meanwhile, the DCC has been asked to investigate what could be done about intermittent WAN
Coverage impacting consumers, particularly Pre-Payment top up provision. The DCC is to
review if there has been a technology development which enables a lower cost solution to be
implemented and what that cost of WAN Coverage increase might be.

In December 2023, DESNZ consulted on proposals for an internet based Virtual WAN Provider
(VWP) in areas where there is currently no WAN provided by the existing Communication
Service Provider (CSP). This is expected to deliver full benefit of smart to c.330k premises.

The proposed solution (CADg – Consumer Access Device GBCS compatible) would allow
Devices to be communicated securely over the internet using the consumer’s broadband
connection. DESNZ believe around 95% of the identified no-WAN premises have sufficient
broadband coverage to support the arrangements without inconvenience to the consumer
(speeds of 2Mb/s or greater). Subject to a positive business benefits case and the approval of
the Security Sub Committee, a decision on whether to proceed is expected by the end of Q1
2024.

5.3.4 DESNZ Flexibility Innovation Programmes

Timeframe: 2023 - TBC

DESNZ is running a Flexibility Innovation Programme, to support innovative solutions to enable

large-scale widespread electricity system flexibility. This forms part of the DESNZ Net Zero
Innovation Portfolio. This Programme has so far included: Alternative Energy Markets
Innovation Programme, Energy System ‘digital spine’ feasibility study, V2X competition,
Automatic Asset Registration (AAR) competition, Interoperable Demand Side Response
Programme competition, Smart Meter System based Internet of Things Applications
competition, Smart Meter Energy Data Repository competition.

Initial National Grid run Demand Flexibility Service (DFS) trials have required consumers to
have smart meters as a prerequisite. The Flexibility market is developing and may result in

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 new industry roles and market participants. No decisions have been made as to whether
Consumer flexible assets will need to be connected to smart meters, or whether communication
will be via a different method.

DESNZ will be starting Phase 2 of its Innovation Programme in March 2024 which is expected
to last 12 months. From this phase, more will be learnt about the proposed technical solutions
and required specifications which can meet the needs of the UK market. They are also aiming
to demonstrate the technical solutions using simulated market data as well as real market data
in a contained live trial.

All of these initiatives are likely to uncover and enrich the considerations for smart metering in
the context of flexibility, and the SEC Panel will be keeping abreast of early insights in order to
consider impacts ahead of any implementation programmes.

5.4 Trends
Timeframe: On-going

SWG has identified, and Panel has agreed, to monitor certain activities that may have an impact
on the SEC. The approach is to review these areas every 6 months to monitor and consider
any potential proposal for Panel activity. For example, volumes of Device Model Combinations
(DMC) and Firmware version tracking: there is concern that the amount may exceed a point,
where the number of DMC and Firmware versions become unmanageable for Parties. The
DCC Reporting to inform these areas was requested under the Interoperability project. The
same report will be used to track and monitor the situation. Reports are now being provided by
the DCC. SECAS is working through the data in order to develop the most appropriate means
by which to feedback to Parties. It is likely that this will occur in Q1 2024.

Other areas of monitoring include overall DCC service readiness and availability and DCC
service capacity. These are already reported and reviewed via the OPSG. A “dip stick”
approach, every 6 months for SWG, will be used to consider if the areas need any broader
consideration.

DCC Capacity has been raised as one such trend (e.g. via MHHS, Energy Bill Support Scheme
and Other Users driving traffic). Whilst OPSG and the DCC is monitoring current capacity
levels, the SWG will be discussing whether it needs to do more to monitor future demands on
DCC Capacity. The DCC is due to present an update to SEC Panel on its Capacity and Traffic
Management programmes in Q1 2024.

6. Strategic response: Do Nothing

No areas have been identified as part of the latest review where the SEC Panel believes it should take
no action in relation to events; given that they are believed to have no impact on the SEC, or there is
nothing further the SEC needs to do in relation to these areas.

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