Smart metering set to rise dramatically in next five years

London, 12 July, 2007 – Smart metering benefits the full value chain of energy stakeholders – utilities consumers and governments alike. Its implementation is a central theme in many governments’ energy conservation policies. Consequently, utilities are now faced with overhauling existing systems and migrating to smart metering. A new report by independent market analyst Datamonitor (DTM.L) “Smart metering in the energy and utilities sector,” predicts the penetration of smart metering will grow to an estimated 41% in Europe and 89% in North America by 2012. For technology vendors, the mass roll-out of smart metering will be an opportunity to show how their offerings can facilitate and deliver the benefits smart metering provides.

Datamonitor’s report investigates the technological implications of smart metering, including how developments in software, communication and networking are shaping the future of smart metering.

The incidence of smart meters is set to rise as the benefits accrue to multiple stakeholders

Smart metering is about having more information. Smart meters transmit real or near-real time readings to the utility via a two-way communication channel. This provides better monitoring of energy usage and allows utilities to more effectively manage their power loads. For the consumer that real-time consumption data enables them to manage their energy use more efficiently and react to tariff changes more easily. As for the governments, they benefit from the lower energy consumption by the reduced carbon emissions and a reduction in the need to build more power stations.

The fact that the benefits of smart metering accrue across the entire value chain, has meant legislation mandating it has been introduced in a number of countries, while the likes of the EU’s Energy Services Directive in 2006 has also encouraged it at a pan-European level.

6% of households in Europe and North America currently have a smart meter. Datamonitor forecasts that this will rise to 41% in Europe and 89% in North America by 2012. Slower penetration in Europe is the result of concerns over the more competitive market effectively ‘stranding’ assets when customers want to switch provider – in turn making utilities less inclined to install them in the first place. In North America, by contrast, customer churn is less of an issue and many utilities have already started a program of replacing existing meters with smart meters.

One of the crucial benefits of smart metering is the element of demand response

Utilities considering the migration to smart metering will typically weigh up the cost of implementing the smart metering infrastructure with the benefits that it will derive for the utility – typically by way of cost savings. Operational benefits, such as a reduced manpower for taking meter readings in the field and reduction in call center costs via more accurate bills are immediately apparent and easily quantifiable. However, there are also important non-operational benefits that need to be taken into consideration.

“One of the key benefits of smart metering is the ability to offer demand response programs”, says Alex Kwiatkowski, Lead Analyst in Datamonitor’s Vertical Market Technology team. “In times of high demand, such as on a hot summer day when many air conditioning units are running, utilities do not have sufficient supply to meet demand, so additional power has to be imported at great cost to the utility. To reduce the need for this imported power and, in turn, to cut these additional costs, smart meters can communicate to customers a higher tariff and provide an incentive for them to reduce their consumption during this peak period. Such programs are being widely implemented in California where periodic blackouts are the most common alternative.”

Smart metering is driving and being driven by technology innovations

While simple quarterly or monthly meter readings are collected from traditional meters, smart meters produce a wealth of data including information on time of use, tariffs, tampering, outage detection etc. Consequently, software innovations, such as the development of Meter Data Management (MDM) suites, have taken place to address this issue; they process the vast volumes of data received and deliver this data to the relevant department that will use it.

However technology innovations, such as the continued development of broadband/IP communication, Wi-Fi and WiMAX, are also helping to drive the uptake of smart metering. As Kwiatkowski explains “the volume of meter data needing to be transmitted from smart meters to the utility is placing an increasingly heavy burden on traditional 2G mobile networks. Consequently, larger bandwidth options are needed. Broadband has been a key facilitator of smart metering given that a lot of the infrastructure already exists, however the likes of Wi-Fi can also have a key role to play in densely populated areas such as towns and cities.”

Kwiatkowski concludes:

“Due to the benefits it has across the value chain, smart metering is here to stay and is going to grow rapidly. Consequently, utilities need to understand how to approach the daunting task of overhauling existing systems. There will certainly be a key role for technology vendors to demonstrate how they can facilitate smart metering and deliver the benefits it provides.”

oak media GmbH / pressbot.net

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10.07.2007 - 10:34 pressbot.net | 1659 X