Smart meters are emerging as potential game changers, revitalising the entire electric industry. These meters are not only playing a vital role in improving customer service but also laying the foundation for sorely needed new and innovative African utility business models.
Over the next few years, smart meters will continue to gather momentum as a viable tool in terms of transforming the way the utility industry operates. This tech-based solution empowers customers in terms of getting maximum benefits from new technologies, including solar PV, smart home technologies, and battery storage.
It is energy efficiency, billing transparency, compliance, and performance that will continue to be the key customer touchpoints used by manufacturers for profitable gains. According to Fact.MR, the global smart meters market was valued at nearly $10 billion in 2018 and is estimated to reflect growth at a CAGR of over 8% from 2018 to 2026.
The increase in revenue generation within the market is a result of smart metering being considered as an enabler for utilities to achieve energy transition and digitisation goals. Active markets such as North America are expected to pass the 50% penetration level by 2024 owing to massive smart grid investments by governments, private investors, and public utility companies.
Deployment in the Asia Pacific region is expected to be backed by massive rollouts in China while the European Union’s 80% penetration target by 2020 is driving adoption in that region. Projects in developed regions will mainly focus on replacement and upgrade initiatives for existing units.
The African smart meter perspective
It is quite different in less developed economies such as those of African countries. Here the smart meter revolution is yet to be fully embraced – where the majority of projects are still in the pilot phase with implementation mainly found in South Africa and Nigeria. Grand View Research predicts South Africa’s smart metering landscape will record a 5.1% growth between 2018 and 2025 and that the country’s revenue generation will increase from $54.1 million over $79.5 million during the forecast period. However, Egypt is expected to play a critical role in driving Africa’s smart meter activity, as the country has announced plans to install up to 30 million smart meters over ten years.
The need to eliminate continued energy theft, reduce increasing electricity demand, lower operating costs, and protect revenue are factors likely to spark the smart meter uptake at many more African utilities and distribution companies. Despite the presence of advanced metering infrastructure (AMI) adoption drivers, several challenges continue to hinder government, utility, and energy stakeholder interest in implementing large-scale rollouts of smart meters.
The cost of the smart meter
According to Shawn Papi, senior research advisor at Eskom Research Testing and Development and member of AFSEC TC13, the slow rate in the adoption of smart meters in the region is due to the perceived high costs related to the technology. He says smart meters tend to cost more in comparison to basic prepaid meter systems used by the majority of utilities in Africa. The higher price related to smart meters has made African utilities reluctant to adopt the technology and to continue using prepayment meters. The prepaid meters address their primary intent of assuring revenue collection through upfront payment. Other AMI capabilities are not seen to be of great importance to energy providers in Africa at the moment, explains Papi.
However, the research advisor does add that the meter manufacturing industry is releasing far more smart metering products than basic prepaid meters as it shifts its focus to new technologies. “Unlike in developed economies, the absence in Africa of all-inclusive smart metering business cases, addressing applications beyond revenue protection, like customer centricity and operational efficiency, is limiting the role of funding institutions towards the expansion of the market,” says Papi.
Smart meter standardisation
At the same time, the unification of smart metering technology on the continent is a significant concern. Various African utilities are piloting or looking forward to adopting (mostly proprietary) technologies. There is a need to solve the standardisation issue on an African level, stresses Papi. “For instance, to develop standards that would, at least, keep the prepayment feature in African smart meters since the majority of the utility firms are still interested in the prepaid energy metering use case over and above smart meter features like load limiting.” Despite the African Electrotechnical Standardisation Commission (AFSEC) efforts to increase energy stakeholders’ awareness of the adoption and use of standards, knowledge and interest remain low.
In October 2018, AFSEC released the Guide for Application of Standards for Smart Metering Systems in Africa following a mandate from the African Union to look at international standards and tailor them to the African region – and to stimulate the standardisation of technology at a regional or continental level. [Ed: refer to ESI Africa Issue 2 2019, pages 22 & 23 for more insight into the AFSEC Guide]
“If we standardise across the continent, we will build up economies of scale (at a continental level) and encourage competition, which will reduce the costs and improve innovation,” emphasises Papi, adding that in France or the Netherlands, smart meters costs are reasonable because they have made considerable investments in standardisation. To achieve smart meter standardisation at a national level, South Africa’s NRS 049 specification workgroup (composed of metering experts from Eskom and South African municipalities), developed and published the second edition of the NRS 049 specification in October 2016.
This edition specifies open communication standards and adopts the DLMS/Cosem data object model, application layer and data security features. Furthermore, the NRS 049 Ed.2 includes smart meter use cases applicable to the South African utility environment and aspects of the Internet of Things. It further positions the specification as the first attempt at a genuinely South African companion specification.
The role of data telemetry
The lack of sufficient communications infrastructure and systems, particularly cellular network coverage, to provide connectivity to the smart meters in Africa is also a barrier. However, Papi advises that there are options for utilities to ensure they have the communications infrastructure they need for smart meter data telemetry for different environments.
Many communications options that the IEC has standardised through the IEC can be implemented and can be privately owned by utilities or contracted to a telco to deploy for them. The arrival of the Internet of Things has helped to introduce communication technology alternatives in areas, for instance, where there is no cellular coverage. The emergence of distributed resources and new business models will drive utilities in the region to adopt smart meters with time to stay competitive and financially sustainable. The need to make use of real-time grid operations data to achieve acceptable levels of operational efficiency will further necessitate the adoption of smart metering on the continent.
Moreover, consumer demands for new and innovative services and the need to ensure business practices are sustainable through services such as quick detection of faults will within the coming years force energy providers to go straight into smart metering rather than basic prepayment. ESI