The electricity meter market continues the journey towards advanced metering infrastructure (AMI) deployment, with 109 million communicating meters shipped globally in 2018.
According to IHS Markit data, this rise in sales can be attributed to the shift from basic to communicating meters as utilities head towards a data-driven future. The IHS Markit report states that nearly two-thirds of the 1.6 billion meters distributed between 2018 and 2025 will be communicating meters, boosted by several large smart meter rollouts within Europe, Middle East and Africa (EMEA) and Asia Pacific regions. A short-term peak will occur in 2020 before the market rebounds again through 2025, as a result of the various rollout cycles that affect the overall forecast (particularly where ahead of schedule, such as seen in Japan and South Korea).
In contrast, the North American market maintains a steady growth with no major rollouts expected in the next few years, whilst Latin America continues to show potential for growth. The main driver for this current shift towards communication remains the same – legislation and national mandates. Long-running, legislation-driven rollout programmes in the European Union (EU) and China continue to drive much of the volume; EMEA region and China account for nearly 57% of the total market shipments during the forecast period.
For countries that provided a positive cost-benefit analysis, the EU’s Third Package had a target of 80% smart metering coverage by 2020. Meanwhile, China has several initiatives helping drive smart metering, including the 13th Five-Year Plan, whereupon the State Grid Corporation of China (SGCC) has created a plan for smart grid investment to align with this mandate. [Ed: read more on the SGCC in ESI Africa Issue 4 2019 on page 20] Although these short-term drivers remain strong for AMI investment, organic demand for smart metering from utilities is growing as they look beyond meter-to-cash toward additional applications in the future.
Grid evolution gaining popularity
The long-term drivers for metering will come more from grid evolution and two particular regions are already approaching it differently: Africa and Asia Pacific. EMEA is often classed as a mature market overall, but the true picture is more detailed: Europe is the established market, Middle East is the evolving market, and Africa is the emerging market. Africa has one of the lowest rates for access to electricity, but the grid is changing as more buildings are becoming connected. This increases the need for metering, although likely basic or Automatic Meter Reading (AMR) for the foreseeable future due to the lower cost and lack of funding typically available. However, Africa has very low barriers to entry for AMI technology.
In most areas there is no previous infrastructure needing adaptation, repairing or replacing to allow for communicating meters, whilst fewer regulations or standards also provide lower barriers to technology adoption too. Where funding can be secured for specific projects, AMI has huge transformational potential for African utilities; however, pure electrification efforts more typically drive metering investment into lower technology solutions.
The largest rollout plan in Asia Pacific is India, which is also mandate driven. India is advancing from basic (or no) metering with a very large smart meter rollout. The government has announced plans to install 50 million communicating meters, which alone would drive a 10% increase in the global market total. However, delays are expected due to the complexity of the tenders, with only one major tender deploying any significant volume to date. Organic drivers for metering across the rest of Asia Pacific are more typically smart grid and communicating meter focused.
Legislation and government initiatives typically centre more around smart grids and smart cities, where such initiatives are prevalent in China, South Korea, Thailand and Vietnam. There are over 1,000 smart cities planned for deployment over the next decade, with nearly half of these being in China. These particular grid evolutions are driven by energy theft, growing shifts towards renewable resources, and social changes, all alongside the global increase in electricity demand. In all cases, grid evolution will drive the need for communicating meters rather than basic units, as utilities seek to understand and analyse grid status through data networks.
More than just a consumption meter
The next decade will see the shift take place from legislation-driven AMI toward an organic utility need for AMI through grid evolution. As a result, utilities will focus less on implementing the lowest cost solution (to simply satisfy a mandate) and increasingly focus on the total cost of ownership for systems (including the communication network) and loading more applications to the solution (such as outage management). This approach will help drive the next level of demand for communicating electricity meters, pushing volumes from the current magnitude of 100 million per year, up to the order of 1 billion installations by 2025, as utilities look to make the communicating meter even smarter.
In another report, research firm MarketsandMarkets anticipates the global smart meters’ market will grow by 9.34% between 2017 and 2022; revenue generation is expected to grow from $12.79 billion in 2017 to $19.98 billion by 2022. The firm attributes this growth to rising investments in smart grid projects and increasing up-gradation of T&D infrastructure, government policies, and energy conservation. Asia-Pacific is estimated to be the fastest growing market for smart meters during the forecast period. Factors such as government policies and mandates in developed economies coupled with accurate billing as well as improved customer service are driving the global smart meters’ market. China is expected to grow at the fastest pace during the forecast period.
Furthermore, the growing power sector in India is expected to spur the growth of the market and represents a promising opportunity for major smart meter providers. Japan is also expected to witness a significant growth during the same period. Meanwhile, Europe and the Middle East are trying to boost their energy efficiency programmes, T&D spending, and construction and infrastructural activities. With regards to the technology segment, AMI is expected to constitute the fastest-growing market from 2017 to 2022 because of its advanced technology.
Moreover, AMI reduces labour cost, and several power, water, and gas utilities worldwide are replacing AMR with AMI infrastructure, further creating growth opportunities for the AMI market.
Demand for smart meters
The residential segment is expected to constitute the fastest growth of the smart meters’ market during the projected period. The meters measure the electricity, water, and gas consumption and communicate this to the central utility system. The installations of these devices in the residential sector helps in reducing CO2 emissions globally as consumers’ inclination towards peak time savings of energy would increase.
The increasing residential construction activities and government mandates like the EU 20-20-20 policy, which aims to convert 80% of the installed meter base to a smart one, have ensured the growth in the demand for smart meters. The North American market dominates the smart meters’ market during the forecast period. This region’s market growth can be attributed to the focus on electricity, water, gas, monitoring and prevention of leakage, and the repair and upgrade of aging infrastructure.
Both reports highlight legislation and the evolving grid as drivers pushing utilities toward an increasingly data-heavy environment, which fuels the demand for communicating meters. The question to ask now is – how well equipped is your utility or region in keeping pace with the industry? ESI