This presentation is based on Frost & Sullivan’s recent research on the AMI markets in Asia Pacific. As a part of the research process we had conducted indepth interview with several value chain players across the region. China and India are excluded from this study/presentation.
Most of today’s system consists of ‘accumulation meters’ which simply record energy consumption progressively over time or ‘interval meters’ that record consumption over set time intervals. United States Federal Energy Regulatory Commission (FERC) defines “advanced metering” as follows: Advanced metering is a metering system that records customer consumption (and possibly other parameters) hourly or more frequently and that provides for daily or more frequent transmittal of measurements over a communication network to a central collection point.
WAN- From aggregators to AMI datacenter and operations center LAN – From meter to aggregator (can be a local tower or distribution substation) HAN – Connecting smart appliances and in-home loads to meter; also offers in home display facilities Consultants and System Integrators have a role to play across the project phase from concept to comissioning, while Installation contractors focus more in terms of onsite fixing of meters. On the supply side there are standalone meter suppliers, standalone communication vendors and some who do both. Companies like Landis+Gyr and General Electric Company are primarily meter manufacturers. These meter manufacturers have partnerships with communication vendors to offer advanced and reliable equipment. Communication vendors like Silver Spring Networks, Trilliant, and Aclara offer a turnkey solution by resourcing from the meter manufacturers. However, Sensus and Itron are the AMI companies that manufacture meters and communication products.
Advanced metering enables electricity businesses to offer new or improved services to customers including additional tariff options (particularly time-varying pricing), flexible billing cycles, benchmarking of energy usage with similar customers, real time or near-real time information on actual electricity consumption and its cost, the aggregation of accounts and/or synchronization of multiple account billing and meter reading, web services based on the more timely information provided by advanced metering, and bill prediction for large and small customers, including weather forecast data.
Record at least hourly usage data - A minimum of hourly meter reads delivered one time per day. Remote reading - Ability to manually read – for consumers as well as meter readers Remote Connection/disconnection – Advantageous when customer moving out of current premises Two way communication – To be able to receive and send information to/from customer premises Visual Display on meter - Meter Settings reconfiguration (Remote) – To change any parameters on the meter functionality Tamper Detection Communication path to In home display – For TOU Prepayment option Outage Notification – To identify the area of outage quickly Time of Use Load Control – To cut off power to home appliances during peak load Measurement of active/reactive energy flow - (To allow for distributed generation)
We divide the next decade into two phases – the earlier part during which the roll out of smart meters and AMI will begin to happen and the latter part during which the advanced features will be implemented as a run up to the smart grids vision. This chart is more pertinent for markets where there is an active AMI roll out plan. Demand response (DR) can be described as a means to increase the demand side participation in the competitive electricity market. The customer adjusts his/her electricity consumption in response to an external signal.
This is more from Asia Pacific context and relative penetration rates of these technologies. It does not indicate the actual market volumes for these technologies The choice of technology depends on several factors like population density, existing inhouse knowledge on communication technologies within utilities, cost, topography etc RF - Decreasing costs and advances in encryption technology that allow multiple devices to share common frequencies have made RF the most popular technology for AMI. Normally permits a higher power signal, which enables greater distance between the transmitter and receiver units. Terrain issues, intermodulation concerns, prior licensees, The same band is shared by other applications specialized modulation and encryption techniques are incorporated into most unlicensed systems to minimize interference. Unlicensed RF systems normally require equipment to be placed much closer together, increasing siting needs, and may constrain meter technology options. PLC - The deployment of PLC avoids monthly communications costs for public networks or additional capital costs associated with the construction of towers and other RF network infrastructure. Earlier forms of PLC experienced technology and propagation challenges which made the collection of the volume of data associated with most AMI deployments very difficult. However, PLC technology has evolved to the point where reliable meter data transmission can take place and most of the older system problems have been overcome. PLC systems can operate over long distances without regard for terrain, topography or foliage impediments that might create difficulties for other types of systems and can service customers in urban, suburban and rural environments. but PLC systems have difficulty handling the volume of data transactions required to support full two-way distribution automation. PLC is the most cost efficient today. WiMax – Creates a seamless communication system with no requirement for a concentrator. The meters can be IP read. However, the WiMax spectrum licensing costs and chip set costs are high at the moment. The technology will pick up with cost reductions in chip sets over the coming years. GPRS – Today the cost of a GPRS modem still exceeds the cost of a PLC modem by a factor of two or more. However, the concentrator provides enough processing power to efficiently encode the metering data for transportation to the Data Management system with GPRS technology. Through the use of the concentrator the GPRS costs can be substantially reduced compared to point-to-point communication.
Information security – Despite encryptions the risk of hackers having access to consumer data is still real. The role of communication and software providers as well as network companies assumes greater significance as they would be the ones to appropriate security packages to prevent hacking or security mishaps. Utility losing control - Traditionally, the utilities have had the upper hand with regards to load control. However with the installation of smart meters, the next level of energy management would fall in the hands of the consumers. Cost recovery - The high cost of installing smart meters and related technologies is undermining the benefits of AMI. Currently the entire cost is being passed on to consumers but better methods of cost recovery need to be devised to make the business case for AMI sustainable Stranded Assets - Most of the traditional meters that are in place today have a considerable amount of life left in them. Introduction of smart meters would mean replacing these meters, thus leading to inventory pile up for the utilities. Lack of standards - The process of setting overall industry wide standards is still in a nascent stage. Immature standards for communication networks, specifically HAN are a major industry challenge.
Software, combining system integration and IT accounts for about 25% Installation is physical installation of meters at customer premises – varies from 15% to 20% of the total cost (on the higher side in Australia)
Enhanced customer information is high in the medium term because of features like inhome displays during this period, which will be overshadowed by other smart grid features in the long term Operational efficiency has a higher impact in the short and medium term due to cost recovery
Interim compliance deadline of 2015: The Rules provide that retailers must ensure that meters at residential and small commercial premises are fully certified by 1 April 2015. Ageing Workforce – Large of amount of data to handle. Current workforce may be inefficient in this aspect. New technology may be difficult to understand for the current workforce at the utilities who may not have much experience working with data management systems and other software.
In 2025, renewable energy reaches a 8% share in overall energy supply, while the gas power generation reaches a 25% share. To promote green energy industry, Bureau of Energy, Ministry of Economic Affairs has worked out the “Green Energy Industry Program”for which Energy ICT is one of the seven potential topics. Installing advanced meters will, by itself, do nothing to reduce greenhouse gas emissions. Emission reductions will only be achieved if installing the meters results in changing people’s behaviour so that they use less energy in total. Restraints Taipower is a state-own and monopoly in Taiwan, all of the project should follow the government policy. Funding – unpredictable domestic market size is inhibiting investment in this business. Taipower company lacks source of finance.In Taiwan, It is very difficulty to pass the costs to consumers.
Drivers The Republic of Korea is one of the 10 largest energy-consuming countries. It is also dependent on foreign sources for 97% of its energy. AMI will lead to more effcient energy usage and ultimately to the smart grid implementation for energy security. Exports – Wants to get 30% of US AMI market in the next 5-7 years Restraints – Lack of private funding is a restraint in most Asia countries. South Korea wants to invest US$23.7b by 2030 on smart grid R&D and deployment.
Drivers Japan's objective is more focused – to enable further introduction of renewable energy and create a new infrastructure for EVs and new services through the utilization of smart meters and ICT network. Promoting Japanese companies in the smart grid space for meters, software and communication infrastructure development. Restraints Efficient grid - • Japan already has highly reliable grid. Going for advanced integrated control including demand-side to accommodate unstable renewable power Japan has retained vertically integrated -power suppliers. It can be harder to persuade such power companies to promote energy saving, unless they feel they sell 'services' and not simply energy
HK – No activity right now SG – In-home display will be a major issue since meters are not being put inside homes Price point will be very low as SG will implement only very basic functionality Will not have TOU pricing MY No smart metering yet ID No activity and more local players PH Meralco is interest and some activity happening but no roadmap yet Have started buying industrial meters with smart meter capabilities now Vietnam No movement Still building infrastructure Will be dominated by local players
Smart Meters and AMI Markets - Global Perspective
Smart Meters and AMI Markets - Global Perspective
AMI Technology Trends & Evolution Agenda 1 2 3 APAC AMI Markets Key Industry Challenges 4 5 AMI Benefits & Features AMI Introduction and Value Chain European Smart Meters Markets 6 South African Smart Meters Markets 7 US AMI Markets 8
Utility Metering Utility Legacy System vs AMI Systems Consumer Electricity Meter Cannot communicate to/from consumer One-way communication Utility AMI RF MESH PLC BPL MDMS Utility MDMS WAN LAN Metering Consumer CDMA GSM HAN In home Display Two-way communication Smart Meter
AMI Value chain MDMS Process and store meter data Major Players Itron, eMeter, SAP Wide Area Network (WAN) Public/Private Network Local Area Network (LAN) RF mesh, PLC, BPL, WiMax, GPRS Home Area Network (HAN) Zigbee, Home plug WiFi, Z-Wave, Wavenis, Digitalstrom Major Players GridConnect, Freescale, MicroChip Smart Meter Data collection & storage Major Players GE, Landis+Gyr, PRI, Elster System Integrators Consultants Installation Contractors Source: Frost & Sullivan Major Players Itron, Elster, SSN, EKA Systems, Trilliant Meter Vendors Communication Vendors IT Vendors
Advanced Metering Benefits Reduced meter reading errors Reduced billing errors Reduced meter reading costs Prepayment option Physical privacy for consumers Half Hourly usage data Reduced Energy bills
AMI Features 2 3 4 5 6 7 1 Remote reading and also ability to manually read Remote connection and disconnection Two-way communication and Communication path to in-home display Visual display on meter Meter settings reconfiguration (remote) Tamper detection Record at least Hourly Usage of data 8 9 10 11 Outage notification Prepayment option Time of use Load Control 12 Measurement of active/reactive energy flow (To allow for distributed generation)
2011 2012 2013 2010 2014 AMI Technology Evolution 2015 2016 2017 2018 2019 2020 Source: Frost & Sullivan. Remote Meter Configuration In-Home Display Time of use Demand Response Energy Management Systems Real time communication Outage Notification Remote Connect/ Disconnect Remote meter reading
Technology Trends – Communication Technology Penetration AMI Technologies WiMAX GPRS RF 2010 2015 2020 PLC Low Medium High Source: Frost & Sullivan
Advanced Metering - Industry Challenges Lack of Standard Protocols and Interoperability Initial upfront cost and cost recovery Risk on information security clouding consumers judgment Fear of losing power over load control by the utilities Source: Frost & Sullivan Issue of ”Stranded Assets” and evolving technology
AMI – Roll out Cost breakdown for Projects Source: Frost & Sullivan Smart Meter and its installation form the majority of cost involved in AMI implementation
2010 2015 2020 Drivers High Medium Low Impact Drivers and Restraints - Australia Government Mandate 2010 2015 2020 Rapidly changing technology Lack of standards Rising cost to consumers Enhanced Customer information Operational Efficiency Source: Frost & Sullivan. Restraints
2010 2015 2020 Drivers High Medium Low Impact Drivers and Restraints – New Zealand Demand side participation 2010 2015 2020 Rapidly changing technology Lack of standards Ageing workforce Compliance deadline of 2015 Highly competitive & Deregulated market Source: Frost & Sullivan. Restraints
2010 2015 2020 Drivers High Medium Low Impact Drivers and Restraints – Taiwan Reduced energy wastage 2010 2015 2020 Regulation Lack of standards Lack of funding Reduction in peak load Reduction in Green House Gas emissions Source: Frost & Sullivan. Restraints
2010 2015 2020 Drivers High Medium Low Impact Drivers and Restraints – South Korea Energy Security 2010 2015 2020 Rapidly changing technology Lack of standards Lack of private funding Boosting technology export Smart grid implementation Source: Frost & Sullivan. Restraints
2010 2015 2020 Drivers High Medium Low Impact Drivers and Restraints – Japan Infrastructure for EVs 2010 2015 2020 No clarity on technology to deploy Efficient grid Vertically integrated power suppliers Developing new industries and enhanced services Integration of renewable energy into grid Source: Frost & Sullivan. Restraints
Asia Pacific AMI Market Size <ul><li>Total APAC AMI market is expected to generate a cumulative demand of 41 million meter units by 2017 </li></ul><ul><li>The market is estimated to generate revenues of about US$12.5 billion from 2009 through 2017 </li></ul><ul><li>The market is estimated to have a CAGR of 69.32% for the period from 2009-2017 </li></ul><ul><li>The growth will be fuelled by AMI activity in Australia, New Zealand, South Korea, Japan and Taiwan </li></ul>Source: Frost & Sullivan
Key Growth Markets – SEA/NA & Pacific <ul><li>Australia </li></ul><ul><li>Market size of 4.02 billion USD over the next 9 years </li></ul><ul><li>CAGR of 70.45% from 2009-2017 </li></ul><ul><li>New Zealand </li></ul><ul><li>Market size of 525 million USD over the next 9 years </li></ul><ul><li>CAGR of 35% from 2009-2017 </li></ul><ul><li>South Korea </li></ul><ul><li>Market size of 3.15 billion USD over the next 9 years </li></ul><ul><li>CAGR of 71% from 2009-2017 </li></ul><ul><li>Japan </li></ul><ul><li>Market size of 4.16 billion USD over the next 9 years </li></ul><ul><li>CAGR of 85% from 2009-2017 </li></ul><ul><li>Taiwan </li></ul><ul><li>Market size of 600 million USD over the next 9 years </li></ul><ul><li>CAGR of 137% from 2009-2017 </li></ul>Source: Frost & Sullivan
Asia Pacific Summary The Asia Pacific advanced metering industry is in a nascent stage with rollouts expected to begin around 2011-2012 The Asia Pacific AMI market will be worth US$12.5 billion through 2017 and is likely to grow at at a CAGR of 69.3% (2009-2017) Thailand , Malaysia and Philippines are currently focused only on automated meter reading capabilities for commercial & industrial consumers. No plans yet for a large scale residential roll out Singapore is expected to begin rollout of AMI around 2015, with basic smart meter functionality Some of the key drivers for AMI in Asia Pacific include regulatory mandates, choice for customers, technology upgrades, energy management and a move towards smart grids architecture The growth in AMI is fuelled by Australia/New Zealand in the short term & Korea, Japan and Taiwan in the long term Major market restraints include financing issues, interoperability and lack of standards, limited experience & reference instatallation s for the technology, and justifying the cost-benefit of AMI roll out
Smart Meter Key Drivers & Restraints Source: Frost & Sullivan. Market Drivers Market Restraints Smart meters are imperative for implementation of smart grid Smart Meters considered active towards efficient energy management in T&D Increasing price of electricity encouraging the need to reduce expenses Well defined legislations and directives enabling utilities to adopt smart meters Lack of a standardization in communication protocols leading to problems of interoperability Global Economic Slump slowing down new investments towards smart meter and grid technology No clarity on an apt business case inhibiting market adoption
Europe Smart Meter Geographical Hotspots Propensity towards smart meter investments Degree of Implementation Low High High Sweden Italy Netherlands France Denmark Finland United Kingdom Germany Austria Spain Cyprus Latvia Czech Republic Portugal Belgium Poland Ireland Malta
Europe Summary The European smart meter industry is in a nascent stage with commercialisation expected to happen by 2012 Smart meters deployment are an integral part of smart grid The scope for smart grids does not end with the energy industry, but extends across different industries Europe has been very proactive with deployment almost complete in Italy and Sweden Lack of clarity on an ideal business case and interoperability continue to cloud investors rational Europe – push market – smart meter and smart grid markets are legislation driven
Market Drivers Government legislation The Amended Electricity Regulations Act of 2006 specifies that all end users with a monthly consumption of 500 kW or greater needs to have two-way communication smart metering systems installed by 2012. Decrease in theft/fraud Smart meters will enable energy distributors to detect meter tampering or electricity theft and remotely disconnect the electricity supply to these meters on detection. Demand side management Demand side management is expected to reduce energy consumption in the country by 3,000 MW by 2012 and Eskom has identified energy-efficient metering as a key initiative for the success of this program. Replacement of obsolete technology When replacing meters due to natural wear and tear, electricity distributors wish to replace these meters with the latest metering technology in order to avoid further subsequent replacement or conversion costs.
Market Restraints Substantial investment Implementation of mass smart meter rollouts represent a large capital investment by municipalities. Compatibility standards There is currently no set compatibility specifications for the national standardization of the smart metering network. Until the NRS049 has been reviewed and approved, electricity distributors will not tender for substantial rollouts of smart metering systems. Communication technology Potential Communication technologies to be used for the operations of smart metering systems is still undecided within many municipal regions. Expertise shortage Smart metering represents a relatively new technological development within the metering industry of South Africa. In this regard, there exists a certain lack of expertise within municipalities with regards to installation, maintenance and repair of the product, as well as its operations Consumer adoption Initial resistance to the adoption of smart meter technology is expected by consumers, as it represents a forced change in consumer life style.
South African Electricity Meters Market <ul><li>The electricity meter market within South Africa is segmented into three broad meter technologies: Credit meters, prepaid meters and smart meters. </li></ul><ul><li>The total market size of the electricity meter market within South Africa is just over 11 million meters. </li></ul><ul><li>Total current market growth: 3.6 percent (2008) </li></ul><ul><ul><li>Driven by electrification initiatives </li></ul></ul><ul><li>The smart meter market is expected to experience a period of rapid growth over the next five years </li></ul><ul><ul><li>Conversion initiatives </li></ul></ul><ul><ul><li>Electrification initiatives </li></ul></ul>Electricity Meter Market: Market share per product type (South Africa), 2008 Electricity Meter Market: Market Share per Product Type and Sector (South Africa), 2008 Source: Frost & Sullivan Source: Frost & Sullivan
South Africa – Market Revenue <ul><li>Market Revenue </li></ul><ul><li>The total revenue of the electricity meter market is expected to reach $50.5 million by 2014 </li></ul><ul><li>Growth in total market revenue is expected to increase substantially for the period 2009 - 2014 </li></ul><ul><ul><li>This is due to the roll out of more expensive smart meter systems </li></ul></ul><ul><li>CAGR for product categories (2007 – 2014) </li></ul><ul><ul><li>credit meter market:: -6.13per cent </li></ul></ul><ul><ul><li>prepaid meter market:: -5.9per cent </li></ul></ul><ul><ul><li>smart meter market: 57.2 per cent </li></ul></ul>Total Revenue Forecasts (South Africa), 2007-2014 Forecast Revenue Growth (South Africa), 2008 - 2014 Smart Meters Prepaid Meters Credit Meters 2008 market size Forecasted market size (2014) Smart Meters Credit Meters Prepaid Meters Source: Frost & Sullivan