Advanced metering market

Advanced Metering Infrastructure Market to Grow at Fast Rate, States Frost & Sullivan. Revenues expected to triple – Massive opportunities for communication systems and network, meter data management (MDM), customer and programme data management

Legislation and standardisation are set to catalyse the advanced metering infrastructure (AMI) market in Europe. Market participants are working towards standardisation and fulfilling regulatory requirements for the development of smart meters and AMI to begin mass rollouts. In Ireland we are faced with metering of domestic water supply in the short term future for instance.

New analysis from Frost & Sullivan, European Advanced Metering Infrastructure (AMI) Market, finds that the AMI revenue in Europe is expected to grow from €85m ($1.13b) in 2011 to €2.8b ($3.72b) in 2016 at a compound annual growth rate (CAGR) of 26.9%. The research covers smart meters, installation, communication systems and network, meter data management (MDM) and customer and programme data management.

“Emerging smart grid technologies, which support enhanced energy management, will boost the installation of AMI in Europe,” noted Frost & Sullivan Energy & Power Supplies Research Analyst Neha Vikash. “The market is expected to witness higher growth not only in smart meters and the installation segments, but also in communications networks, MDM, customer and programme data management segments as well.” Most companies in the AMI space are not just the hardware (meter) providers. They combine them with important services and appropriate functionalities in communication infrastructure and data management. These are the key technologies for the deployment of innovative solutions. Installation of hardware does not generate a constant stream of revenue.

Despite its obvious benefits, smart meter implementation reveals regional disparities. Market growth has been faster in Western and Northern Europe. The lack of regulatory drive and utility implementations has affected installation rates in Central and Eastern Europe. It is expected that the smart metering activity in the CEE region will follow the Western European knowledge wave and experience. “It is also expected that once large scale roll out activity begins in Central and Eastern Europe, the pace of implementation will be faster compared to that of Western Europe,” concluded Vikash. “Regulatory approval, along with increased competition, aging infrastructure, and new technology will continue to drive investments in advanced metering and intelligent grid technologies.”

Nevertheless, EU member states that lack the regulatory push for deployment will experience large-scale implementation after 2015, as they have to comply with the EU’s Third Energy Directive, or pay a high penalty fee.

“AMI is an important step towards achieving the EU 20-20-20 goal which states that by 2020, 80 per cent of households must have smart meters and complete rollout achieved by 2022,” elaborated Vikash. “Government mandates will, therefore, be a key driver for AMI deployment.”

In addition to legislation, the lack of communication standards and security issues also play a major role in determining market prospects. In fact, data security is an issue among all member states, but it is of higher importance in the UK, Germany and the Netherlands. This has resulted in a delay in smart meter roll out plans by utilities.

“Standardisation is likely to affect future smart meter sales, development and innovation,” concluded Vikash. “Meters complying with security requirements as per the standardisation mandate as well as satisfying regional legislative security requirements are likely to encourage customers to adopt smart meters.”

Europe to experience five-fold growth in installed base of smart meters by 2017

Increasing competition with Chinese and other Asian companies expected to enter the market in the short to medium term

The European smart meter market is at a growing stage. While smart meter developments are taking place in countries like Denmark, Finland and Norway, large scale rollout has been planned in countries such as UK, France, Spain,Portugal and Ireland to meet the energy targets and environmental policies set by the EU. Currently Sweden and Italy are the only mature markets in Europe.

New analysis from Frost & Sullivan, European Smart Meter Markets, finds that the smart meter revenue in Europe is expected to grow from €422.00 ($318.4) million in 2010 to €1.45 ($1.93) billion in 2017 at a compound annual growth rate (CAGR) of 29.3 per cent. The smart meter installed base in Europe is expected to grow from 43.90 million in 2010 to 200.43 million in 2017 at a CAGR of 24.2 per cent. The market foresees larger growth post 2012 with the publishing of the standardisation mandate. Standardisation will affect the future development and innovation of smart meters.

Europe is a push market where the smart meter and smart grid markets are legislation driven. There is region-wise disparity due to the different regulatory challenges faced by each country, thus having a direct impact on implementation.

“The smart meter market is expected to prosper, owing to the recent impetus from renewable energy and smart grid implementation,” says Frost & Sullivan Research Analyst Neha Vikash. “Smart meters are required for integration of renewable energy. Europe is focussed on meeting the 20-20-20 targets which is a necessary driver for increase in renewable energy and the third energy directive targets 80 per cent smart meter penetration in the residential sector by 2020.”

Currently, the European smart meter market has less than 20 vendor companies. The competition among manufacturers, utilities, ICT, network, remote monitoring and automation companies is high and it is forecast to increase along with new participants entering the market. In particular, Chinese and other Asian companies will start to make their appearance in this market during the next 1-2 years.