The Smart Meter Technology Value Chain (Strategic Focus)

Table of Contents

OVERVIEW

• Catalyst
• Summary

KEY MESSAGES

• Ageing electricity infrastructure is based on centralized generation
• Current industry pressures drive AMI adoption
• AMI adoption will vary across geographies
• There are many barriers to the adoption of AMI technology
• Differentiation amongst meter manufacturers is difficult
• Meter Data Management systems are core to AMI functionality
• A great deal of the value of AMI lies beyond the MDM

MARKET OPPORTUNITY

• Scope of report
• Ageing electricity infrastructure is based on centralized generation
• Current industry pressures puts the centralized generation model under strain
  • Cost to serve
  • Electricity theft is exacerbated by time to detection
  • Widely dispersed renewable energy generation causes problems on the distribution network
  • The intermittency of wind power increases the potential for large scale energy storage investment
  • Improve interoperability
  • Demand management
  • Customer usage data
  • Mismatches in the settlement process
• AMI, as a part of the smart grid, can address many of the current industry pressures
  • The functionality made available through AMI addresses many of the current industry pressures
  • Smart grid technologies address issues surrounding distributed generation
• AMI adoption will vary across geographies
  • There are many factors that drive the type of AMI and smart grid investment
  • AMI is more likely to gain funding than other capital projects
  • Not all AMI roll outs are driven by logical decision-making
  • The drivers for adoption varies across geographies
• There are many barriers to the adoption of AMI technology
  • The technology remains unproven at scale
  • Open standards
  • To gain full functional benefit of AMI, much of a utilities back office and applications need upgrading
  • The recession and subsequent economic stimulus package have both caused delays to AMI investments in the United States
  • European regulations will probably insist on minimal technological requirements

THE AMI VALUE CHAIN

• Meters
  • Meter functionality is diverse
  • Technological innovation is only a temporary differentiator among meter manufacturers
  • The frequency of meter readings will drive huge investment in data center hardware
• Communications
  • Home area network communications
  • Last mile to home - the network linking smart meters to the outside world
  • Wide area network - transmitting meter data to the utility
• Meter data management systems
  • Meter data management systems become the core of AMI-enabled functionality
  • The functionality of MDM systems varies from supplier to supplier
  • MDM systems are all adaptations of products designed for different applications
  • All MDM systems are struggling with scalability issues
• Beyond the MDM
  • Smart delivery
  • Smart customer

CUSTOMER IMPACT: THE BENEFITS OF AMI

• Customer side
  • AMI provides accurate automated meter reading, cutting field force costs
  • AMI improves the efficiency of processing customer churn
  • AMI enables the efficient conversion to prepay
  • AMI helps mitigate losses through theft
  • AMI will change the face of a utility' s contact center, but may not help reduce costs
  • Improved customer visibility of energy use
  • AMI data improve knowledge of the customer
• Delivery side
  • AMI improves the accuracy of load forecasting
  • AMI allows utilities to manage demand by controlling end user' s appliances
  • AMI can also help utilities to manage demand through time-of-use tariffs
  • AMI promotes microgeneration of renewable energy
  • AMI assists in detecting outages much faster

COMPETITIVE LANDSCAPE

• Meter manufacturers
  • Itron
  • Landis + Gyr
  • Elster
  • Echelon
• Communications manufacturers
  • Trilliant
  • Silver Spring Networks
  • Ambient
  • Aclara
• Telecommunications companies
• MDM vendors
  • OSIsoft
  • Ecologic Analytics
  • Itron
  • EnergyICT
  • eMeter (EnergyIP)
• Enterprise software companies
  • Oracle
  • SAP
• Systems integrators and outsourcers
  • IBM
  • Accenture
  • Capgemini
  • Logica
• Partnerships and alliances
  • Smart Energy Alliance
  • AMI Lighthouse Council

GO TO MARKET

• Understand your clients' specific needs
• Don' t rely on technology to differentiate
• Provide strong ROI cases and proofs of concept for applications beyond the MDM
• Work around utilities' inherent conservatism
• Services companies should focus on the customer side for AMI-driven opportunities

APPENDIX

• Definitions
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

FIGURES

• Figure: Traditional electricity provision is based around centralized generation
• Figure: Pressure from all sides causes utilities to change their business model
• Figure: It is more expensive to supply electricity in times of peak demand
• Figure: Smart grids enable a distributed network of electricity supply
• Figure: The characteristics of a utility and the market in which it sits impacts how and if AMI and the smart grid will be implemented
• Figure: Datamonitor expects smart metering to fare better than other capital projects for utilities such as power generation
• Figure: There are general geographic trends that drive the adoption of different AMI technologies
• Figure: There is a diverse array of functionality that can be added to a smart meter
• Figure: Functional modules require additional applications to manage them
• Figure: Communications within the AMI infrastructure
• Figure: Beyond the smart electric meter: typical smart appliances in the Home Area Network
• Figure: Current selection criteria for meter to concentrator communications
• Figure: The Meter Data Management System becomes the core of both delivery and customer processes
• Figure: AMI benefits both the delivery and customer sides of a utility' s business
• Figure: By introducing peak time tariffs peak load can be reduced
• Figure: Selected vendors in the AMI value chain