World Electricity Meter Report Ed 6 - 2007

Abstract

The meter industry is poised for the most important technological development since the introduction of the Ferraris induction meter over a century ago. Replacement of electromechanical, meters with basic solid state meters has already started. This trend has now been overtaken by a development which has been brewing for several years but in the last 12 to 18 months has taken a significant step forward to reality. This is the introduction of advanced or intelligent metering, with which energy providers and consumers communicate with each other. Advanced metering offers benefits such as, planning for lower energy consumption, demand management to reduce peak load, lower supplier costs, lower consumer bills, fewer GHG emissions, better service to the consumers, additional services for customers. Recent studies record modest cost benefit savings from 0% to 20%, with an average of 5% to 10%. But take note, the global stock of electromechanical meters is carried on utility books at installation value of some $20 billion, with a 20-30 year straight-line depreciation. For any utility, the write-off of this large asset would involve a huge accounting loss. Replacement is likely to be phased over many years.

In 2007, there are just under 1.6 billion electricity meters installed in the world, and annual demand is 122 million meters. 79% of the installed base consists of electromechanical meters, 21% of solid state. Six countries account for 54% of the electricity meters in the world: China, USA & Canada, India, Japan, Brazil, and Russia. The proportion of solid state meters is a substantial increase over 2006 with the rapid rates of conversion in China and India. The pattern of demand for meters is entering a new, fluctuating phase in some regions, similar to that of AMR in the USA in recent years, where intermittent large utility AMR contracts caused erratic patterns.

The reason for fluctuating demand in the meter market is the switch from electromechanical to solid state meters, and up-grading to advanced meters.

The AMR market continues to develop but it is moving into a new phase. Utilities buying AMR facilities now want more that one-way communication; if they are going to invest in advanced meters, why buy half? They want full AMI capabilities with two-way communication. This is driving forward the solid state meter market in Europe and Asia but, paradoxically, it may retard the development of AMI in the USA because of the existing investment in one-way AMR infrastructure.

The switch to solid state meters takes three forms; government mandates for change as enacted by the governments of India, Iran, Sweden, Netherlands, California, Victoria in Australia, with more in the pipeline; large-scale utility deployments such as the Telegastore in Italy and many in the US; and smaller ad hoc deployments often starting with the C&I segment of the meter market and filtering down to residential meters. The progress of advanced metering attracts varying opinions. Many see it as an inevitable technological development with many benefits. But there are those who believe that the cost benefits are so modest that only government legislation will drive it forward.

On the corporate front, important developments continue as the big meter companies reinvent themselves. To consolidate their advantage over the smaller meter companies the global meter giants are acquiring or being acquired by technology and software groups, so that they are not limited to selling meters but can offer total metering services. In this manner, the giants are exerting downwards pressure of the smaller meter companies. But new, aggressive meter companies from Central and Eastern Europe are making their mark and entering regional markets with wider international ambitions. The report also identifies meter companies which could be described as ' outside the main orbit' of the international metering community but are potentially important because they serve large domestic markets and have established large manufacturing capabilities which are increasingly sophisticated. Companies occupying the high ground today ignore these new comers at their peril.

The methodology of the study has been reviewed comprehensively by the ABS Technical Review Panel and new metrics have been introduced to reflect market evolution. Each of the three main drivers was assessed separately (new building, replacement and refurbishment of meters, and up-grading of meters) and relevant metrics were considered, introduced or rejected. This is a more complex exercise than it at first appears and some obvious candidates were rejected after piloting calculations showed them to be false discriminators.

The dynamics of the market are changing and issues such as the conversion from electromechanical to solid state meters and the effect on replacement rates in the C&I and residential sectors have been reviewed. The growth of new housing, the demographic trends of household size, and electrification ratios have been researched and their implications assessed.

Extensive work has gone into reviewing the methodology, identifying improvements and establishing the correct metrics of the market and its dynamics. We believe that the new methodology is a significant improvement. It is described in detail in the report.