Plotting the growth of the global metering market...
The energy industry has changed considerably in recent years, for a number of reasons. Needless to say, predicting how the metering market will evolve, particularly in the USA is the key that will allow all participants in the sector to optimize their respective positions. Of course, the stance adopted by those involved in the market depends on how they perceive their involvement and what they hope to gain in the future.
For utility companies, the issue of meter ownership, maintenance and reading remains, in the case of the residential market, their clear obligation. Of course, this is not to say that the metering functions of their operation can’t be outsourced, as we have seen in the UK in several instances, but the meter and its operation remain the responsibility of the utility. This is unlikely to change and until a cost effective residential AMR solution becomes available, it is unlikely that this market will evolve dramatically.
In the commercial and industrial market, the role of the utility is less simple. In most cases, the customers themselves own their meters and in many markets, AMR is a necessary requirement. Development in this area over recent years has been staggering. The industry is now beginning to couple new metering technology with advanced software applications to provide fully functional energy management solutions that, it could be argued, provide the most significant value-added proposition for major energy users in both Europe and the USA. There are many advantages to this, not least in allowing the utility to develop stronger relationships with their high value clients and therefore safeguarding their position in the competitive deregulated market. Deregulation has opened up the industry across the traditional functional demarcation lines. It is clear that metering businesses will be subject to even greater change in the next few years, and that information technology will play a fundamental role in their success.
Utility companies are ever more accepting of strategic partnerships which allow them to retain “ownership” of their large clients while divesting themselves of functions which they do not consider to be core competencies. In many cases, metering is one of the first areas in which utilities re-consider their role. As utility companies gradually divest their metering operations, a number of new opportunities have opened up. The discontinuity in the industry offers an ideal opportunity for new entrants, or for current players to move up or down the value chain.
Examples of this movement could be:
- Meter manufacturers moving upstream into the territory of meter operators in order to protect their existing market share and acquire a basis for independent technology improvements.
- Meter hardware operators separating from their parent company and offering a geographic niche service.
- National network operators offering home gateway services, including automated meter-reading services (AMR).
These trends are already apparent in Europe and it is very likely that they will develop and grow in popularity in the US as well. For example, the success of Lowri-Beck and Accuread in the UK highlights the popularity of employing third parties to provide meter-reading services to utility companies in a deregulated market.
The developments in the metering space are heavily dependent on the pace of deregulation. Further changes to the utility industry will provide both a threat and an opportunity to the market players. However, utilities that choose not to act in the light of new developments should expect to lose market share.
Some utility companies are, in a few instances, implementing trials the last stage development of AMR, the two-way communications system. Such systems, as exemplified by CellNet Data Systems - active in Europe through a partnership with Bechtel Enterprises Inc. under the brand BCN Data Systems - can support multiple applications, including both AMR and value-added services.
PECO Energy and Northern State Power Co have researched the viability of such systems and believe that the increased costs associated with two-way communications can be justified through additional revenues from associated services and operational cost savings.
The most likely developments in the metering industry can be categorized by short, medium and long-term projections. Short-term projection (to 2005) – Uncertainty surrounding deregulation will lead to a cautious approach to new metering investment and infrastructure development. The possibility of recalibration of traditional electromagnetic or mechanical meters and the absence of a clear understanding of the future threats and opportunities connected with a competitive market will delay in new technology investment.
Medium-term projection (to 2007) – Utilities will begin install short-range radio transmitting frequency-metering equipment that can be read from the perimeter of residential properties by a vehicle-mounted, handheld or passive Wi-Fi receiver. This will allow the utilities to reduce the number of meter reading personnel and enhance the efficiency of their meter reading operation. Smart prepayment solutions are also expected to gain in popularity, particularly in Europe.
Long-term projection (to 2010) – Utility companies will fully separate their metering activities and outsource many of the metering functions to external players. Full separation will result in new entrants and existing metering companies working to reconcile billing dates and align the reading of electricity, gas and water meters (in the case of a residence) to streamline the meter reading process and maximize economies of scale.
These scenarios suggest that the wider scale adoption of new technology and the development of the utilities market as a whole will result in a great deal of opportunity for companies in the sector. Metering might not be glamorous or particularly exciting, but it will become even more lucrative for market participants and that means that this neglected area should receive a great deal more interest in the coming years.