Advanced Metering: What You Don’t Know CAN Hurt You
By Jesse Berst
The advanced metering sector is in turmoil and transition. Everything is changing: regulations, pricing, business models and, of course, technology. It’s exciting, but it’s confusing and risky as well.
In times like these, what you don’t know about the future can hurt you. Utilities can all too easily end up with obsolete technology. Or a pricing model that gouges them for years. Or a vendor that doesn’t survive, stranding them without adequate support and upgrades. My firm has just completed an in-depth research report on advanced metering. We uncovered significant details about the current market. More importantly, we learned of big changes on the horizon.
The three functions that make a meter “advanced” are:
- The ability to take interval measurements, measuring both what was consumed and when.
- Automatic transmission of the resulting data, eliminating the need for manual, walk-by, or drive-by reading.
- . Two-way communications: the ability to both “talk” and “listen.”
Today’s models often have other built-in functions as well, but those three define the baseline functionality.
Advanced metering is an outgrowth of the last century’s automated meter reading (AMR) systems. The AMR business case rested on labor savings: reducing the number of people needed to collect readings.
Two-way, advanced metering offers even better labor-cost reductions, but it also empowers important new applications, including: outage management, demand response and time-of-use pricing, theft detection, on-demand reads, and power quality monitoring.
Over the long run, the monetary benefits from such applications can easily eclipse the labor savings. What’s more, there is growing recognition that smart metering is a cornerstone for the smart grid of the future. As a result, it gets easier every year to justify advanced metering to regulators and ratepayers.
That’s where advanced metering stands today. But what’s next? Our research revealed five major technology transitions:
- Electromechanical to digital. This transition is almost over.
- Mobile to fixed. Mobile AMR (walk- or drive-by) has dominated until this point. Fixed networks will be the strong trend going forward.
- Separate to integrated. From meters with add-on modules to meters with many functions in one unit. This transition has just started.
- Custom-built to commodity. The commonalities between meter platforms and the pressures to lower prices will push meter makers to create “off-the-rack” versions. (Of course you will still be able to get “alterations” and “custom-made” units if you want.)
- One-way to two-way. Although two-way systems are more expensive, they enable dozens of applications not possible with one-way systems.
As a result of these and other findings, GlobalSmartEnergy believes advanced metering has reached a tipping point and will begin to predominate in new utility deployments. Indeed, the category will grow at 15 percent to 20 percent per year (versus 3 percent for meters in general) for the next five years.
In addition, GlobalSmartEnergy predicts prices will drop fast (50 percent by 2009), bringing advanced functionality for the cost of today’s basic AMR units.
There’s much more to tell than I have space. About the coming industry consolidation that will change the vendor landscape. About the entry of offshore manufacturers (notably the Chinese) into the U.S. About the emerging standards that will spell big trouble for metering companies that don’t adapt in time. And about the path forward for advanced metering software.
But I think I’ve made my point. The advanced metering sector may change more in the next three years than in the past 20. In that atmosphere of flux and volatility, you must consider more than today’s needs. You must also keep the door open for tomorrow’s revolution.