Recent developments suggest that smart meters may soon be hotly in demand across the region
Alot of things in the utilities sector appear to be getting ‘smart’, with increasing demand for energy efficiency being matched by technological advances to provide some clever solutions to old problems.
July’s issue looked at the progresof smart grid adoption in the Middle East, and this month we turn our attention to how the market for smart meters is performing in the region.
The two are of course intrinsically linked, though whilst a large-scale smart grid development is still to be seen, smart meters have been the subject of a greater number of smaller installations and local trials. Even so, trying to establish the level of current demand elicits mixed responses from our experts.
“There is demand in the region for Advanced Metering Infrastructure technology, as part of a smart grid solution, although the pace of adoption for smart metering solutions is very slow in comparison to other regions such as North America, Europe and Asia.
We expect this demand to increase exponentially in the future as the adoption of Smart Grids becomes a higher priority across the industry,” says Abdelrahman Abdellatif, principal consultant, Energy Solutions, at Huawei Enterprise ME.
By contrast, Muness Charara, director, energy sales and marketing ME, Itron, suggests that, “Smart metering and the smart grid are rapidly growing and evolving in the Middle East.
It is one of the fastest growing regions in the world and the demand for smart meters for new developments and meter replacement is on the rise. We view this as a tremendous growth opportunity.”
Hatem Tantawy, GCC sales manager at Elsewedy Electric subsidiary Isrkaemeco, says that smart meter implementation is already underway across much of the region, despite the key driver being a focus on environmental concerns, rather than in other markets where integrating renewable energy is a key concern.
“Taking a decision on the method and technology of deployment is not easy and takes time, especially during the rapid changes and dynamics of the ICT industry.
However, most of the GCC countries have started to consider the smart grid by taking the first step through smart metering deployment. Accordingly we can see that most utilities in the UAE, Kuwait, Qatar and Saudi Arabia are already in the stage of deploying smart meters into their grid,” he says.
If current demand is viewed as patchy, future growth is universally predicted to be substantial, with a recent report by Northeast Group predicting that the capital expenditure on smart meters in the Middle East will reach $3.9 billion by 2022, with 16.1 million units installed.
The group has forecast that the Gulf, led by Saudi Arabia and the UAE, will see the majority of near-term activity in the market, with 86% of households having a smart meter installed by 2022.
Charara says that this demand will be driven by the importance of smart meters to utility companies when they try to optimise their distribution networks. ‘Time of Use’ charging, together with energy forecasting and the balancing of network demand will be key drivers for utilities as they look increasingly at smart metering.
“Most utility companies are under pressure from regulation authorities to decrease their carbon footprints, show more transparency with customers, and increase the efficiency of operations and maintenance – including distribution, outage, peak demand, billing management and cost optimisation,” adds Abdellatif.
A particular aspect of smart metering technology that Itron is investing in is to make smart metering solutions flexible and capable of being adapted to specific local requirements. Ease of deployment and suitability to particular conditions will, no doubt, be a particular concern of utilities companies faced with massive smart meter installation programmes.
“We are preparing to introduce a modular smart meter platform. With its modular and secure design, this platform provides utilities with the flexibility to choose the communication technology that fits with local installation conditions and communications infrastructure on site.
Utility companies will be able to procure meters independent of the communication modules, and then make their choice of type and number of communications modules based on their unique needs,” Charara says.
The communications aspect of smart meter units is also what Huawei flag up as being of particular focus looking ahead. Abdellatif says that machine-to-machine wireless technology is evolving at an especially rapid pace, whilst the cost of such technology is decreasing.
“This is best demonstrated with cellular communications such as LTE, 3G and 4G. The industry trend, we believe, will be towards adopting wireless smart metering embedded with this type of connectivity.
Embedding smart metering with this cellular connectivity has many functional and technical advantages over other types of smart metering. Although the capital expenditure appears high, the total cost of ownership over a few years is low. However the main advantage of cellular-enabled smart meters is that it allows utilities to focus on their core business – which is power generation and delivery,” Abdellatif adds.
Tantawy says that utilities are also demanding that technology is built on an open-platform to cope with future technological changes. “The main concern for any utility is to guarantee the interoperability and the future-proofing of technology. Iskraemeco is one of the founders of the IDIS Specification, which guarantees interoperability and prevents any monopoly in the supply of smart meters to utilities.’
In terms of current barriers to wider smart meter adoption, Charara suggests that the very complexity of projects involving smart meters and smart grid initiatives can often lead to utility companies adopting the technology at a slower pace. The internal changes to the way that a utility actually runs its business – that are required if that the benefits of smart metering are to be fully felt – can lower the rate of uptake.
“In addition, there is no regulation from the governments that could act as a catalyst for a faster roll out of such projects in this region. Utility services are subsidised and that makes it hard to justify the business case for investment in this domain,” he says.
Abdellatif confirms this view, suggesting that there is a question over how ready utilities companies are to change their business models to leverage the full features of smart meters.
Dynamic and real-time pricing, and the provision of incentives to encourage customers to manage and control their own power consumption – a necessity if smart meters are to fulfill their energy-savings potential – are not necessarily readily accepted by utility providers. A country’s telecom operators also need to be engaged to play an active role in supporting utilities with the installation of wireless smart metering.
“This requires that the mobile network owners provide an attractive business model based on managed services to the utility companies willing to deploy smart metering, where charges are not monthly on each SIM card,” he says.
Tantawy says that in addition to the challenge of convincing utilities of the advantages of installing smart meters, and justifying the long-term commitment involved, there is a challenge to convince utilities’ customers of the benefits.
“The social perspective is very important and it is a challenge to convince customers to accept and convert to smart meter systems. Consumers are the main stakeholders, and there is a need for a significant paradigm shift of the current consumer point of view, to raise his responsibility and involvement in relation to the environment and the efficient usage of energy,” he says.
Meeting the challenge
Charara says that Itron is an integral part of a number of smart meter roll-outs in the region, and says that a key part of its position is having a locally based team that can deal with the complexity of such a potentially large undertaking.
“The projects are complex in nature and require local presence from system design through transition to the utility for operations.
With smart metering, we find that our customers are looking for a reliable partner that can collaborate with them as they deploy these projects, and that can help them manage the internal and external changes that accompany large deployments.
We can also bring value to our customers by specifying and implementing other parts of the smart metering ecosystem – establishing the IT infrastructure and data centre or interfacing with billing and CRM systems for example,” he adds.
Abdellatif too, says that buyers are looking to see that smart meter solutions are flexible and capable of being highly customised to unique customer requirements.
Furthermore, vendors must also be committed to making further enhancements to a smart metering solution, as well as being capable of actually deploying possibly huge volumes of smart meters in a short period of time.
As we found with smart grids, the smart meter boom has not yet got into full swing, but the conditions for a large-scale deployment are now largely in place. Recent developments, such as Abu Dhabi’s trial of ‘time of day’ pricing (see box-out) suggest that utilities companies are now providing smart meters with the support from their end that the solution requires.
If such a trial shows that consumers can be encouraged to reduce energy consumption through pricing and the visual awareness of consumption, smart meter adoption on a wide scale will surely follow.
Abu Dhabi Energy Trial
Abu Dhabi’s Regulation and Supervision Bureau (RSB) in June announced that it is preparing to undertake a trial energy-purchasing project that will test the effectiveness of incentives to reduce energy consumption in the Emirate.
The RSB, which is the independent regulator of electricity, water and wastewater in Abu Dhabi, is seeking 400 volunteer households from selected areas to have electronic smart meters installed.
The trial will then see these households placed on a theoretical ‘time of day’ pricing structure where electricity use is charged at two different rates. The aim is to see whether it is possible to incentivise electricity usage during low-demand periods, through a two-tier pricing structure.
Participant households will be placed on a pricing structure where off peak usage (between 8PM and 2PM) will be priced at around a third of peak time usage. Volunteers will then be able to monitor their usage through a wireless display unit, which provides a visible means for households to track energy consumption, cost information and their historic usage.
In addition, households will be sent a monthly report on their consumption and performance, together with suggestions on where potential savings could be made. Powerwise, the RSB office running the trial, wants to see whether households will switch energy-intensive activities such as heating and cooling to off-peak times of day.
The trial is set to begin in August this year, and will run for a 16 month period.
Leviton’s two cents…
Leviton technical support manager Middle East & Africa, Motaz Al-Batta, reports that the smart metering market in the Middle East is still moving slowly, but that momentum is beginning to build, with some consultants now focusing on including smart meters in new projects.
This movement has been driven by the obvious upsurge in electricity demand, together with increasing cost considerations and the number of environmental initiatives being introduced across the region.
His company provides a range of smart meters and energy monitoring solutions that determine precisely where and when energy is being used. Being accountable for energy consumption, the firm says, can mean significant reductions in energy consumption – with long-term cost savings of between 15 and 20%.
Al-Batta says that the principle challenge to smart meter providers is that the idea is still new, and the technology is still evolving. There is therefore a challenge in educating stakeholders on the benefits of using the units, and also in finding qualified workers to install the meters.