Smart metering set to rise in next five years.

A new report by independent market analyst Datamonitor, 'Smart metering in the energy and utilities sector', predicts the penetration of smart metering will grow to ah estimated 41% in Europe and 89% in North America by 2012. For technology vendors, the mass roll-out of smart metering will be an opportunity to show how their offerings can facilitate and deliver the benefits smart metering provides.

The report investigates the technological implications of smart metering, including how developments in software, communication and networking are shaping the future of smart metering. The incidence of smart meters is set to rise as the benefits accrue to multiple stakeholders

Smart meters transmit real or near-real time readings to the utility via a two-way communication channel. This provides better monitoring of energy usage and allows utilities to more effectively manage their power loads. For the consumer that real-time consumption data enables them to manage their energy use more efficiently and react to tariff changes more easily. As for the governments, they benefit from the lower energy consumption by the reduced carbon emissions and a reduction in the need to build more power stations.

The fact that the benefits of smart metering accrue across the entire value chain, has meant legislation mandating it has been introduced in a number of countries, while the likes of the EU's Energy Services Directive in 2006 has also encouraged it at a pan-European level.

6% of households in Europe and North America currently have a smart meter. Datamonitor forecasts that this will rise to 41% in Europe and 89% in North America by 2012. Slower penetration in Europe is the result of concerns over the more competitive market effectively 'stranding' assets when customers want to switch provider, in turn making utilities less inclined to install them in the first place. In North America, by contrast, customer churn is less of an issue and many utilities have already started a program of replacing existing meters with smart meters. One of the crucial benefits of smart metering is the element of demand response

Utilities considering the migration to smart metering will typically weigh up the cost of implementing the smart metering infrastructure with the benefits that it will derive for the utility, typically by way of cost savings. Operational benefits, such as a reduced manpower for taking meter readings in the field and reduction in call center costs via more accurate bills are immediately apparent and easily quantifiable. While simple quarterly or monthly meter readings are collected from traditional meters, smart meters produce a wealth of data including information on time of use, tariffs, tampering, outage detection etc. Consequently, software innovations, such as the development of Meter Data Management (MDM) suites, have taken place to address this issue; they process the vast volumes of data received and deliver this data to the relevant department that will use it.

Due to the benefits it has across the value chain, smart metering is here to stay and is going to grow rapidly. Consequently, utilities need to understand how to approach the daunting task of overhauling existing systems. There will certainly be a key role for technology vendors to demonstrate how they can facilitate smart metering and deliver the benefits it provides.

www. datamonitor.com