IDC Energy Industry Insights Community –
On March 8, IDC Energy Insights launched the Worldwide Quarterly Smart Meter Tracker, a new data product tracking global deployments and shipments of Smart Meters. Unlike FERC and the EIA, which count both retrofitted electromechanical meters and meters with one-way communications, IDC's tracker focuses on truly 'advanced' metering and communications solutions; IDC defines a "smart meter" as a solid-state electric meter with integrated two-way communications.
Global smart meter deployments have more than doubled since 2005, and several findings have emerged from IDC's research of the US Smart Meter market (my colleague Adam Hazdra commented on the EMEA market here).
Push from Above
While smart meters have slowly been emerging since 2001, the Energy Independence and Security Act of 2007 (EISA 2007) and legislation enacted by large, capacity constrained states have ushered in a new era of digital information in the utility industry.
Section 1307 of EISA directed States to encourage utilities to deploy smart grid technology (as defined in Section 1301) and recommended that States allow for rate recovery, including "a reasonable rate of return" on associated CapEx.
Early adopters of EISA's recommendations include Texas and California, two States that had suffered through several rounds of rolling blackouts in the early and mid-2000's. Texas had encouraged Smart Grid deployment even before EISA with 2005 House Bill 2129, and directed the PUCT to establish a rate recovery mechanism in 2007 with HB 3693. Similarly, California enacted Senate Bill 17 in 2009, requiring utilities to file a Smart Grid deployment plan with the CAPUC by July of 2010. Pennsylvania became another early adopter under Governor Ed Rendell, implementing HB 2200 as Act 129 in 2008; Act 129 specifically targeted smart meters, requiring all electric distribution companies with more than 100,000 customers to submit a smart meter technology procurement and installation plan.
Current pilots and deployments in Texas, California, and Pennsylvania represent more than 21 million contracted endpoints, and have helped to drive the smart meter base in America from less than 2 million in 2007 to nearly 20 million by the end of 2010. The next wave of smart meter deployments will be driven by a similar 'push from above' as more than $4.3 billion in smart grid ARRA funding is spent over the next three years.
While the breakneck pace of smart meter deployment will slow after 2013, IDC Energy Insights forecasts that US smart meter installations will surpass 80 million by 2015 as utilities will find a business case to replace aging AMR and drive-by systems and as demand begins to grow for HAN and remote load-control functionality.
Established Players Lead the Way
Itron and Landis+Gyr dominated the US meter market in 2010, combining to account for more than 60% of total installations. Landis+Gyr commanded more than 50% of the 2010 Muni and Coop markets, while Itron (> 40%) and Sensus (nearly 20%) lead in major IOU deployments.
Smart Meter communications in the United States continue to be dominated by RF-Mesh based solutions and more than 75% of endpoints installed in 2010 are communicating through mesh networks. Itron's OpenWay solution leapfrogged both Landis+Gyr and start-up darling Silver Spring Networks in 2010 as major deployments at San Diego Gas & Electric, Southern California Edison, and CenterPoint Energy came up to speed.
While mesh remains the preferred solution in the IOU market, PLC, or power-line communications, has historically dominated the electric cooperative market. Despite recent gains by Sensus' RF-Tower based offering and RF-Mesh solutions provided by Tantalus and Elster, this trend continued as PLC captured more than 50% of the Coop market in 2010. Aclara maintained a narrow lead over Cooper Power Systems and Landis+Gyr's TS2 solution in 2010 deployments of PLC at US cooperatives.
The Smart Grid Investment Grant program launched by EISA and furthered by ARRA has given tremendous momentum to the US Smart Meter industry. Much about the marketplace however, remains uncertain and will be determined in the next 5-10 years.
* How will low-capacity PLC networks hold-up as HAN's begin to place demands on bandwidth?
* What effect will grassroots concern over electromagnetic radiation have on wireless deployments?
* Will declining cellular data prices overcome utility concerns regarding reliability and data security?
* What impact will cross-platform functionality have on vendor selection?
* How will the marketplace develop as startups rise and fall and Chinese manufacturers enter the industry?
* How will the increased integration and penetration of renewables influence smart meter adoption?
IDC's Worldwide Quarterly Smart Meter Tracker provides a quantitative look at the Smart Meter industry in North America, EMEA, and the Rest of the World, including shipments and installations by meter and communication vendor, market value, and a 5-year forecast.