When the ongoing COVID-19 crisis fades into the past and the global economy recovers, the long-term view for smart meter deployment and emerging market growth is strong, writes Stephen Chakerian.
North America, Western Europe, and East Asia are largely concluding most of their first-time smart meter rollouts over the next few years and attention has shifted to emerging markets. The leading emerging market countries are forecast to deploy 148 million smart meters (excluding the Chinese market which will deploy more than 300 million more), representing billions of dollars in investment over the next five years. Of course, the global pandemic is far from settled, and emerging market countries are now experiencing the greatest challenges in vaccine access and distribution. But as the ongoing crisis fades into the past and the global economy rebounds, the long view for emerging market growth is strong.
“Emerging markets” is a catch-all term for many countries, each exhibiting unique characteristics, drivers, and challenges in terms of getting smart metering projects off the ground. Given this diversity, the best way to understand the emerging market landscape is to consider the respective regions and countries individually.
India has generated perhaps the most interest among smart metering vendors, and rightly so, as the central government uses every policy lever at its disposal to promote mass deployment of AMI meters.
The centrepiece of these efforts is the publicly-owned Energy Efficiency Services Limited (EESL), which is seeking to enlist India’s state governments and utilities in a generously-financed smart meter rollout programme. Struggling with endemically poor revenue collection, most of India’s public and state utilities are in dire financial straits, and many have eagerly accepted EESL’s offer. This means AMI deployments across the country will begin to exceed 5 million meters annually within just a few years. Elsewhere in South Asia, Pakistan, Nepal and Bangladesh recently announced large-scale AMI rollouts. South Asia has been suddenly propelled towards the top of the emerging market regional rankings.
Progress varies in neighbouring Southeast Asia, from almost no deployments in Vietnam to full large-scale rollouts in Malaysia, where TNB continues its 8.5 million-meter deployment, notable for the direct involvement of US-based vendor Trilliant.
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Thailand’s PEA follows at a more gradual pace, beginning with a flagship pilot project in the tourist city of Pattaya, supplied by a combination of domestic and international vendors. Large-scale tenders are expected soon in Thailand, which should lead to steady investment throughout the 2020s.
Indonesia, the region’s largest market, is still a few years away from major deployments, although rumblings of a one to two million-meter AMI project at national utility PLN have persisted for years.
Central and Eastern Europe
Many of the most economically advanced and investment-ready emerging market countries are found in Central and Eastern Europe (CEE). This has not always translated to immediate growth. However, the region will continue to benefit from its proximity to Western Europe, seen through the presence of AMI-forward utilities such as EDF (France), Enel (Italy), E.ON (Germany), and EVN (Austria), along with Western European vendors including Landis+Gyr, Sagemcom, and Kamstrup that view the CEE region as a key revenue source for the future. While EU-mandated AMI targets largely did not apply to CEE countries, they can be credited with fostering interest and early action in smart metering investment in the region.
The Middle East and North Africa (MENA) can be roughly split between the affluent Gulf and the lower-middle-income countries of North Africa and the Levant. Both groups are moving to deploy smart metering infrastructure, though the former has had more rapid success. Leading the way is Saudi Arabia, installing 10 million smart meters at a breakneck speed, due to finish this year. The UAE and Kuwait are rolling out meters at a similar pace. The most optimism outside of the Gulf may be seen in Egypt, where a 250,000-meter pilot programme is ongoing and will likely lead to larger deployments soon.
The countries of Eurasia share a legacy of energy inefficiency dating back to the Soviet era, with smart metering infrastructure featuring as a key pillar of efforts to rectify the problem. Utilities in Russia and Ukraine have self-financed smart metering deployments on a limited scale, mostly serviced by affordable domestic vendors.
Uzbekistan, Kyrgyzstan, and Azerbaijan are also conducting projects, though are highly dependent on foreign assistance. Eurasia also poses a greater investment risk than other emerging market regions, but despite such obstacles, the region has witnessed several success stories as of late. An ADBfunded project recently saw the installation of 1.5 million smart meters in Uzbekistan, and the Uzbek government will now seek to self-finance the deployment of AMI across the rest of the country. How such an effort unfolds could speak volumes on whether or not a full-scale national rollout in the region can be sustained without external support.
Utilities across sub-Saharan Africa continue to struggle with lost revenue on account of both technical power losses and nontechnical losses such as electricity theft. Advanced meters would swiftly and significantly improve revenue streams, but many utilities face the basic dilemma of being utterly ill-equipped to finance such deployments. Foreign assistance has been and will continue to be essential, and utilities in Nigeria, South Africa, Kenya, Ghana, and elsewhere on the continent have sought to overcome these obstacles by putting forward ambitious metering
plans for the coming decade. This was made possible in part by the influx of low-cost smart meters from China, a trend being seen across most emerging markets regions.
Latin America’s market – something of a disappointment compared with expectations a decade ago – is poised for a turnaround Major regulatory breakthroughs have been reached in Chile and Colombia that could serve as a model for the rest of the region. A decline in AMI costs prompted by the entry of Chinese manufacturers has made largescale deployment more financially feasible.
Meanwhile, international utilities – most notably Enel, which operates distribution utilities in several Latin American countries – have brought valuable project know-how and a readiness to invest in smart metering infrastructure to the region. The majority of the Latin American market will be made up of a handful of large, regional leaders including Brazil, Mexico, Colombia, and Chile, while opportunity will also exist in small, energy progressive countries such as Costa Rica, Panama, and Uruguay. Brazil will be the largest market by far, and one of the more immediate investment destinations, as multiple large-scale projects are set to begin in the next two years.
China’s metering market – the world’s largest – remains largely closed off to non-Chinese meter manufacturers. Now undertaking its second national rollout, Chinese vendors will continue to dominate this market, led by Clou, Hexing, Inhemeter, Holley Metering, Kaifa, Linyang, Sanxing, Star Instruments, Wasion, ZTE, and others. Most of these vendors will also continue their efforts to branch out into international markets.
Across a diversity of emerging market countries with unique circumstances and histories, one commonality is a steadily improving environment for smart metering development. At the moment, it can be hard to look past the global pandemic, but even from a conservative viewpoint, prospects for sustained investment have never been stronger. Drawing on technological advances and lessons learned over the past two decades, AMI deployments are set for robust growth in all emerging market regions throughout the 2020s. SEI
About the author
Stephen Chakerian is a Senior Research Analyst at Northeast Group LLC, a smart infrastructure market intelligence firm based in Washington, DC. He has been covering global smart grid markets for more than five years. Steve received his Master’s in International Relations and International Economics from Johns Hopkins University’s School of Advanced International Studies.