By Srivatsan M R
The Asia Pacific (APAC) region is at the verge of entering into a huge growth phase for Automatic Meter Reading (AMR) in the energy meters market. Frost & Sullivan estimates the the AMR market in Asia Pacific region will grow at a compound annual growth rate (CAGR) of 63.2 percent during 2008-2015. The growth in the short term (2009-2010) is expected to come from replacement of all the existing energy meters in South Korea and New Zealand. The growth in the medium term (2011-2012) is likely to be driven by the mass rollout of AMR meters in Australia. The growth in the long term (2013-2015) is expected to be strengthened by AMR rollouts in Japan. Currently the rollout of AMR in South East Asian countries looks unlikely before 2015. But it is necessary to monitor the market closely as the results of the trials that are being conducted in the region may indicate future rollout plans. Since replacement of meters is in the bubble phase in the Asia Pacific region, meters and communication vendors are expected to maximise their revenues during this time frame.
AMR MARKET INTRODUCTION
AMR meter reading technologies can be segmented as shown in the figure below. Broadly AMR technologies can be divided into one way and two way communication. In one way, only the meter sends data to concentrator at predefined intervals. Where as in the case of two way, the concentrator sends commands to the meters and the meter responds to the commands. There have been few small installations of one way AMR systems in the US. The biggest drawback with one way communication is that features such as demand side load management cannot be accomplished. Currently with the rapid development of communication technology, it is quite clear that two way communications is going to lead the way and one way communication will be non existent soon.
Two way communication can be further divided into PLC or power line carrier based technology, RF mesh based technology and CDMA/GSM based technology. In PLC there are two main categories: one is high bandwidth, short distance, low and medium voltage technology, also popularly known as DLC (distributed line carrier); the second is low bandwidth, long distance and high voltage technology. One major difference between PLC and DLC is that with PLC technologies the data can pass through distribution transformers where as with DLC this is not possible.
RF mesh technologies are generally divided as per the frequency band in which they operate. The first one is 900 MHz, which is free to use in most of the countries; second is 2.4 GHz, which is free to use throughout the world; and third is 400/500 MHz, which is proprietary frequency band in most of the countries.
CDMA/GSM based technologies have meters with SIM cards installed in them and use the cellular network to communicate with the meter.
There is no single AMR technology that seems to be dominant in the Asia Pacific region. South Korea has decided to go with DLC technology that it has developed in association with a local company. In New Zealand RF mesh technology seems to be a clear winner as the retailers are driving the AMR rollout and they don’t want to be dependent on the distribution companies to use the power lines for any PLC technology. In Australia there are strong indications that most of the utilities prefer RF mesh technology after trials with different AMR technologies. But the RF mesh solution may not be able to provide the utilities in the state of Victoria with a complete reading solution. Hence there may be a small percentage of meters that may be read using GSM based modems. The rest of Australia is expected to follow the state of Victoria and adopt RF mesh as the main AMR technology. But again there could be some utilities in Australia, especially the ones located in the West of the country, that may go for PLC technology as the locations of the meters in these regions are remote and difficult to cover with RF technologies. In Japan it seems that the Tokyo Electric power Company (TEPCO) and utilities close to TEPCO would go for PLC based technology. Currently TEPCO is actively evaluating the different PLC technologies available. The rest of Japan (ie Kansai Electric power Company and utilities close to Kansai) are expected to go with RF mesh technology developed by a sister company.
As can be seen from the current trends there is no single AMR technology that can be declared a clear winner. Utilities consider many factors when deciding on AMR technology to be used. Also a single technology may not be sufficient to read all the meters within the coverage area. A mix of a minimum of two technologies may be used by utilities to cover all the meters. Despite implementing AMR, it could be possible that some small percentage of meters may need to be read manually, as these meters could be located in areas where they may not be accessible using PLC or RF mesh technology.
UTILITIES TO SELECT
The following are some of the key factors considered by utilities before mass rollout of AMR in the APAC region.
Price plays a critical roll in the decision to select a particular AMR technology for mass rollout. The cost that the user pays for AMR can be divided into two groups. One is the initial investment for modems, concentrators, repeaters and backend software and the second is running costs which includes maintenance fees and fees for resources used by a particular AMR technology. PLC is very attractive from the price point of view, as most of the utilities own the power lines. Hence they don’t need to pay any cost to use them. Also with some of the PLC technologies the initial investment is also not very high as the distance covered is long. But with most of the high bandwidth DLC technologies the distance covered is very short due the attenuation of signal during transmission. This creates a need for more repeaters and concentrators, which may make DLC based AMR rollout expensive. With RF mesh the initial investment cost is high as the utilities will need to pay for setting up concentrators and repeaters on locations that may not be owned by them. But in general the area covered with one concentrator for RF mesh technologies is much higher than DLC technologies. Also with the use of free frequency band there is no need for utilities to pay for bandwidth use. Hence utilities in the APAC region consider all the factors mentioned above to finalise the lowest cost and most suitable AMR solution for itself.
Reliability for AMR meters is defined as the percentage of the data received from the meter that is error free. This is very critical, as the data from the meters is used for revenue billing. Reliability of the AMR solution again depends on the way inherent communication protocol handles error during transit of signals. Hence the utilities analyse the way each vendor handles the error occurrence and recovery from the error. Data is very critical for energy meters; hence the protocol should ensure it gets the correct and timely data from the meter. Despite all the efforts in the protocol to ensure the data received is error free, there will be a small percentage of errors. The ideal AMR system should have a mechanism to detect the error and recover from it.
Scalability with respect to AMR meters means how many nodes (metering end points) the AMR system can handle. Currently all the trials that have been conducted have been on small quantities from 1,000 to 5,000 end points. With the number of end points increasing, the backend system may get overloaded and crash. Hence the AMR vendors have to make sure that with the scaling up of the AMR rollout, the software in the backend system is geared to handle the huge amount of data received from all the meters connected. With most countries going with the 30-minute interval data as the standard feature, scalability of the system to millions of end points is one of the most critical issue that the utilities keep in mind when selecting an AMR solution.
All the data read form the meter is used for billing the customer. When using AMR the utilities want to make sure the end customer or anyone else cannot tamper with the data being read from the meter by modifying the data transmitted to the concentrator. The ability for anyone to modify the data will again depend on the inherent data security built into the communication protocol used by a specific AMR technology. Hence the utilities carefully analyse the security features of the communication protocol used by different competing AMR vendors.
BUSINESS MODELS IN THE AMR MARKET
Business models that are currently being used in the AMR rollout can be broadly divided in to following categories:
Pure sale of equipment: In this type of business model the meter manufacturers and the communication providers sell all the equipment to the utility and train the utility field engineers on the products. The utility is then responsible for installing and maintaining the equipment. Sometimes a single vendor sells both the meters and the communication equipment. But there is also an option available for utilities to buy these products from different companies. The current trend especially in Australia is to have multiple vendors for the meter and to select a single vendor for communication equipment. Due to this arrangement all the meter vendors need to integrate the communication modem of the selected vendor in their meter design. Utilities prefer this kind of arrangement as it gives them flexibility and multiple options with meters.
Sale of equipment and installation: In this case a single vendor gets the contract to sell the meter, communication and the order to replace the current meters with new AMR enabled meters along with installation of all the other communication equipment. Many of the vendors prefer this model as they can make bigger margins with this type of arrangement as the utilities give the vendors a bundled order for equipment and installation. Utilities that are generally not very informed about AMR technologies are comfortable giving the complete order to a single service provider. They prefer this model as there is much less effort needed from the utility. Sale of equipment, installation and maintenance: This case is one step further than the case mentioned earlier. The vendor is also responsible for maintaining the equipment after installation. Again the utilities that prefer less involvement and are comfortable giving the complete order to a single vendor adopt this model.
The major meter providers such as L&G, GE Energy, Actaris, EDMI and Elster are likely to play a bigger role in the mass rollout of AMR meters in the APAC region. Most of the meter manufactures have developed their own AMR communication technology that is either based on PLC or RF. Apart from the manufacturers, communication providers such as Silver Spring networks, Aclara Technologies and ARC innovation have a definite role to play in the rollout of AMR meters.
Implementation of the AMR industry electric meter segment comes with opportunities in many different areas. With the mass rollout of AMR there will be need for a workforce to replace all the meters, install new AMR enabled meters and verify the operation of new meters. The meter vendors have the opportunity to sell AMR enabled meters to utilities. The communication vendor will sell modems, concentrators, repeaters and back end software. AMR meter rollout also brings the need for data analysis and GUI software that help utilities to analyse and do billing. Frost & Sullivan expects the AMR meters market size to reach $1.22 billion by 2015 at a CAGR of 63.2 percent during 2008-2015. The market size estimates do not include modems, and communication infrastructure. The geographic scope of the market covers only Japan, Korea, Australia, New Zealand, and Southeast Asia.
KEY CHALLENGES FOR SUCCESSFUL IMPLEMENTATION OF AMR IN APAC REGION
Though the AMR market has ample opportunities for vendors and service providers, the challenges in successful implementation cannot be ruled out during the period 2009-2015. The following are some of the challenges that are likely to be faced by the technology in the region:
Effective business case: As in all businesses there is a need for a strong business case for mass AMR rollout to be approved. Factors such as labour cost, current state of power distribution infrastructure, etc make the overall business case either strong or weak for countries in the region.
Green awareness: Green awareness is the awareness in the community about the importance of energy efficiency and climate change. Depending on the level of green awareness in each country there is strong or weak support among the people for mass rollout of AMR meters.
Political issues: Meter reading and billing currently provides lot of jobs in many countries. But with mass AMR rollout most of these jobs would be lost. Hence this becomes a very political issue. Many utilities are controlled by governments; hence this puts pressure on the utilities not to approve mass AMR rollouts.
AMR technology evolution: Currently all the AMR technologies that are present in the market are in their early stages. Most of the claims are just on paper. There is not much field data available to prove the claims of different vendors. Hence this makes the utilities very slow in the decision making process. Most of the utilities want to delay the decision until they can see practical proof of benefits from mass AMR rollout.
The AMR market in APAC looks attractive. The growth during 2009-2010 is expected to come from replacement of 21.0 million meters in South Korea and replacement of 4.0 million meters in New Zealand. The market growth during medium and long term looks positive as the demand from other countries is likely to increase during 2011-2015. The market is open for opportunities for equipment suppliers and service providers. As discussed in the article, the adoption of technology and standards varies across countries in the region. Hence constant monitoring of these markets becomes prominent in capturing opportunities.
Frost & Sullivan is conducting a research study on “Automatic Meter Reading Markets (AMR) in Asia-Pacific”, which is planned for publishing in 2009. Frost & Sullivan will look at the AMR market developments across different countries in the Asia Pacific region and quantify the growth opportunities available for the meter manufacturers during 2009-2015.