RESEARCH REPORT. Executive Summary: Smart Meters in Europe

Transcription

1 RESEARCH REPORT Executive Summary: Smart Meters in Europe Advanced Metering Infrastructure for Electric Utilities in Europe: Business and Technology Issues, Country Profiles, Key Industry Players, and Market Forecasts NOTE: This document is a free excerpt of a larger report. If you are interested in purchasing the full report, please contact Pike Research at sales@pikeresearch.com. Published 3Q 2012 Eric Woods Research Director Neil Strother Senior Research Analyst

2 Section 1 EXECUTIVE SUMMARY 1.1 Europe s Smart Metering Boom By 2020, more than 237 million smart electricity meters will be deployed across Europe and almost 90% of installed electricity meters in Western Europe will be smart. Smart meters will provide a platform for energy efficiency improvements, new customer services, and network optimization. To achieve that goal, more than 30 million meters will need to be deployed annually during the peak years of activity and major upgrade programs will need to be executed in parallel in Europe s largest countries, along with many smaller projects in a diverse range of countries and utilities. The adoption of smart metering on this scale across many of the world s most advanced economies will drive a new wave of technical and market innovation in electricity metering that will have an important impact on the global market. With the move to mass deployment comes increasing scrutiny of the benefits of smart meters and their impact on consumers. The critical assessment of the value of smart meters will become more urgent as the next phase of large-scale rollouts becomes a reality. The economic crisis in Europe has so far not been a brake on smart meter programs, but it is putting additional pressure on utilities and governments to ensure that the benefits of smart meters are realized and made visible to customers. 1.2 Smart Meters: Enablers for a Low-Carbon Europe Smart meter programs in Europe are not just a utility operations issue; they are also a core part of the energy policies of the European Union (EU) and of many national governments. Smart meters have been given a key role in the EU s ambitious program to produce a low-carbon, energy-efficient Europe. Smart meters and associated developments in smart grids are seen as enablers of a low-carbon Europe that, by 2050, will have reduced its greenhouse gas (GHG) emissions to 80% of its 1990 level and almost completely ended its dependence on fossil fuels. In the process, Europe is hoping to establish a leadership role in innovative energy technologies. The stepping stones to this ambitious goal are the well-known targets for % reduction in GHG emission, 20% of energy provided by renewable sources, and 20% improvement in energy efficiency. These goals are now enshrined in a wide range of national targets, laws, and regulatory orders. The role of smart meters in achieving the EU s energy goals was clearly identified in the European Commission s Third Energy Package. Smart meters are expected to make a major contribution to energy efficiency and to the creation of a more consumer-focused and competitive energy market. Smart meters are also seen as an important element of a broader strategy for smart grids and the upgrading of the European energy infrastructure. 1

3 1.2.1 Smart Meters and Energy Efficiency The importance of the EU s commitment to smart meters is heightened by the fact that energy efficiency is the area where European countries are most notably underperforming in relationship to the targets. The European Commission estimates that current trends show a reduction of less than 9% in primary energy consumption will be achieved by 2020, well short of the 20% target. Recent policy announcements aim to improve performance on energy efficiency, though EU countries are still likely to fall short of the original goals. A new energy efficiency directive proposed in 2012 will increase the expectations being placed on smart meter programs and may also affect the nature of the rollout and the supporting technologies, to ensure greater focus on consumer engagement and improved energy efficiency. We are also likely to see stronger measures taken to ensure commitment to these goals across EU member states Smart Meters and Smart Grids Smart meters are not only related to consumer issues, but also to the large-scale energy infrastructure improvements needed to support other aspects of the 2020 targets. Smart meters have a role to play in relation to the key aspects of that strategy, including:» Improving the integration of renewable energy sources into the grid, from large-scale renewable projects to distributed micro-generation. Smart meters will enable a range of demand management strategies, such as time-of-use (TOU) pricing, and will help network operators balance the fluctuations in supply created by a greater reliance on intermittent generation sources.» Supporting the wide-scale introduction of electric vehicles (EVs) and the demands of an extensive EV charging infrastructure. Smart meters will provide additional insight into the changes in energy demand created by EV deployment.» Providing detailed information on the low-voltage network, helping reduce network losses, improving outage management, and reducing operational costs. Smart meters will also enable utilities to better assess where they need to make network reinforcements in response to distributed renewable energy and EVs. 1.3 Market Challenges A more critical spotlight is being placed on smart meters, as more countries move to large-scale rollouts. These concerns relate to the precise benefits they will deliver, the cost of deployments, and issues around privacy and security. The emergence of such concerns is inevitable as we move closer to large-scale rollouts across Europe s largest countries. The task facing governments, regulators, utilities, and suppliers is to show the European public the advantage of smart metering for consumers, for national energy security, and for the environment. 2

4 Realizing those benefits requires both the consumer and network impact of smart meters are given due consideration. The relationship between smart meter deployments and other smart grid upgrades varies from country to country. Some countries still face a disjunction between the requirements of network operators and consumers, others are taking a more holistic view, and some are looking at innovative ways to bridge the gap. The challenges facing the European economy inevitably cast a shadow over such an ambitious investment program. So far, there has been no significant change in smart meter programs that can be directly attributed to the crisis in the Eurozone. Publicly traded utilities have seen the share prices fall (and have also been impacted by changes, for example, to German energy policy), and some slowing down of programs has occurred. However, most European countries see the clean technology market as one of the key areas for future growth and are making the case for smart meter deployments to create local jobs The Market Today EU countries have a mandate to deploy smart meters to 80% of customers by 2020, unless they can make an economic case for not doing so. It is expected that most countries will meet this target. Of the five largest countries, representing around 60% of meters in the EU, only Germany has yet to make an explicit commitment to a nationwide rollout. Deployment of smart meters across Europe will be steady over the next 10 years, with the most intensive activity between 2015 and The biggest announced programs are in Spain, France, and the United Kingdom. The Spanish and British rollouts are already underway and will gain momentum over the next few years. France is expected to begin procurement for its national project in Again, the biggest uncertainty remains the German market. The German government has been driving a standard specification for smart meters, but has yet to commit to a mandated national program. Germany s policy should become clearer before the end of Norway and the Republic of Ireland are among the smaller countries that have recently announced a mandated program. A number of countries in Eastern Europe have begun initial deployments of smart meters, notably the Czech Republic, Poland, and Russia. The need to secure revenue and reduce losses through theft and corruption provides an additional impetus to new meter deployments in Eastern Europe, which will gradually spur the deployment of smart metering solutions. The market outside the EU and in Eastern Europe, generally, will be characterized by smaller local deployments over the next few years, with larger-scale deployments developing in the second half of the decade and beyond. Europe is still a patchwork of countries with different market structures, political coloring, and economic strengths and weaknesses. The importance of a common and accepted policy across 27 EU member states should not be underestimated, but neither should the specific challenges within each country. 3

5 1.3.2 Technology Trends A number of countries and large utilities are already committed to using power line communication (PLC) for their smart meter programs and PLC will continue to have a leading role in the European meter communications market, but not to the exclusion of other solutions, particularly Global System for Mobile Communications (GSM) and General Packet Radio Service (GPRS). The role of private radio frequency (RF) systems is less clear. If the United Kingdom accepts the proposals from the SmartReach consortium for a nationwide communication infrastructure based on Arqiva s radio tower network, then the picture will look very different. RF mesh networks are likely to remain a niche deployment, unless regulators provide a specific allocation of spectrum for their deployment. ZigBee is still the preferred choice for the emerging home area network (HAN) market, but not necessarily for communication beyond the meter and the in-home display (IHD), gas meter, or in-house gateway. Other technologies may be chosen for links to the IP-based home network. One of the most interesting developments in Europe will be the impact on the supply chain of large national deployments. These programs are driving large-scale standardization programs that require metering suppliers to meet strict requirements on interoperability. This enables utilities to optimize their procurement processes and drive increased price competition in the market. Further innovations will also be driven at the network level and across a number of different smart meter platforms. PLC smart meter deployments, for example, are also driving the implementation of a new generation of intelligent data concentrators that will support a range of distribution automation (DA) tasks. In the United Kingdom, new models for centralized data sharing and exchange are being developed to share information between network operators and energy suppliers. The focus on energy efficiency and consumer choice will also open up the opportunity for energy suppliers to offer new services for energy management and home automation. At the same time, utilities will need to meet tough EU and national rules on data privacy. A strong emphasis is being placed on consumer control over their data and how much they share with utilities and other parties. 4

6 1.3.3 Market Forecast Pike Research estimates that around 212 million smart meters will be deployed in Europe between 2011 and 2020, driven by EU and national mandates as well as utility-driven operational efficiency programs. Annual deployments will reach their peak in 2018, when nearly 33 million meters are expected to be deployed, more than 27 million of those in Western Europe. Pike Research forecasts that the smart meter market in Europe will be worth $2.35 billion by 2018 at the peak of major rollout. By 2020, the market will be worth almost $1.6 billion annually. Cumulative revenue between 2011 and 2020 will be almost $16 billion. While the Western European market will peak before the end of the decade, the Eastern European market will continue to show strong growth beyond By 2020, smart meters will have almost 90% penetration of the electricity metering market in Western Europe and 28% in Eastern Europe. By 2020, a total of more than 237 million smart meters will be installed across Europe. Chart 1.1 Smart Meter Installed Base, Western and Eastern Europe: Western Europe Eastern Europe (Millions) (Source: Pike Research) 5

7 Section 9 TABLE OF CONTENTS Section Executive Summary Europe s Smart Metering Boom Smart Meters: Enablers for a Low-Carbon Europe Smart Meters and Energy Efficiency Smart Meters and Smart Grids Market Challenges The Market Today Technology Trends Market Forecast... 5 Section The Smart Meter Market in Europe A Market Taking Off Definitions and Scope Smart Meter Definition Regional Scope: the EU and Beyond Other Utility Smart Meters Smart Meters and European Energy Policy The Road to Smart Meters and the Third Energy Package Smart Meters and Energy Efficiency in Europe Competitiveness and the Internal Market Smart Meters and European Smart Grids

8 2.5.1 Improving Visibility Helping Accommodate Renewable Energy The Benefits of Smart Meters Helping Customers Monitor and Control Energy Use Enabling Flexible Pricing Schemes that Reflect Real Cost of Energy Dynamic Matching of Generation and Consumption Patterns Net Metering for Solar and Wind Power Improving the Efficiency of Network Operations Smart Meter Deployments in Europe Western Europe Eastern Europe Communications Networks: the European Approach HAN and IHD Market Dynamics European Requirements and Innovations The Challenge for European Utilities Governments and Regulators: National Needs and International Obligations The Supplier Landscape Market Challenges Funding and the Economic Crisis Delivering the Smart Meter Programs Consumer Concerns Skills and Resources Interoperability, Standards, and Future Proofing Security and Privacy

9 Section Technology Issues Smart Meter Basics EU Metering Standards Meter Communication Technologies in Europe Power Line Communications PRIME G3-PLC Specification Open Smart Grid Protocol Other PLC Standards Broadband over Power Lines Cellular/Wireless Networks WiMAX RF Mesh RF Point-to-Multipoint Home Area Networking Technologies RF Home Area Networks ZigBee Other RF HAN Technologies Power Line Carrier for HANs Security and Privacy European Standardization Process European OPEN meter Project

10 Section Country Profiles France Summary Market Background Smart Meter Projects Germany Summary Market Background Smart Meters Italy Summary Market Overview Smart Meters The Netherlands Summary Market Overview Smart Metering Nordics Summary Market Overview Sweden Finland Norway Denmark

11 4.6 Spain Summary Market Background Smart Meters United Kingdom Summary Market Overview Smart Meters Eastern Europe Summary Market Overview Russia CIS Countries Poland Czech Republic Bulgaria Other Eastern European Projects Section Key Industry Players Utility Profiles British Gas EDF Group Enel Group E.ON AG Iberdrola

12 5.1.6 Vattenfall Supplier Profiles Aidon Arqiva Connode CURRENT Deutsche Telekom Echelon Corporation Elster Group Hewlett-Packard IBM Iskraemeco Itron Landis+Gyr Logica Powel Power Plus Communications AG Sensus Vodafone Xemex Standards and Industry Bodies European Regulatory Organizations ACER ERGEG/CEER European Standards Organizations

13 CEN CENELEC ETSI Industry Organizations DLMS User Association ESMIG ESNA and OSGP Prime Alliance ZigBee Alliance Section Market Forecasts Forecast Introduction European Smart Meter Shipments and Revenue Total European Market Western Europe Eastern Europe Smart Meter Shipments by Meter Type Basic Smart Meter Shipments Advanced Smart Meter Shipments Smart Meter Shipments by NAN Technology Advanced Smart Meter Shipments by HAN Technology Section Company Directory Section Acronym and Abbreviation List

14 Section Table of Contents Section Table of Charts and Figures Section Scope of Study Sources and Methodology Notes

15 Section 10 TABLE OF CHARTS AND FIGURES Chart 1.1 Smart Meter Installed Base, Western and Eastern Europe: Chart 6.1 Smart Meter Unit Shipments, Western and Eastern Europe: Chart 6.2 Smart Meter Revenue, Western and Eastern Europe: Chart 6.3 All Electrical Meter Unit Shipments, Western Europe: Chart 6.4 Smart Meter Shipments by Selected Countries, Western and Eastern Europe: Chart 6.5 Smart Meter Installed Base by Selected Countries, Western and Eastern Europe: Chart 6.6 All Electrical Meter Unit Shipments, Eastern Europe: Chart 6.7 Smart Meter Shipments by Meter Type, Europe: Chart 6.8 Advanced Smart Meter Unit Shipments, Western and Eastern Europe: Chart 6.9 Advanced Smart Meter Unit Shipments as a Percentage of All Smart Meter Unit Shipments, Western and Eastern Europe: Chart 6.10 Smart Meter Unit Shipments by NAN Technology, Europe: Chart 6.11 Smart Meter Unit Shipments by NAN Technology, Western Europe: Chart 6.12 Smart Meter Unit Shipments by NAN Technology, Eastern Europe: Chart 6.13 Advanced Smart Meter Shipments by HAN Technology, Europe: Figure 2.1 Project Shortfall in EU Energy Efficiency Savings Against 2020 Target... 9 Figure 2.2 Average Amount in Euros per kwh of Electricity for Domestic Consumers in EU 27, November Figure 2.3 Share of Renewables in Energy Consumption by 27 Countries: 2005 and Figure 3.1 Functional Reference Architecture for Smart Metering Communications Figure 3.2 OPEN meter Architecture Figure 4.1 The U.K. Model for Smart Meter Communications Services

16 SCOPE OF STUDY Pike Research has prepared this report to present an analysis of the smart meter market in Europe. The report provides an analysis of European Union, national government, and industry initiatives for smart meters across Western and Eastern Europe. The report provides a strategic examination of the market focusing on key business drivers, technology issues, regulatory factors, customer demand dynamics, and the competitive landscape. It also examines the diversity of communications technologies being used to support smart meters across Europe. The forecasts cover shipment numbers, revenue and installed base of smart meters in Europe for the period of 2011 through There are also forecasts for the uptake of the smart meter communication technologies. SOURCES AND METHODOLOGY Pike Research s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Pike Research s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Pike Research s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analyst s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Pike Research s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Pike Research, a part of the Navigant Consulting, Inc. Energy Practice, is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Pike Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets. 111

17 NOTES CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value) (1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2012 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding. 112

18 Published 3Q Navigant Consulting, Inc Pearl Street, Suite 300 Boulder, CO USA Tel: This publication is provided by Pike Research, a part of the Navigant Consulting, Inc. ( Navigant ) Energy Practice and has been provided for informational purposes only. This publication may be used only as expressly permitted by license from Navigant and may not otherwise be reproduced, recorded, photocopied, distributed, displayed, modified, extracted, accessed, or used without the express written permission of Navigant. Navigant makes no claim to any government data and other data obtained from public sources found in this publication (whether or not the owners of such data are noted in this publication), and makes no express or implied warranty, guaranty, or representation concerning the information contained in this publication, its merchantability, or its fitness for a particular purpose of function. Any reference to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply an endorsement, recommendation, or favoring by Navigant. Navigant does not assume, and hereby disclaims, any liability that may result from any reliance on or use of any information contained in this publication, or for any loss or damage caused by errors or omissions in this publication. This publication is intended for the sole and exclusive use of the original purchaser. If you do not have a license from Navigant covering this publication, please refrain from accessing or using this publication. Please contact Navigant to obtain a license to this publication. 113