Utilities around the world will invest a total of around $30 billion over the next five years to install more than 300 million smart meters, bringing many of the world’s most populous countries to full deployment but leaving other parts of the globe with relatively low penetration.
Cumulative investment in advanced metering infrastructure (AMI) will rise to $127.6 billion by 2025, up from $97.4 billion this year, according to a new report from Wood Mackenzie Power & Renewables. Over that period, total smart meters deployed will rise from about 1 billion to nearly 1.3 billion.
Smart meters are a key tool for utilities seeking to gain insight into and control over their electricity distribution networks, replacing manually read electromechanical meters with digital, two-way communicating devices that measure and share usage data in hourly or minute-by-minute intervals.
This “interval data” is a prerequisite for implementing time-of-use rates or other billing methods that take account of what time of day customers use power. It’s also a potential data gold mine for utilities seeking to analyze customer energy-usage patterns and manage the increasing number of customers equipped with rooftop solar panels, behind-the-meter batteries, plug-in electric vehicles and other distributed energy resources.
Asia will dominate the market with roughly 40 percent of all new meters deployed by 2025, or more than 136 million units, driven by nationwide deployments in Japan and South Korea, as well as expected growth in the still slow-moving market in India. By 2025, about 850 million smart meters will be installed across Asia, including 640 million in China, which largely completed its first-generation AMI rollout last year, along with 82 million in Japan and 22.5 million in South Korea.
India, with about 300 million potential metering endpoints, is expected to be the second-largest market behind China, though it hasn't yet met its own expectations for AMI deployments, with only about 7.7 million meters deployed as of last year, said Francesco Menonna, Wood Mackenzie Power & Renewables analyst.
Several new government programs are expected to boost deployment to 40 million by 2025. And unlike China's market, which is dominated by domestic manufacturers, India's market is open to global competition.
"My view on India is that it’s a market with huge potential — starting small but starting to move," Menonna said.
Slow smart meter rollout in Germany
Europe will spend about $17 billion, or about $2.9 billion per year, to add more than 110 million meters by 2025, as countries including France, Spain, the Netherlands, the U.K. and others move toward full deployment. France, Spain and the Netherlands are expected to hit the European Union's target of 80 percent of all customers having smart meters installed by the end of 2020, and the U.K. has stated that it will hit the target in 2024, Menonna said.
Other Western and Northern European countries are expected to meet similar goals. One notable exception is Germany, where government data privacy regulations and questions of cost-effectiveness have slowed AMI rollouts.
Meanwhile, Italy and Sweden are expected to replace existing their AMI networks, among the oldest in the world, with newer and more capable technologies. AMI systems from top vendors such as Itron, Landis+Gyr, Sensus (owned by Xylem), Elster (owned by Honeywell) and Aclara (through its GE Meters acquisition) have become more capable over the past decade, adding more computing power to their meters and increased data bandwidth to their networks.
U.S. utilities, meanwhile, will spend about $3 billion to add about 24 million smart meters to the estimated 104 million deployed as of this year. By 2025, more than four-fifths of U.S. utility customers will be equipped with smart meters, up from about two-thirds this year.
But this forecasted growth may be slowed if state regulators delay a significant number of utility projects, Menonna said.
Over the past two years, regulators in Massachusetts, Virginia, Kentucky and New Mexico have blocked multimillion-unit smart meter deployments over concerns of cost-effectiveness as well as lack of clear metrics on how they’ll benefit customers.
Latin America and Africa will see less robust growth over the next five years, WoodMac forecasts. Fewer than one in five Latin America utility customers will be equipped with smart meters by 2025, despite significant rollouts in Mexico and Brazil. Much of Africa remains without smart meters, although Egypt's government plans to deploy 30 million of them over the next 10 years.
The Wood Mackenzie report AMI Global Forecast 2020-2025: H1 2020 explores AMI meter installations and expenditure between 2017 and 2025.