London, U.K. --- (METERING.COM) --- January 29, 2007 – It is becoming apparent that a cast-iron investment case for AMR has yet to be made, and that current investments are being driven by regulatory intervention and not pure business decisions, according to a new report from independent market analyst Datamonitor.
In the search for technological solutions to reduce energy consumption, automated meter reading technology has been heralded as part of the jigsaw that will change consumer’s energy consumption patterns. It is argued that if consumers can get a real time perspective of how much their energy use is costing them at any specific time, they may be persuaded to reduce their consumption, or at least switch it to less costly time of the day.
Whilst analysts talk about AMR as a single technology, in reality the solution is comprised of a number of technological components which are all decided upon and configured. There are multiple options that exist for the actual meter that sits in consumers’ homes, and different communication options also exist for getting the actual meter data from the home to the utility company and back again. Additionally options exist for the hard and software systems to process and integrate the data.
The most interesting battleground is in the area of communication systems, where broadly speaking three different solutions exist – powerline communication, where the data is transported over the existing residential electrical power lines; fixed line transportation, where the data is transported over fixed telephone lines; and the most recent development, transportation of data using mobile networks.
This battle is currently being played out in the Swedish rollout by Vattenfall, as Datamonitor energy and utilities managing consultant David Hiller notes. “In Sweden Vattenfall is installing AMR in three different areas of the country and in each of these areas a different communication option is being utilized, with different combinations of powerline communication and mobile networks being employed.”
Whilst the technology to support the introduction of AMR has been around for some time, large scale European rollouts have not materialized in the way that some analysts expected. In the past costs have been prohibitive for utility companies, and the payback period for such investment was at best uncertain.
In the last three years we have seen two large scale European rollouts of the technology take place, the largest being in Italy with the installation of 30 million new electricity meters by Enel. “The Swedish rollout by Vattenfall is on a much smaller scale,” Hiller says.
To date, the installation of new meters has actually been driven by government intervention and regulation, Hiller says. “Whilst Enel and Vattenfall try to argue that the implementation of AMR has been made on the back of pure business investment decisions, this transparency is not clear to the market. Sweden has been prompted into the adoption of AMR by the government-imposed necessity for monthly readings.
“Enel’s rollout received a €1.1 billion ($1.4 billion) reimbursement from the government in 2005 to cover stranded costs. This covers the loss for Enel if they install an automated meter in a customer’s home, only for that customer to switch supplier before Enel has gained a return on its investment.
“In a future of liberalized energy markets across Europe it becomes difficult to ascertain which player in the value chain will be prepared to swallow the huge investment needed for large scale AMR rollouts without further regulatory or government intervention of one sort or another,” Hiller says.