A new law, which requires electricity companies in Sweden to collect meter data once a month from all customers, means that power utilities will need to install AMR units in 5 million homes by 2009. The leading energy group Vattenfall has already begun purchasing 425,000 units for installation in the coming years. The Swedish AMR vendor Senea estimates the market value will be 6,000 million kronor (US$700 million) over the next six years.
The leading energy group Vattenfall has begun purchasing 425,000 units for installation in the coming years. The Swedish AMR vendor Senea estimates the market value will be 6,000 million kronor (US$700 million) over the next six years.
There has been a long-running debate about reading electricity meters in Sweden. Initially the subject came up at the time of the deregulation of the Swedish energy market. The political process began in 1992 and was completed in 1996, when competition was allowed full rein in the newly created common Scandinavian electricity market.
However, consumers were required to install AMR devices on their own if they wanted to purchase power from a supplier other than their local energy company. Those stand-alone installations were so costly that changing electricity suppliers became far too expensive for ordinary consumers when compared to the reduction in energy costs. This requirement was therefore abolished in 1999, which led to a sharp downturn in sales of AMR systems in Sweden. At present power utilities only have to collect metering data more than once a year from very large customers – those consuming in excess of 100,000 kWh per year.
TURNING TOWARDS AMR
Now the tide seems to be turning once again, this time in favour of AMR. Energy prices have soared on the deregulated market, and the rapid restructuring and consolidation of the Scandinavian energy industry has spread much confusion among the public. On top of that, consumer groups have heavily criticised electricity bills for being incomprehensible and inaccurate, as the amount billed does not correspond with actual consumption. Environmental concerns also speak in favour of AMR. There is strong public interest in producing energy using renewable sources, which makes power conservation an important issue for the government, especially as it relies on support from the Green Party. Several public investigations have therefore been initiated to address the energy sector.
In May 2002 the Swedish Energy Authority (STEM) presented a report claiming that more frequent readings of electricity meters would benefit the entire economy to an amount of 600 million Swedish kronor (US$70 million) per year. STEM argues that overall power consumption would decrease and that electricity companies would be able to reduce costs for administration so much that it would justify slightly increased costs for energy distribution. STEM therefore proposed that every user of more than 8,000 kWh per year should have their electricity meters read at least once a month by 2006. That is about one-third of the energy users in Sweden.
By the year 2009, STEM wanted monthly readings of all meters. This would have meant that another 3.5 million AMR units would have had to be installed in the years after 2006. Despite the fact that the notion of a significant economic benefit through the use of AMR has been brushed aside as over-optimistic in another report from the energy consultant Sweco, the proposal has won acclaim among all but one of the political parties represented in parliament. The government did not, however, find it necessary to divide the rollout into two stages. In March 2003 it proposed a new bill requiring monthly readings of all electricity meters by 1 July 2009. By then AMR installations must cover all 5 million users in the country.
POWER UTILITIES PREPARE FOR AMR INVESTMENTS
Three major multinational energy groups dominate electricity distribution in Sweden – Vattenfall, Fortum and Sydkraft. Vattenfall is wholly owned by the Swedish state, Fortum is largely held by the state of Finland and Sydkraft is part of the German E.ON group. All three have close to 1 million customers each, which gives them a combined market share of more than 50%. The other half of the market is distributed among some 190 companies with only local or regional presence. Among these, Göteborg Energi and Graninge are the largest with 270,000 and 160,000 customers respectively, while the smallest utilities have fewer than 5,000 power users.
All these utilities are now preparing themselves to meet the new requirements from regulators. State-owned Vattenfall has preceded legislation by initiating a purchase of 425,000 AMR devices over the next three years. This will be sufficient for about half the company's customers in Sweden.
The end of February 2003 was the last date to submit applications to tender for the first delivery of 50,000 units later in the year. During 2004 Vattenfall plans to order another 200,000 units, and the remaining 175,000 units will be purchased in 2005.
A few lesser regional power utilities have already installed AMR systems, but Vattenfall's purchasing plans have really vitalised the Swedish AMR market. Most utilities have begun studying and evaluating available solutions to pave the way for the large-scale installations which they all believe will take place in the years to come. Co-operation around AMR is common in areas with several very small power utilities. In total more than 1 million more AMR units will be purchased by Swedish power utilities, in addition to those now being ordered by Vattenfall.
Attitudes towards AMR are mixed among the utilities. Whereas some early adopters are generally pleased with their systems, others complain that it adds to costs without increasing efficiency to any significant extent. Many would have preferred to have meter reading automation as a long-term project, rather than having to implement it in just a few years. Everyone agrees that investment in AMR systems would have been made at a much slower pace in the absence of legislation. But now – as the process has inevitably been set off - many utilities are considering the introduction of automated meter reading for all their customers, even though legislation does not yet demand this.
GROWING OPTIMISM AMONG SCANDINAVIAN AMR VENDORS
Vendors from the Scandinavian countries currently dominate the Swedish AMR market. Sweden's Senea and Finland's Enermet hold strong positions and are usually listed as serious contenders in the competition for AMR contracts. Senea claims to have won five out of six contracts to supply systems covering entire distribution areas in Sweden since the deregulation of the electricity market. In addition to holding a significant share of the domestic market, it has also exported solutions to Finland and Norway.
The company recently entered into a partnership with meter manufacturer Actaris. Through this agreement, Senea and Actaris become partners in marketing, distribution and project management in the Scandinavian market. Actaris is also going to license and integrate Senea's CustCom radio and PLC communication devices with its electricity meters.
Enermet currently appears to be Senea's main competitor in Scandinavia. The Finnish company has supplied Swedish power utilities with significant volumes of conventional electricity meters, and now seeks to retain that market share in AMR. Enermet has partnered with Finnish Nokia to jointly develop a wireless communication system using GSM for remote reading of energy data. Denmark's energy meter manufacturer Kamstrup and the Swedish energy metering and monitoring solution provider Megacon are other Scandinavian AMR vendors with a strong presence in the Swedish market.
Apart from Actaris, other international AMR vendors are also beginning to take notice of developments in Sweden. For example, the US powerline communication specialist Hunt Technologies is represented through an agent that markets its Turtle system. Turtle is well suited for the large, sparsely populated areas in the northern part of the country, and remote areas such as inhabited islands in the archipelago around Sweden's coasts. However, STEM believes that there is plenty of room for more players in Sweden, and hopes that the new legislation will attract even more international vendors capable of providing competent solutions that help to increase efficiency in the national energy distribution sector.