The Smart Meter Technology Value Chain (Strategic Focus)

Overview 1
Catalyst 1
Summary 1
Key Messages 2
Ageing electricity infrastructure is based on centralized generation 2
Current industry pressures drive AMI adoption 2
AMI adoption will vary across geographies 2
There are many barriers to the adoption of AMI technology 2
Differentiation amongst meter manufacturers is difficult 3
Meter Data Management systems are core to AMI functionality 3
A great deal of the value of AMI lies beyond the MDM 3
Table of Contents 4
Table of figures 5
Market Opportunity 6
Scope of report 6
Ageing electricity infrastructure is based on centralized generation 7
Current industry pressures puts the centralized generation model under strain 7
Cost to serve 8
Electricity theft is exacerbated by time to detection 9
Widely dispersed renewable energy generation causes problems on the distribution network 9
The intermittency of wind power increases the potential for large scale energy storage investment 9
Improve interoperability 10
Demand management 10
Customer usage data 10
Mismatches in the settlement process 10
AMI, as a part of the smart grid, can address many of the current industry pressures 11
The functionality made available through AMI addresses many of the current industry pressures 11
Smart grid technologies address issues surrounding distributed generation 12
AMI adoption will vary across geographies 14
There are many factors that drive the type of AMI and smart grid investment 14
AMI is more likely to gain funding than other capital projects 16
Not all AMI roll outs are driven by logical decision-making 17
The drivers for adoption varies across geographies 18
There are many barriers to the adoption of AMI technology 20
The technology remains unproven at scale 20
Open standards 21
To gain full functional benefit of AMI, much of a utilities back office and applications need upgrading 21
The recession and subsequent economic stimulus package have both caused delays to AMI investments in the United States 22
European regulations will probably insist on minimal technological requirements 22
The AMI Value Chain 23
Meters 23
Meter functionality is diverse 23
Technological innovation is only a temporary differentiator among meter manufacturers 25
The frequency of meter readings will drive huge investment in data center hardware 25
Communications 26
Home area network communications 27
Last mile to home - the network linking smart meters to the outside world 29
Power line carrier 30
Wireless mesh 31
Cellular 32
WiMax 33
Wide area network - transmitting meter data to the utility 33
Meter data management systems 34
Meter data management systems become the core of AMI-enabled functionality 34
The functionality of MDM systems varies from supplier to supplier 35
MDM systems are all adaptations of products designed for different applications 36
All MDM systems are struggling with scalability issues 36
Beyond the MDM 37
Smart delivery 37
Smart customer 38
Customer Impact: The Benefits of AMI 39
Customer side 40
AMI provides accurate automated meter reading, cutting field force costs 40
AMI improves the efficiency of processing customer churn 40
AMI enables the efficient conversion to prepay 40
AMI helps mitigate losses through theft 41
AMI will change the face of a utility's contact center, but may not help reduce costs 41
Improved customer visibility of energy use 41
AMI data improve knowledge of the customer 41
Delivery side 42
AMI improves the accuracy of load forecasting 42
AMI allows utilities to manage demand by controlling end user's appliances 42
AMI can also help utilities to manage demand through time-of-use tariffs 42
AMI promotes microgeneration of renewable energy 43
AMI assists in detecting outages much faster 43
Competitive Landscape 44
Meter manufacturers 45
Itron 45
Landis + Gyr 45
Elster 46
Echelon 46
Communications manufacturers 46
Trilliant 46
Silver Spring Networks 46
Ambient 47
Aclara 47
Telecommunications companies 47
MDM vendors 48
OSIsoft 48
Ecologic Analytics 48
Itron 48
EnergyICT 49
eMeter (EnergyIP) 49
Enterprise software companies 49
Oracle 49
SAP 49
Systems integrators and outsourcers 50
IBM 50
Accenture 50
Capgemini 51
Logica 51
Partnerships and alliances 51
Smart Energy Alliance 52
AMI Lighthouse Council 52
Go to Market 53
Understand your clients' specific needs 53
Don't rely on technology to differentiate 53
Provide strong ROI cases and proofs of concept for applications beyond the MDM 54
Work around utilities' inherent conservatism 54
Services companies should focus on the customer side for AMI-driven opportunities 54
APPENDIX 55
Definitions 55
Further reading 56
Ask the analyst 56
Datamonitor consulting 56
Disclaimer 56
List of Figures
Figure 1: Traditional electricity provision is based around centralized generation 7
Figure 2: Pressure from all sides causes utilities to change their business model 8
Figure 3: It is more expensive to supply electricity in times of peak demand 10
Figure 4: Smart grids enable a distributed network of electricity supply 13
Figure 5: The characteristics of a utility and the market in which it sits impacts how and if AMI and the smart grid will be implemented 15
Figure 6: Datamonitor expects smart metering to fare better than other capital projects for utilities such as power generation 17
Figure 7: There are general geographic trends that drive the adoption of different AMI technologies 18
Figure 8: There is a diverse array of functionality that can be added to a smart meter 24
Figure 9: Functional modules require additional applications to manage them 25
Figure 10: Communications within the AMI infrastructure 26
Figure 11: Beyond the smart electric meter: typical smart appliances in the Home Area Network 27
Figure 12: Current selection criteria for meter to concentrator communications 30
Figure 13: The Meter Data Management System becomes the core of both delivery and customer processes 34
Figure 14: AMI benefits both the delivery and customer sides of a utility's business 39
Figure 15: By introducing peak time tariffs peak load can be reduced 43
Figure 16: Selected vendors in the AMI value chain 44