Smart meters that give home and business owners more control over their electricity consumption patterns have been a huge success in North America, with penetration rates now approaching 35 percent and expected to reach nearly 70 percent by 2020.
But the future of smart meters will be volatile, according to a new analysis from Pike Research, with North American deployments peaking in 2011 before an expected drop-off over the next two years as government incentives that helped drive demand expire.
According to Pike's analysis, a record 12.4 million smart meters shipped in North America last year as U.S. and Canadian utilities and consumers embraced the technology, which allows for a direct exchange of supply-and-demand information at the household or business level.
But by 2013, such shipments are expected to drop to about 7.2 million as adoption rates plateau and incentives provided under the 2009 American Recovery and Reinvestment Act expire.
"The goal under the Recovery Act was to accelerate deployment, to put in as many [smart meters] as possible, and it was required to happen by the end of this year," said Bob Gohn, a Pike Research vice president and lead author of the analysis. "So you've got a whole bunch of big programs in states like California, Texas and elsewhere where deployment is winding up this year."
As of September 2011, the Edison Foundation's Institute for Electric Efficiency reported, U.S. utilities had installed roughly 27 million smart meters nationwide, with an additional 38 million expected to come online by 2015.
The projected slowdown in North American installations will be countered by robust growth in Europe and Asia, where government mandates and other factors are driving regional booms in smart meter adoptions, the report found.
China will lead, but are its meters 'smart'?
According to Pike, smart meters globally should see a compounded annual growth rate of just under 5 percent for the 2010-20 period, with Europe eventually emerging as the No. 1 deployer of the technology in terms of percentage of households and businesses using the devices.
On a country basis, China will be the largest deployer of smart meters by 2016, with more than 310 million units installed, according to Pike.
At the same time, the analysis predicts "very dynamic and even volatile regional market characteristics, with dramatic shifts over the forecast period and very different communications technologies and standards."
In fact, Pike researchers found that Chinese deployment of smart meters was happening much more quickly and more aggressively than expected just three years ago, when the firm did its last major market analysis on the technology.
The State Grid Corporation of China, for example, has significantly expanded its use of advanced remote meters, which it considers to be "smart metering." But others have questioned whether the Chinese technology meets the full definition of "smart meter" because it does not allow for full two-way communication and the ability to read and store data on a near-continuous basis.
First-generation problems linger
Even with the technology's limitations, Pike Research opted to include the Chinese remote meters in its market analysis, resulting in an additional 40 million to 50 million meters per year shipping from 2010 to 2014. "As a result, the view of the global smart meter market has changed dramatically," the report states.
In other regions, notably North America and Europe, problems with the first-generation technologies such as proprietary wireless radio frequency networks and power line communication have added pressure on utilities to adopt new open systems on Internet protocol networks that allow for fuller integration of smart metering tools.
The analysis also found that companies manufacturing and selling smart meters are becoming larger and more globalized as demand for the meters grows worldwide. As part of this process, the industry is seeing some conglomeration as well-established firms such as Toshiba purchase smaller startups that specialize in smart meter applications.
The report also notes that utilities, regulators and smart meter manufacturers are trying to address consumer concerns about the first generation of smart meters, which many said had problems with meter accuracy, data security and privacy, and health effects.
"The consumer response experience to date calls into question just how consumers will ultimately incorporate smart meters into their lives and adjust their current lifestyles to respond to the information they will receive about energy usage and, in many cases, energy prices," the analysis states.
Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500