While analysts talk about automated meter reading (AMR) technology as a single technology, in reality the solution is comprised of a number of technological components that are all decided upon and configured. There are multiple options that exist for the actual meter that sits in consumer’s homes. Likewise, different communication options exist for getting the actual meter data from the home to the utility company and back again, and additional options exist for the hardware 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. 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.
European rollout
While 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 would have 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.
To date, the installation of new meters has actually been driven by government intervention and regulation. While 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 E1.1 billion reimbursement from the government in 2005 to cover stranded costs. This covers the loss for Enel if it installs 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.
