Smart metering requirements in emerging markets

Smart grid, with smart metering as its major building block, is the way forward for emerging markets, says Amir Hajimiragha, BBS Access.
Published: Mon 20 Jun 2016

Over the past decade, new dimensions of complexity have been added to the power system. These include an aging infrastructure and growing levels of consumption-especially during peak demand hours when systems run very close to their limit (i.e. low reserve margins), an increase in natural disasters, the potential of terrorist attacks and the emergence of new types of loads sensitive to variations in power quality and reliability (e.g. data centres and some consumer electronics).

But the complexity doesn’t end there.

Increasingly, environmental concerns are leading to the development and integration of renewable power sources which are intermittent and stochastic. In addition to this, new forms of stochastic loads like plug-in electric vehicles are being introduced to the power system and it's these uncertain aspects of generation and demand which make it very difficult to operate and control the power system. As a result, there is a huge concern over the reliability of the energy infrastructure. It is for this reason that the century-old system and its processes must change.

To address this reliability concern, governments around the world have invested billions of dollars in the smart grid.

Because the conventional power system is not communication-rich, smart meters or better said, a smart metering system provides the communication infrastructure for the power system. It establishes the information or data link between utilities and energy consumers and it provides precise information about the demand, making the entire power system more observable. When all parts of the power system can be monitored, the system can be better controlled.

The communication and smart metering system in place today gives utilities a better view of the system and its processes at any point in time. Based on the collected data, utilities can take action quicker especially when it comes to infrastructure maintenance, voltages, outages, and load management.

Emerging smart meter markets and characteristics

According to Amir Hajimiragha, Director, Technical Projects & Smart Grid Integration, BBS Access, Singapore, the emerging smart meter market characteristics are as follows:

  • Increasing electrification 

  • Population and electricity demand in these countries grow at higher rates compared to other parts of the world.

  • Most of these countries suffer from poor billing and collection processes. 

  • Electricity theft is a major concern

  • These markets are exposed to more economic and political difficulties.

  • The level of corruption is relatively high in some countries

  • Labour costs are relatively low (an opportunity for AMI).

  • Income levels are relatively low (a challenge for AMI)-these countries display a greater degree of price sensitivity.

  • Pilot projects and small deployments seem to be the norm in these markets.

Hajimiragha says that despite this list of characteristics, it must be pointed out that different markets have different characteristics and requirements. For example, in North America the main focus is on peak reduction; in Europe, CO2 reduction is very important while in Asia Pacific countries the focus is on reducing losses and minimizing the cost of customer service.

Therefore, the AMI solution used in these markets should obviously be different in terms of smart meter functionality and communication complexity.

Hajimiragha points out: “One unique technology cannot be duplicated in all regions. It is important to note that there are certain communication technologies, which bear a considerable impact from the specifications of the distribution system. As an example, power line communication (PLC) is very sensitive to the level of noise/disturbances; as such it faces challenges in harsh and dynamic environments. Therefore, while this technology is an established and well-proven solution in Europe, it may not be a recommended solution in an emerging market in South Asia.”

Government mandates boost smart metering deployment

He explains that  government mandates are the biggest key enabler for smart metering deployments in all markets-both developed and emerging. He lists the following examples:

  • Deployment of 11 million smart meters in California was the result of an order from the California Public Utilities Commission.

  • Almost 6 million smart meters were deployed in Texas after a recommendation from the Public Utilities Commission.

  • The current 4.7 million smart meters installed in Ontario, Canada were the result of the Ontario Energy Board (OEB) mandate given in 2004.

  • In Europe, the 20-20-20 initiative has been the main driving force for smart metering/AMI deployment. These targets of 20% reduction of greenhouse gas emission, 20% energy efficiency improvement and 20% renewable power penetration cannot be materialized by 2020 without having an AMI system in place and without applying the concepts of smart grid.

Difference between AMI in developed and emerging markets

When it comes to the difference between AMI in developed and emerging markets, the biggest difference is the scale of deployment, which has a direct impact on the total costs, says Hajimiragha.

While the scale of deployment in developed countries is in the range of "millions", the AMI projects rolled out in emerging markets have been on much lower scale (e.g, in the range of "thousands" - mostly in the form of pilots).

Theft of service is a far more critical concern in emerging market countries than in developed ones. Technical requirements in the emerging market economies are mostly limited to basic meter reading and control. These features are all that is needed to support anti-theft initiatives. However, utilities in well-developed countries are now looking for more efficient utilization of AMI data to realize the true concept of smart grid, says Hajimiragha. He explains: “For example, they are exploring high-level applications such as outage management, voltage profile optimization, asset management, customer segmentation, load forecasting and demand response. In the emerging market countries we are a bit far from these advanced technical requirements.” 

Drivers & challenges in deploying the AMI system

Hajimiragha lists the key drivers for AMI system deployment for developed countries as follows:

  • Energy efficiency and reliability improvement,

  • Deferring investment in generation capacity, 

  • Supporting distributed generation and mainly renewable power sources, and

  • providing a solid foundation for a smarter grid equipped with advanced functions.

However, the key driver in the emerging markets is mainly theft reduction and improvement in revenue collection.

Hajimiragha says that the challenges are more or less the same for both mature and emerging markets. He lists the most common challenges:

  • High cost of AMI system (this is the cost, which will be imposed on consumers who already suffer from relatively low income levels - in most but not all of the emerging market countries). This cost is more troubling in emerging markets, says Hajimiragha.

  • Financing

  • Regulatory models

  • Development of standards

  • Rapidly changing communications technology (this results in technology and protocols being outdated very quickly)

In conclusion, Hajimiragha says that when it comes to investing in smart metering/AMI, efficiency and reliability are a utility’s major concerns. He goes on to say: “You want to keep the lights on at the lowest possible cost; you have high rates of growth in electricity demand (this results in more pressure on your grid and affects your service reliability), you are challenged by your aging electricity infrastructure, your non-technical losses are high and your billing process is inefficient; and you are faced with generation capacity shortages especially during peak hours. These are all good reasons that smart grid with the smart metering/AMI as its major building block is the way you should go.”

BBS Access business activities include design, development and engineering of energy meters and communication devices for smart metering, Transferring of Manufacturing Technology (ToMT) of smart meters and AMI solution integration.