Pity the utility just starting to shop around for smart meters – or the investor hoping to cash in on smart metering market projections that predict growth to 250 million smart meters by 2015. As I’ve been warning for a while, there are too many meter vendors with similar product lines. What’s more, profit margins are migrating away from the hardware and towards the communications, network and software.
So I called on all of the insiders and vendors I’ve been interviewing to come up with the top five meter makers who will still be around for Smart Grid 2.0. See if you agree with me, then vote in the Quick Poll and use the Talk Back form at the bottom to post your opinion (even if you are foolish enough to disagree with me).
Just because a metering company is not on this list doesn’t mean that it will fail. But it does mean that it will have to work very hard to find a survival strategy as the industry consolidates. That could mean combining with another smaller player; purchasing additional technologies to add to the product line; or finding a niche market where it can dominate.
In alphabetical order:
Echelon
A heavyweight in Europe, Echelon has only begun making inroads in the U.S. The company takes a different approach to the hardware than most others, designing more functionality into the meter’s “motherboard” instead of employing add-on modules. If you remember the early days of the personal computer, when everything (including modems, hard drives and networking) came as add-in modules, then you’ll understand the advantage that comes when you integrate everything instead.
If its hardware approach seems inspired by Silicon Valley, its communications strategy draws on its European heritage.Rather than using RF or cellular to communicate with every smart meter, Echelon uses “distribution line carrier,” a more advanced form of old-school power line carrier. The power line relays information from each home to the transformer, which then uses any of the popular communications pipes to backhaul the data to the control center. They save the cost of putting a radio into every smart meter and the cost of troubleshooting meters that can’t communicate because of difficult reception. That cost savings story is starting to gain traction in the U.S., as witness Echelon’s smart metering win with Duke Energy.
On the down side, Ken Oshman (CEO since 1988) announced his retirement after recently being diagnosed with cancer. But since he will remain Executive Chairman, we expect a smooth transition.
Elster
Elster already sees itself as a solution provider, not a product company. Within the next five years they want to be working with utility partners on everything – from testing to going to regulatory commission meetings.That’s a company that’s in it for the long-term. Some fault Elster for being slow to embrace new technologies. When I talk to the company, they contend they just don’t toot their own horn enough – and that’s something they’ll need to step up.Meanwhile, Elster just announced a new CEO in Simon Beresford-Wylie, most recently at Nokia Siemens Networks, one of the world’s largest telecommunications infrastructure and network solutions companies. Coincidence? Hardly. Clearly, the Luxembourg-based company understands that they need to provide a complete solution, not just the meters themselves.
General Electric
Of the five meter makers on my list, GE is the newcomer in the smart meter space (though an oldcomer in “traditional” meters). Ironically, the company has long had great new metering concepts in the labs, but couldn’t get out of its own way to jump on the smart metering bandwagon when everybody else did. But don’t sell them short. GE already has important meter contracts, including a big one with Florida Power & Light and what should prove to be an interesting WiMAX play with Grid Net for Australian utility SP AusNet. But the main reason GE is on my list is the Smart Grid portfolio they bring to the table along with their meters. They still have some integration work to do, but I believe GE has the vision and the operational know-how to be a force – and one that consumers can be comfortable with.
Itron
Itron was the clear leader in first-generation AMR and the early leader in next-generation AMI contract wins, but a laggard in getting smart meters into the field in quantity. I’ve fretted that Itron’s Smart Grid metering prospects might be diminished unless it could prove its ability to a) scale up and b) move from proprietary systems to open standards. But credit where credit is due – the feisty Spokane, WA-based company seems to be leaping both hurdles. Itron now has enough units in operation to prove its scalability, especially since SCE – Itron’s largest smart metering customer – indicates it is likely to accelerate deployment. And Itron is starting to catch up – in some cases even take a lead – in supporting standards. Itron snagged some nice contracts with utilities that received stimulus money ($200 million awardee CenterPoint Energy and $83.8 million DTE Energy among them). What’s more, it recently announced a migration path that makes it easier for its AMR customers to upgrade. Given that nearly 8,000 utilities around the world already rely on Itron technology, the company has a large installed base to draw from.
Landis+Gyr – This Swiss-based company is one of the granddaddies of electric metering in Europe, but word of warning to U.S. competitors: They’re making serious inroads here, including the massive Oncor smart meter deployment in Texas; they’re also working with AEP, SMUD, PG&E and others.The company says it has won more than $1 billion in new orders around the world this year, including major contracts in Australia, across the Nordic countries, and in the U.S. And just last week the company announced it had raised $100 million in shareholder capital to fund rapid growth in smart metering. Even though the company was slow to digest and integrate its previous acquisitions, and even though its U.S. marketing has been lame, I don’t see any sign that Landis+Gyr is going to be anything but a serious player.
That’s my take. If you have your own crystal ball, please vote in our Quick Poll and post your Talk Back below.
It's difficult to know all the factors that went into the conclusions drawn in this article, but I guess the real question is "who cares?". Once standards are demanded by customers, meters are commodity devices. I have worked with many of these vendors, and with the possible exception of Itron and Echelon, none of these companies seem ready for smart anything and most of them are clueless about the forces that pomise to radically reshape the market. If they were in any industry other than the utility industry - slow to embrace change - they would probably already be out of business. As it is, by having half-baked, flawed and mostly unreliable security and protocol strategies, they are deploying meters today that will probably need to be replaced tomorrow. This is especially true of Landis+Gyr, but they are not alone. I agree that these vendors need to start delivering integrated, secure, standards-based solutions rather than meters if they want to be around for the long haul. As it is today, the loss of any of them would have a negligible impct on the industry.
Tim - 11/11/2009 - 07:55
Are You Sure
What about Silver Springs? Is GE still working with them to add functionality to legacy meters?
Robert Dalias - 11/11/2009 - 08:57
Smart Meter Survival
Actually, metering will eventually become part of the smart home concept and the telcos will end up with the lion's share of the pot. It is interesting that every meter manufacturer is implementing a HAN group or section. External meters may very well end up in museums.
Bill Melendez - 11/11/2009 - 09:12
HANs will take time...
Interesting comments Bill, but I think this AMI vendor consolidation will definitely happen prior HANs getting at all mainstream...just look at how long it has taken for home media servers to take off (they haven't yet at scale).
Jesse's list seems like pretty good forecast, am curious (and hopeful) that Echelon can succeed with their AMI to transformer hardwired approach -- they've been innovative for a long time but haven't seen the growth...
Mark Weiner - 11/11/2009 - 09:36
SSN and how about Sensus???
Silver Spring Networks isn't really a smart meter vendor. They do, however, integrate their communications technology into a number of meter vendors.
And I would put Sensus in this list as well.
Neil Greenfield - 11/11/2009 - 09:48
Safe Picks
These are all safe picks. 4 of the 5 have been around for years in metering and still continue with their market share. Echelon being the new entrant to the U.S. market amongst the 4. I too believe Silver Springs Networks and Sensus Metering should be included as they continue to introduce significant partnerships and gather ever increasing business.
Mario Natividad - 11/11/2009 - 10:35
Answer to Mario's Safe Picks
I certainly agree that Silver Spring Networks is a leader, but they build communications infrastructure and (with the Greenbox acquisition) home interfaces, not the meters themselves. As meter makers such as Itron impinge into the communications space, they will compete, but I think it unlikely that Silver Spring will introduce its own meters anytime soon.
As for Sensus, they are absent from our radar screens. If they are doing great things they are certainly being quiet about it.
Jesse Berst - 11/11/2009 - 10:53
powerline versus wireless-mesh
The thing about Echelon that most of the media hasn't been able to put together so far is that since they have had a vision of the smart grid for such a long time they have been able to address gaining access to this smart energy industry. They already supply products for multiple markets and have an installed base of millions of devices ready to be networked into the smart grid. So I think an honest evaluation of any of these meter providers should include what they have done for all the other industries that use energy. In other words, Echelon has established the Demand Side market with building automation and streetlight monitoring etc. (it is an Echelon product that EnerNoc uses to succesfully provide DM, for just one example), in addition to the meter market. So when utilities finally understand the new energy revolution, if they go with a limited application like wireless-mesh, they are going to find that they will then have to solve the next level of the problem which involves the already enormous network of the power network, the network of electrons. I think this is what Jim Rogers at Duke understands inherently, and I believe it is this insight which will give Duke a huge advantage over other utilities as Duke starts to harvest the information obtained from their power (electron) network. The wireless-mesh networks, on the other hand, have opted to ignore this data set completely.
Mike Horning - 11/11/2009 - 12:34
Echelon
"these vendors need to start delivering integrated, secure, standards-based solutions rather than meters" - Tim, sounds like you are descibing Echelon.
B. Spudley - 11/11/2009 - 13:28
What about Sensus?
Our recent RFP results identified Sensus as a clear standout. The had all the answers, twice the RF radio power, and huge market momentum. Itron Smartmeter components were still in development. Elster is made in Belgium. We are Americans.
Jeff Wilson - 11/11/2009 - 14:58
Meters
If Cisco gets into the meter business, all of the existing meter companies will disappear.
Paul Pauesick - 11/11/2009 - 17:54
Sensus not on the Radar?
Your radar needs to be recalibrated if Sensus is not on it. Senus has a complete set of electric, gas, and water AMI solutions, and aquired Telemetric to more fully integrate their FlexNet licensed RF two-way communications technology into Distribution Automation solutions. In the HAN/DR space, they partnered with Home Automation International and 4Home to develop a full set of solutions using FlexNet communications. Sensus also has been directly involved with development of the U-SNAP non-proprietary physical and logical standard for plug-in communications interfaces and modules that allow use of any communication protocol in PCTs or smart appliances. Alliant Energy, Georgia Power, Alabama Power, Mississippi Power, Gulf Power, Hawaii Electric Co., Portland General Electric, and Atmos Energy are all engaged in full scale deployments of Sensus FlexNet AMI smart metering. Over a dozen small utilities in Ontario are also in the early stages of deploying FlexNet AMI. Sensus is definitely in the top 5 of deployed AMI systems right now, and I only see it growing...
Rick Potter - 11/11/2009 - 18:24
Sensus & Echelon
Neither Echelon nor Sensus has a serious polyphase meter offering.
Sean - 11/11/2009 - 20:30
RF is a huge mistake
RF is gaining a foothold in two or three countries, the US an Australia and possibly Canada. Australia is a sponsor of Zigbee and pushing this as a standard. Al Gore is behind Silver Springs and has the clout to cloud the realities of its faults. In my opinion, the US is making a huge mistake at a critical moment in time by not understanding the faults of RF and allowing companies to spend good money after bad to move forward with this science experiment.
With RF systems, utilities will trade meter readers for tree cutters. With RF, utilities will move to add communication networks to their skill set and will have to manage a system which will be more difficult to stay on top of then their existing distribution systems. With RF, utilities will pay handsomely to come up with technologies which will create the reliability and security of DLC systems. With RF, utilities will never have the ability to gain a "line of sight" which is comparable to DLC into their distribution system for things such as voltage control.
Here's a question which Echelon poses to analysts "is it easier for a metering company to become a networker or a networker to become a metering company?" Clearly the answer is the later. Smart grid is all about networking machines. Echelon has been doing that for over 20 years now and is primed to be the leader in the extranet. My hope is utilities do as Duke did and spend the time to look at all systems and make educated decisions. If they don't, the US risks spending billions of taxpayer dollars and redoing their decisions within 10 years. That's my opinion anyway.
Joe Forbes - 11/11/2009 - 20:39
no where
Microsoft and Google will eat all other players in the market!!!
SMS - 11/11/2009 - 21:33
Need more meters...
Most utilities require dual sources of meter manufacturers for their single and polyphase portfolios, in all forms. I agree with the assessments that the GE, Itron, Elster and L&G meter products are solid stand alone meter products, but, from the utility standpoint, few utilities are willing to single source their entire meter population. AMI/Smart Grid system providers really need to assure customers that there are fully supported dual source options in meter selection compatible with the provider's networking technology. Just my $.02.
And as for Microsoft? Pleeeze....
Jim Garrett - 11/12/2009 - 04:46
Re Jim Garrett's two cents
Jim - That was worth at least a nickel. A good reminder, and another reason that margins are migrating from hardware to communications, network management, meter data management and software applications that ride on top of the metering infrastructure. When your customers start to insist that your hardware be swappable with your competitors' gear, it's hard to charge a premium.
None of this is lost on the folks running the meter companies, so it will be interesting to see how they respond to this challenge.
Jesse Berst - 11/12/2009 - 08:31
Smart Meters
A few observations...
1. Eerie and unintentional and ironic mis-use of words in your title. You meant to write 'shakeout,' i.e, the weaker are being culled from the market, but you wrote 'shakedown' -- which, though unintentional, is the more apt word. Meters are designed as a ratepayer shakedown, as in, the slang for extortion. That is really the purpose of these meters.
2. I recently did a close scrutiny of the first round of ARRA money for both the electric and water utility industries, and -- surprise! -- an amazingly high percentage is going to pay for installing meters for both services. And this is carefully camouflaged by an overlay of language which suggests a wide array of energy retrofits will be funded. In fact, the qualifications for receiving money are such that the only projects that are properly 'shovel ready' are meter installations. The timeline to do other kinds of projects from scratch is far too long to qualify. This restrain was surely intentional. I am speaking, again, of the first round, and the situation may change. In electricity utils, 18 million meters won funding. Do the math. That's the lions share of round one.
3. Given that we are witnessing a federalization of the U.S. grids for purposes of shaking down rate payers to extract "global warming" reparations, to call this phenomenon a "market" is also a misnomer.
4. In addition to the negative security and tech shoddiness of some meters, which others point out, we could add that they are notoriously quick to become obsolete, at least historically. So, the whole federal investment may have to be re-done in a few years. On the other hand, maybe the feds and others who have engineered this take-over don't really care about the accuracy, tech capabilities or security of the meters, because their intentions lie in another direction anyway.
David Engle - 11/12/2009 - 08:53
Re: Jesse & Jim
This is what open-interoperable standards means. We can already see how the meter companies are responding. Both Landis+Gyr and Itron have a lonworks meter in their portfolios. Landis+Gyr bought Enermet years ago to gain a lonworks meter. The smart grid meter deals in Sweden, Norway, Denmark, etc. and the latest with Fortum in Finland have specified predominately plc with GPRS backhaul which essentially created a competition between Landis+Gyr/Enermet and Echelon.
In my opinion, the reason that Echelon's NES meters continue to outsell the Landis+Gyr solution in those territories is the network operating system that Echelon supplies. As the poster above noted: it is easier for a networking company to become a metering company than vice versa--a concept that has been particularly hard for US utilities to comprehend.
Mike Horning - 11/12/2009 - 09:38
Meter Commoditization
What we are seeing is the early stages of the commoditization of the meter (standards make that happen). How many meter manufacture will exist in 5 or 10 years? It doesn’t really matter (the Desktop computer market started with many CPU manufactures and transitioned to four (Intel, AMD, IBM, Motorola) and now we’re basically down to two (Intel and AMD). As Mr. Berst said in the opening paragraph the money is in the network and the software.
The meter manufactures have done an O.K. job on the network/software front. However as we move to a smarter grid there are hundreds of companies in the world that are extremely capable when it comes to designing and building communication networks and large software systems. In 10 years I think anyone of the five on the list will still be making meters but I think the winners for network and software are not one of these five.
Roy Nesbitt - 11/12/2009 - 09:41
Meter Commoditization - Expanded
Further to Roy's post, once today's vertically integrated AMI solutions are deconstructed using open architectures and standards, the meter and the communication infrastructure will be independent. No need for the meter manufacturer to become a communications company (or vice versa).
Further, once the meter can be found and reached directly, without the need for intermediaries like head-end systems and data management systems, the meter manufacturer doesn't have to become an application developer either. Application providers like SAP and Oracle can integrate meter management and data collection directly into their business applications.
Then the meter is truly a commodity.
Joe DiAdamo - 11/12/2009 - 14:47
ISKRAEMECO
Please don't forget ISKRAEMECO!!
Anthony - 11/13/2009 - 02:06
Meter Mania
I like Herzy's new meter.
Miles Tarver - 11/13/2009 - 05:20
Smart Grid, not just smart meter
Intelligent endpoints don't make the grid smarter. Only Echelon's DLC/PLC solution gives real-time visibility into the health and status of the distribution grid itself. Duke's got it figured out.
Nobody cares about making ratepayers pay twice or more for smart meters - it'll just be considered economic stimulus.
B. Spudley - 11/13/2009 - 13:53
Commodities..
meter is commodity, network/comm becomes commodity when stds are widely accepted and implemented?
What comes after that ?
'smart' grid is just not meter and network.
I do not think we have all the vendors out there and whatever you have up there just address one piece of the puzzle. Unfortunately, the co who could add other missing pieces to the product portfolio is going to win the market share. I am not sure if we have our winner there on the list
palkhoa - 11/13/2009 - 15:39
top five
What about Sensus Metering
Kevin - 11/16/2009 - 16:31
schneider electric
You are missing a huge point...and that is AMI is not only about technology that the utility deems appropriate for their customers. It is about the ability to provide energy services to the DEMAND side customer in the format they select. This includes making the data at the common point of billing accessible to more than just the distribution utility. The vendors you have listed above do not have solution offerings that include hardware platforms that support multiple communication paths, protocols, tariffs, demand response intelligence and more. Schneider Electric/PML has been serving this need for over 10 years now. Any utility in the US that has an important commercial or industrial customer and or an IPP that demands real-time access to key energy, demand and power quality data has used ION solutions from Schneider
Electric.
dave - 11/18/2009 - 08:22
The shape of the meter market to come
Just to follow up on Roy and Joe 's excellent comments.
I also believe that the meter market will undergo major transformations. However, in the utility-business this takes time (and money). Lifetime of our current systems is way over 20 years and payback of new AMI deployments will take at least 15 years. So even if I fully agree that eventually the bigger networking and software companies will take over the main market share, this is not going to happen overnight and the historic meter players will stay around for a long time.
20 years from now it's also likely that markets could have changed in a way so that meter manufacturers become part of even bigger industrial corporations integrating the full supply-chain (like we've already seen many times in other businesses).
We must also consider that utilities themselves will change over time: in Europe f.in. the regulatory unbundling has been shaking up the market and we haven't yet converged into a satisfying pan-European model.
We therefore can continue to discuss this list of companies for quite some time and my guess is that it's pretty close to the target.
Maybe we just keep forgetting other parts of the world, such as China and Korea. In these countries high-tech companies are developing really fast and once they succeed in their local and domestic markets they will start to look abroad.
Peter - 11/18/2009 - 12:59
Jeff Wilson Correction
Just to comment on Jeff Wilson's comment:
"Our recent RFP results identified Sensus as a clear standout. The had all the answers, twice the RF radio power, and huge market momentum. Itron Smartmeter components were still in development. Elster is made in Belgium. We are Americans.
Jeff Wilson - 11/11/2009 - 14:58"
Elster meters are manufactured in Raleight North Carolina. These meters have been made in the USA for over 100 years dating back to the original electric meter manufactured by the original owner Westinghouse
David - 11/20/2009 - 19:26
Siemens?
What about Siemens? I believe they are the UK market leaders in metering services. I would have guessed they'd be in the top 5? Maybe I'm wrong. I'd be interested to hear why not.
Brett Sinclair - 12/04/2009 - 10:21
GE & Landis+Gyr
Where are GE SmartMeters made? Where are Landis+Gyr SmartMeters made? Does anyone have this information?
Billy Nobschlocker - 12/10/2009 - 14:21
Smart Grid, not just smart meter
B. Spudley, right you are, except that it is Ambient Corp, not echelon who is providing Duke's communications and backhaul:
Duke is following the plan they filed with the public utility commissions to the "T", therefore, Ambient will get $500-$700 million from this contract. Here's the background for these figures which I am re-posting for new visitors:
Ambient Corp (ABTG) will get about $700 Million from Duke over the next 3-5 years. Duke has already picked ABTG for its communication backbone which integrates BPL and wireless communication through Verizon's cell phone towers.
Since Duke must get authorization for it's ESP from each state it is in, the documents are public information. Duke has already received approval from Ohio:
www.PUCO.ohio.gov. Click on the link to the Docketing Information System (DIS) and enter the case number 08-920-EL-SSO if you want to see all the documents filed.
I'll make the DD easy for you, the document which spells how the smart grid will look and who the vendors will be an be found through the following link:
http://dis.puc.state.oh.us/DocumentRecor...
Click on the "view" image link which will take you to a pdf file containing the public testimony of Christopher Kiegen of KEMA who is a contractor for Duke and has laid out the smart grid costs, benefits and vendors.
Attachment CDK-1 starting on pg 32 of the pdf file details the Duke smart grid. Pg 40 calls for 76,776 Ambient Communication Boxes for Communications with Electric Meters. Pg 41 calls for 54,840 Data communication boxes with electric and gas data collectors. Page 42 has the equipment and data costs.
The costs for Ambient equipment, support and software are:
76,776x$500=$38.4M abtg electric comm. box
54,840x$800=$43.9M abtg elect. and gas comm. box
(total boxes=76,776+54,840=131,616)
From Pgs 42 and 50, you can get the operating costs.
$18/MB data x 578,352 meters x .100Mb/meter/month x 12 months=
=$12.5m/year, at full deployment=12.5x5/2=$31.2M over 5 years with incremental (average) deployment
Pg 51, annual software maintenance fee per box:
131,616 boxes x (11.25 + 6.00)/2 avg fee per box x 5 years /2 avg number of boxes deployed over 5 years=$2.8M
Pg 47, software, Distributed Management System, I believe this will be the AmbientNMS software:
$4M for software
$2.7M consulting fee
Grand total for Ambient portion of Duke Ohio Rollout is:
Several of the comments posted talk about wireless technologies versus power line carrier. The fact is that the successful SMART meter company will understand that their portfolio will need to include a range of wireless and non-wireless options if they are to have a broad and large scale coverage of multiple markets. Each utilities deployment challenges will vary as much as their landscape (be that tree's or mountains blocking effective wireless communications), or the density of meters in metropolitan areas that are challenging to read due to signal degradation through distribution transformers using PLC technology. I firmly believe their is a case for a range of technologies including wireless and non-wireless methods. The smart -SMART Meter manufacturer will keep their eggs in many baskets and keep wireless solutions firmly in their portfolio.
Meter pricing will also continue to be driven downwards as residential deployments take hold over the next few years. This will require wireless-enabled SMART meter manufacturers, to integrate antenna technology that supports meters that are as cheap as today's entry level cell phones are.
Norm Smith - 01/29/2010 - 14:11
Where's Sensus?!
How can you not include Sensus?!
They have become a huge player in this market with great products.
Its a complete whiff to miss them.
Bill - 03/13/2010 - 05:50
Sensus
Is Sensus really that good?
Wireless Solutions - 08/25/2010 - 05:35
What about the RF health consequences
There is a growing body of information about the health consequences of RF. Many people are becoming sick when Wireless Smart MEters are being put into their homes. Rising protests around country. Have to follow the money as to why Public Utility Commissions won't listen to consumers who don't want this technology.
Pamela McNeeley - 06/26/2011 - 06:52
Smart Meters
Where in the United States (State and City)does GE and Itron manufacture their smart meters to help create jobs?
Bob Wekesser - 08/07/2011 - 16:58
Sensus
We have been using Sensus products for the past 12 years. Meters, transmitters, drive by transeiver. The meters have failed miserably, the transmitter batteries havnt lasted nearly as long as they said they would. Now were trying their smart grid 2way transmitters. If history repeats itself they will also fail fairly quickly. Would not recommend this company unless you want to hire alot of repair tech in place of your lower salaried meter readers.
We're getting mixed signals about the vitality of the smart grid market. On the one hand, the recent DistribuTECH conference was one of the most successful ever. On the other, a well-known Wall Street analyst recently told his clients that the smart metering sector is "facing several headwinds," including weak regulatory support in the U.S. and delays in European adoption. Taking the pulse of the smart grid industry is this week's Tuesday Topic.
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