Stephanie Wu – Omdia’s senior smart buildings and energy infrastructure analyst – writes about the new era of software-defined solutions approach, citing its beginnings with advanced measurement infrastructure (AMI) applications in developed markets.
Software and services augment traditional electricity, gas and water meter hardware, unlocking more value than ever from metering data, which will disrupt the future of utilities and the infrastructure industry. Advanced Counting (AMI).
“A new era of software-defined solutions is coming,” said Stephanie Wu, senior analyst for smart buildings and energy infrastructure at Omdia. “And it debuted with AMI applications in more developed markets, such as Europe and North America.”
In their recent publication 2022 AMI Software and Services Report, Omdia explains trends in software-defined solutions as well as utility expectations for state-of-the-art cybersecurity and high interoperability standards in these given solutions. They also delve into the changing and increasingly competitive market landscape. As the demand for additional meter data use cases creates new market opportunities, it has become more central to the future AMI provider business model.
Adoption of managed software and services in the metering market
Electricity has the largest installed base of smart meters with the highest adoption of head-end software (HES).
Over 90% of installed smart meter terminals have adopted HES by the end of 2021, nearly double the adoption rate of water.
The complex feature sets and analytics requirements for electricity have increased the demand for AMI because electricity is not just about energy supply. This is a different structure that sees new local demand emerging to integrate electric vehicle (EV) charging, local (power) generation, solar panels, battery storage and heat pumps, among others. The complexity is much higher than that seen in gas or water.
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Despite the low amounts of software in general, water utilities have the highest ratio of adopted software managed services of any industry, primarily due to their smaller scale and limited budget.
The need for managed services often starts on the wastewater side, followed by commercial/industrial (C/I), then residential.
Investment in gas lags behind electricity and water. Constraints vary according to environmental protection requirements, energy reserves and geopolitics. In the long term, gas will eventually be phased out, which has resulted in limited efforts to upgrade infrastructure.
Regional request for AMI
North America, especially the United States, has been engaged in the “intelligent analytics market” for years. Customers in the region are more willing to pay for software and solutions than those in Europe, where cost pressure is high. Even in Western Europe, the deployment of AMI still varies from country to country.
For example, AMI demand in Germany is relatively nascent. The primary use cases at this point are for data read frequency and billing. However, the Nordic countries, from a regulatory point of view, must reduce the temperature in the networks.
From a regulatory perspective, the Nordic countries offer an interesting use case. The reduction in temperature is necessary to ensure that their systems operate as efficiently as possible. And to stay compliant with regulations, utilities need more granular data from more sophisticated analytical tools. Some are even looking for automated processes to communicate between AMI and SCADA, with features that support smart parameter tuning.
Changing competitive landscape
In the AMI-related software and services market, meter vendors are no longer the only competitive players.
Three other categories of competitors are emerging in the new software and services market, particularly in the field of meter data management (MDM). These include engineering solutions companies, enterprise software companies, and application software companies.
Overall, all types of businesses claim to have a one-stop-shop proprietary solution. So far, none have a full set of capabilities, knowledge, or skills to develop a complete end-to-end solution.
Through partnerships and acquisitions, strategies will likely be required to take full advantage of crowded future market opportunities.
The market is still emerging. Some telecom companies offering both networking and analytics are also present in the competition. A partnership with large utilities could be a springboard for their entry into the market.
About the Author
Stephanie Wu is Senior Smart Buildings and Energy Infrastructure Analyst at Omdia