From Ownership to Outsourcing: An Evolution of AMI

More than a decade after the earliest models of smart electric meters were deployed, the market for advanced metering infrastructure (AMI) is undergoing a major shift. Utilities have historically preferred to acquire their own physical assets and any software required to manage these assets, store all related data in house, and use their own staff to perform related business processes.

However, numerous utilities do not have capital to finance a full-scale deployment or lack the internal skills or IT infrastructure necessary to support smart meters. With utility revenues flattening around the globe, these financial concerns are only increasing. Some of these utilities—particularly smaller companies—are now looking to service-based delivery models to implement smart metering.

Market Landscape

Utilities are increasingly turning to these flexible deployment models to help them mitigate technology risks and reduce costs. In North America, Wisconsin Public Service and the City of Roseville, California recently contracted with Landis+Gyr and Itron, respectively, to manage various aspects of their AMI deployments. Internationally, energy retailers like Solarplicity (UK) and Trustpower (New Zealand) are demonstrating the demand for as a service solutions in deregulated markets.

Regarding these service-based delivery models, there are a number of potential configurations, including:

• Data services: The collection, storage, and analysis of data in the cloud.
• Cloud-based software: The delivery of software as a service or enterprise-hosted software.
• Fully managed services: The delivery of physical assets and business processes as a fully managed service.

While the assets (meters) themselves will largely remain within the utility domain, there are a number of AMI operations being outsourced to third parties, including:

• Smart grid communications (Silver Spring Networks, Sensus, and Trilliant)
• Network headend systems and meter data management software (Itron, Landis+Gyr)
• Smart meter data services (Opower, DataRaker, Trove, SAP, and C3 IoT)

Growth Enables Growth

Looking forward, the market for service-based delivery models will remain strong. This comes in part from three market growth considerations: new smart meter growth, replacement smart meter growth, and growth from emerging markets:

• New: Guidehouse Insights expects the smart meter market to remain strong and grow over the next decade, with global penetration expected to climb from approximately 39% at the end of 2018 to 57% by the end of 2027. These new deployments will facilitate higher levels of spending around smart meter communications and management; this leaves considerable upside in the market for service-based delivery models.
• Replacement: The market for smart meters as a service is not just limited to new deployments. The earliest smart meter deployments will soon enter their first replacement cycle, as seen in Italy and Sweden. After a decade of direct ownership, some utilities are looking to the as a service model as a way to flexibly introduce new technology (e.g., the migration from an owned radio mesh network to public cellular).
• Emerging Markets: In the US, most major investor-owned utilities and cooperatives have or are in the process of rolling out smart meters. This leaves an untapped market of primarily smaller public utilities, which to date have shown a propensity to adopt service-based delivery models for the ongoing management of those new meters. Emerging markets, including Eastern Europe, Asia Pacific, Latin America, and the Middle East & Africa, will account for the majority of new project growth; utilities in these markets are more likely to lack the requisite human and financial capital to deploy and manage their own smart metering network.

Considering the Future

When considering these market drivers, it should be noted that vendors are also paying attention and adjusting their product strategies to this changing business landscape. Perceptions and demand for these service models have changed at a pace that is truly astounding. While not the norm quite yet, the future of service-based delivery models is bright.