Market Insight

Utility Technology Market Shows Maturation at European Utility Week in Amsterdam

November 19, 2014

Michael Markides Michael Markides Associate Director, Smart Utilities Infrastructure

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Existing technologies are starting to attain a large scale in Europe, while new technologies are emerging to solve core European utility problems, according to observations by the IHS analyst team at the European Utility Week (EUW) conference in Amsterdam. While markets are picking up in Europe, technology providers still face difficulties with varying standards, fluctuating regulatory requirements in each country and a customer base that is still in need of understanding best practices for new technology adoption. Moreover, acute problems with the integration of renewable energy are adding complexity to the potential solutions for utilities to invest in.

EUW has traditionally been focused on smart metering, a hot topic in Europe for many years. While European suppliers have known about the massive rollouts for electricity and gas meters for some time, actual shipments are just now beginning to climb. France, the UK, the Netherlands, and Italy are seeing dramatic shifts in their market landscapes in regards to smart gas metering, prompting IHS to issue a forecast for Europe, Middle East and Africa (EMEA) to have cumulative 2015 shipments worth almost $300 million. While smart electricity meters have been the mainstay for a few years, the market has almost entirely been in the Nordic region, with additional markets blooming in the UK and Spain just recently. However, significant adoption for smart electricity meters is now being seen across Europe in regions such as Poland, France, and Benelux - resulting in IHS issuing an EMEA forecast of $1.3 billion worth of shipments in 2015.

 

Mounting problems continue to pose challenges to electric utilities

After all the mandates for smart metering, the challenges from consumer advocates, the delays and bureaucracy, utilities in Europe now have to face a dramatically changing environment as deregulation takes hold and decentralized generation continues to increase, two themes covered continuously at the conference. Alongside the rapid growth of renewable energy is also the issue of grid capacity, an issue affecting all Western European countries. Utilities need additional help in rebalancing the grid while attaining ever increasing reliability standards, while all the time doing their best to defer capital investments and not build new grid infrastructure.

While Germany is the main example for integrating photovoltaic (PV) solar effectively into the power grid, the problem is now being seen across Europe. Intermittent and poorly managed distributed generation is a concern for managing power flow, maintaining adequate voltage levels and preserving the optimum life of grid assets. The difficulty for utilities is this isn’t always a grid-wide issue to solve; it’s more acute in nature and needs local, distribution layer technologies that will work in real time to manage power flow and quality. This is bringing many new potential solutions up for utilities to choose from, offering the help needed, but making for a confusing market landscape that lacks full system-wide, end-to-end solutions.

Integrating renewables will continue to challenge utilities for the foreseeable future. However independent of this is the overarching problem of grid capacity, an issue IHS analysts think isn’t getting enough acknowledgement. The problem with grid capacity is making the most of the existing assets installed in the field, managing them efficiently, transmitting electricity in the best possible way, and preserving the lifetime of the assets to lessen potential capital costs. In turn, the optimum use of the existing electric grid – one that minimizes operational costs while maximizing asset lifetime – is fundamentally a smart grid core challenge that will remain in Europe for some time to come. The good news is that core technologies that can help with maximizing use of the existing grid can and will be leveraged for renewable integration and other emerging smart grid applications.

 

Conclusions for technology providers

While it’s difficult to use the term “smart meter hangover” in a region that is expected to still see annual smart meter revenues grow almost fivefold during the coming years, it is still an applicable term when reviewing the European utility ecosystem as a whole. So much energy and time has been spent on making the case for smart meters that other core operational issues have now reached critical levels. Technology providers are coming to the rescue from other regions (like North America) and from other sectors (like telecom), bringing a promising, yet confusing array of potential solutions with them.

Technology vendors would be wise to view smart meter installations as the base level of grid automation, and also to be aware of the pending need for utilities to make the most of their smart meter data. While most solutions on the market that help to regulate residential PV installations are local in terms of their installation, the complimentary smart meter installations are ubiquitous in the electric grid, offering potential future points of cooperation. Technology providers focusing in on balancing the voltage levels on low-voltage networks would be advised to keep one eye open the medium-voltage grid, the concepts of reliability and the coming wave of improved smart grid analytics that will follow the generation of the new smart meter data.

Solutions to the renewable integration problems need to be scalable to future systems. While initially only an acute problem in certain parts of the low voltage network, the ramifications of large amounts of distributed generation are still not fully known. Solutions here need to be targeted to initially help a single low-voltage network (under one secondary substation for example), but may need to be potentially more geared at a medium-voltage feeder level orientation in the not-too-distant future. In addition, the coming waves of data from meters and medium voltage sensors in Europe will add value that has not yet manifested, giving opportunities to advanced smart grid analytics platforms.

 

Research by Market
Power & Energy Technology
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