Mobile operators see growth opportunities in utilities M2M

Thursday 7 February 2013 | 14:26 CET | Background

Utility companies are some of the oldest users of M2M technology, although not always via mobile networks. Utilities are involved in M2M in various ways, most notably smart metering and smart grids, as well as part of developing the smart home. Following up on a range of recent news stories as well as last year's conference on Smart Metering and Smart Homes at the RAI in Amsterdam, we look closer at this M2M segment, focusing on the role of mobile operators.

Although machine-to-machine (M2M) communications has been available for years, the mobile sector was at first not particularly active in the field. Re It was the utility companies that took the lead in developing the possibilities of mobile technology in smart metering.  However, in the last few years the focus of mobile operators has changed, in part because their traditional sources of revenue (voice, SMS) have started to erode, making new revenue streams a must. At the same time the ‘always online’ trend is gaining pace through the ever-increasing use of smartphones and tablets, as well as other connected consumer electronics devices. This has led to growing interest in the field of smart energy, including smart meters and applications consumers can use in their homes, or remotely via their smartphones and tablets, to control utility services. 

Regulations help stimulate growth

M2M in the utilities sector is growing in part due to enforced regulation by the EU. The energy policy of the EU aims to create a low-carbon and energy-efficient Europe. The main targets are laid out in the 20/20 directive, which calls for a 20 percent reduction in carbon dioxide emissions and a 20 percent increase in renewable energy and energy efficiency, all by 2020. To help achieve this, the EU regulations require the availability of smart electricity meters in 80 percent of homes by 2020. This is likely to be followed by other utilities such as gas and water, as part of a broader emergence of the ‘smart home’ and the smart grid.

Thanks to the EU regulation, the market for smart metering has accelerated in recent years and is expected to continue to grow. Manual Sanchez Jimenez, Smart Grids Program Manager at the European Commission’s Directorate-General for Energy, said at the Smart Homes/Metering event in Amsterdam in October 2012 that EU states are making progress meeting the target for 80 percent of homes with smart meters. Most member states have already conducted a cost-benefit analysis on rolling out smart metering, and the EC is currently assessing these plans.

Smart metering on the up

All the main utilities in Western Europe are now busy implementing smart meters and making their grid smarter. According to Pike Research there will be more than 237 million smart electricity meters installed in Europe by 2020. This can only be achieved if millions of meters are deployed each year in most EU countries.  Many of these projects are carried out by utility companies in co-operation with mobile operators, as shown by some recent examples:

  • In November 2012, M2M provider Maingate and Deutsche Telekom partnered to promote ”capex–free” smart metering by utilities. DT and Maingate are working on how the real-time customer data gathered over smart meters can be used effectively at other parts of the utility business.
  • In September 2012 Enexis and Vodafone Netherlands connected the 100,000th smart meter to their network. In a project started in 2009, Enexis is gradually replacing all its meters with a digital version offering M2M connectivity.
  • In July 2012 G4S Utility Services agreed to extend its partnership with Telefonica O2. The original contract was signed in March 2011. The deal involves the provision of up to 1.4 million SIMs over five years. It will give G4S Utility Services access to Global SIM connectivity to support its roll-out of smart meters.
  • In June 2012 RWE Deutschland announced that it will use infrastructure and services from Deutsche Telekom to communicate with 15,000 digital electricity meters in Mülheim an der Ruhr. The ‘Mülheim zählt’ (Mülheim counts) project is to date the largest smart metering project in Germany. In total over 100,000 devices were to be installed before the end of 2012.
  • In the Netherlands Liander started provisioning smart meters in January 2012 in houses where the meters need to be renewed, as well as in newly built homes. Liander will gradually expand its coverage of homes with smart meters from 2014 and aims to have smart meters available to 80 percent of Dutch households by 2020.

The graph below shows the situation in the EU in December 2012, with green indicating a go-ahead of smart metering, orange means no decision as yet and red a no-go and with the plus indicating a positive cost-benefit analysis, a minus a negative one and question mark that the cost-benefit analysis is in progress or inconclusive. Programmes for the roll-out of smart meters have been announced in the UK and Spain while France’s plans for deployment have been postponed from 2013 to 2014, and Ireland is set to start as well in 2014.

Among the larger European countries, Germany is lagging the most, as the German government has not yet committed to a mandated roll-out programme. Germany continues to follow a market-driven policy; a government-led rollout is therefore not planned. A cost-benefit analysis should be completed in early 2013.

Figure 1: Smart metering progress map (Source:  Status on the roll-out of Smart Metering in the EU - Esmig)

According to the GeekSquad presentation at the Smart Home event in October 2012, it is likely that around 80 percent of 18-65 years olds will use a smartphone app to control their energy usage in 2015. This new type of usage will also require a new type of support. Customers need to be educated on how to use the full services of such an app, and technical support needs to be available to deal with wireless networking and pairing issues between devices.

Overall the sentiment at the Smart Home/Metering event was that smart metering/smart homes will only be successful when the customer is engaged in the process. Cost reduction alone is not enough of an incentive for most consumers. When consumers can take an active role in their energy management, they are more inclined to use the full benefits of a smart meter, but it needs to be simple and transparent.

Despite the EU regulatory support for smart meters, there remain some concerns, as the European Data Protection Supervisor has warned that smart meters can be used to track more information than only the energy consumption data.

Other M2M segments where utilities and mobile operators are actively working together are the smart home and smart cities. In the smart homes segment, players include utilities offering home energy management systems, mobile operators such as Swisscom offering products and services directly to consumers and appliance and electronics manufacturers such as Panasonic and Sony. However many mobile operators, such as Deutsche Telekom and Telefonica, are reluctant to go it alone and have chosen to partner with other parties to provide smart home solutions.

Although several smart city pilot projects have taken place, there are fewer live projects than in the smart metering/smart homes area. One recent example was the deal between Telenor and the Oslo municipality to operate the city’s network of street lights. This will reduce the costs of managing the lighting network. The system also optimises lighting at times of fog, twilight and snow, as well as providing immediate notification of errors and bulb failures.

All in all, the force of regulation combined with the continuing changes in consumer behaviour are leading to new products supporting the emergence of smart homes. This is creating a growth area for the M2M sector and mobile operators in particular.

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