Will Utilities Continue to Deploy Private Networks and Ignore Public LPWA Networks?

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2Q 2018 | IN-5157

According to recently published market data on Low-Power Wide-Area (LPWA) networks (here), private networks have been the most popular choice to connect LPWA devices during 2017. Energy and water utilities have been the leading proponents of private LPWA networks for their smart metering initiatives and have contributed to over 60% of global LPWA connections in 2017. This executive foresight will analyze the utilities’ smart metering implementations and the impact on the regional adoption of private and public LPWA networks.

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Private Networks Account for 93% of All LPWA Connections in 2017

NEWS


According to recently published market data on Low-Power Wide-Area (LPWA) networks (here), private networks have been the most popular choice to connect LPWA devices during 2017. Energy and water utilities have been the leading proponents of private LPWA networks for their smart metering initiatives and have contributed to over 60% of global LPWA connections in 2017. This executive foresight will analyze the utilities’ smart metering implementations and the impact on the regional adoption of private and public LPWA networks.

Acceleration in Regional Smart Metering Projects

IMPACT


Energy and water utility–led smart metering implementations are a more mature, Internet of Things (IoT) growth market for LPWA network technologies. Smart metering initiatives have led to accelerated global adoption in the past decade and have accounted for over 450 million smart meters across the world by the end of 2017. LPWA network technologies represent less than 11% of the connectivity market share in metering. This correlates with a similar adoption rate of LPWA technologies specifically in smart electricity meters, which account for almost 90% of the currently installed base of smart meters. Although smart electricity meters constitute most of these deployments, there has been a growing adoption of smart meters to replace the mechanical flow meters used in gas and water metering points. Battery-operated smart meters used in gas and water utilities have been the largest adopter of LPWA network technologies and continue to see exponential growth. Some key highlights of regional LPWA technology adoption in smart meters are as follows.

Europe

Private Networks: In the United Kingdom, Sensus (now part of Xylem, Inc.), along with Arqiva, won the communication service to connect smart electricity and gas meters for 10 million homes in Scotland and Northern England. Arqiva has also connected around 230,000 water meters for the UK water company Thames Water and is expected to expand to 3 million meters by 2024. In France, Veolia subsidiaries Homerider Systems and M2ocity merged to create Birdz, which has around 2.7 million smart water and gas meters connected using proprietary LPWA technology.

Public Networks: As the region witnesses fierce competition from public LPWA networks, there has been increasing activity in smart metering implementations. In 2015, Arad implemented 80,000 SIGFOX-based smart water meters in the French region of Savoie. Belgian water utility Waterlink is currently implementing over 200,000 Kamstrup MultiCal smart water meters embedded with SIGFOX connectivity, and Proximus (also in Belgium) will roll out a Narrowband Internet of Things (NB-IoT) network to connect over 1.3 million smart meters for Eandis’s and Infrax’s gas and electricity customers by 2022.

North America

Private Networks: The American Recovery and Reinvestment Act of 2009 kick-started the modernization of utility distribution networks in the United States with some of the largest utilities implementing large-scale smart metering rollouts. Canada similarly initiated an ambitious grid modernization program where utilities deployed their own private networks to connect smart metering assets. Although IEEE 802.15.4–based solutions were predominantly deployed, by the end of 2017 energy utilities had rolled out over 11 million smart meters using Power Line Communication (PLC) and proprietary LPWA technologies. Similarly, proprietary LPWA network solutions from Sensus, Neptune Technology Group, and Aclara (now part of Hubbell, Inc.) have connected over 3 million smart water meters.

Public Networks: With the commercial availability of SIGFOX, LTE-M, and LoRaWAN in North America, Original Equipment Manufacturer (OEM) adoption of LPWA technologies are starting to gather steam. Itron, Inc. and Neptune Technology Group have made early announcements regarding LTE-M- and LoRaWAN-based smart meters respectively for the North American market.

Asia-Pacific (APAC)

Private Networks: Following China’s nationwide roll out, the Asia-Pacific region now has the largest installed base of smart meters in the world with 252 million connected endpoints, despite arriving later to the market than North America and Europe. Gas and water metering points are starting to be replaced with smart meters in China as their smart electricity metering program reaches near completion. ZTE has deployed China LoRa Application Alliance’s (CLAA) LoRa networks in 40 Chinese cities. The network being deployed in Guizhou province will help connect smart gas meters for over 75,000 customers for Guizhou Gas.

Public Networks: In partnership with meter manufacturers, Huawei and ZTE have been carrying out large-scale Proof of Concepts (POC) in NB-IoT-enabled smart metering solutions in APAC since early 2017 and have started to implement large-scale solutions in early 2018. Similarly, Tata Communications has collaborated with Mahanagar Gas in India to deploy 5,000 smart meters with its public LoRaWAN network.

Latin America and the Middle East and Africa (MEA)

Private Networks: Although the Latin American region is rich in fresh water resources, the utilities in the region are under stress from mass, rapid urbanization and a high level of unbilled water. Water utilities are starting to implement smart meters to accurately monitor usage and to identify water leaks for lower unbilled water. Brazil, the biggest market for metering in the region, currently has a number of pilot projects that are still in the early stages. Similarly, the MEA region has witnessed a number of smart metering projects, especially by water utilities that have largely relied on private networks.

Public Networks: SIGFOX and LoRaWAN has witnessed initial network deployments focusing on large cities. Operators in the Middle East have made announcements of plans to deploy cellular LPWA networks. Turkcell, the largest Multinational Organization (MNO) in Turkey, is one of handful of operators in the world that have already deployed both NB-IoT and LTE-M technologies. For Turkcell, NB-IoT is likely to be the preferred LPWA technology for smart electric and gas meters.

The Next Wave of Smart Meter Deployments

RECOMMENDATIONS


Early adopters of smart meters have been cash-rich energy utilities that have relied on building private networks to connect smart meters. In mature smart metering markets such as the United States, Canada, Italy, Sweden, and China, utilities have primarily deployed their own networks of PLC or Radio Frequency (RF) mesh networks. PLC and RF meshtechnologies have been implemented in a number of countries, connecting up to 90% of the metering points, while around 10% of the metering points have relied on Wide Area Network (WAN) connections of either 2G, 3G, or proprietary noncellular LPWA networks. WAN technologies have been used to connect disparate endpoints in rural areas where PLC, wireless Meter-Bus (M-Bus), or IEEE 802.15.4 technologies are deemed unfeasible. Public LPWA networks will have little impact on utilities that are either (1) implementing the second generation of smart meters or (2) deciding not to drastically change the composition of connectivity technologies in their implementation plans, especially in brownfield projects.

In 2018, Italian utility Enel announced its plans to replace the existing smart meters to a second generation of meters called Open Meter. The Open Meter will include dual connectivity with PLC and RF and will operate at 169 Mhz. The second-generation smart meters will be replaced over a period of 15 years. Telecom Italia claims to have nationwide coverage of NB-IoT which will be used to connect around 5% of smart gas and electricity meters. Similarly, Sweden (another European early adopter country) is in the process of replacing their first-generation smart meters with second-generation meters between 2019 and 2024. Switzerland’s Landis+Gyr has signed an agreement with SINFRA (Sweden’s central procurement organization for the energy sector) to supply smart meters supporting G3-PLC and NB-IoT technologies.

However, public LPWA networks will witness most traction with greenfield smart metering projects. Since most large energy utilities’ smart meter implementations are almost near completion in North America, the next wave of deployments will come from over 900 smaller co-operatives that provide energy utility service in 47 states. These utility businesses (often nonprofits) will benefit significantly from leveraging public network infrastructure to deploy smart meters to its customers. In Germany, which has a fragmented distribution ecosystem consisting of 1,400 local municipal utilities, public networks will help avoid network overbuild and better utilize their capital expenditure in developing new value-added services. Moreover, as MNOs sunset 2G/3G networks in the coming years, utilities that currently rely on cellular connectivity will migrate to LTE-M and NB-IoT networks. Public LPWA networks will ultimately have the biggest impact on water utilities, accounting for over 90 million smart meters globally by 2023. Water utilities, although more prudent with capital expenditure, are investing in smart metering infrastructure to reduce their strain from high operational expenditures, especially from non-revenue water. The commercial availability of public LPWA network infrastructure and the decreasing cost of metering hardware will accelerate the adoption of smart meters among water utilities in the coming years.

In conclusion, utilities will continue to build, expand, and upgrade private network infrastructure, but greenfield smart metering projects will see a much higher uptake of public LPWA network infrastructure than in the past.

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