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Smart metering: Slowly, but surely

Smart metering may bring benefits, but implementation will take time.

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Smart metering, ANALYSIS

As a technology, smart metering has been on the horizon in the Middle East for some time. Indeed, its adoption has been more prevalent in some places than others. And despite the inevitable slowdown as a consequence of the global recession, it remains a pioneering and beneficial tool for a utilities sector under pressure to operate with finite resources.

 And yet, there remains a lingering feeling of a technology held in neutral, unable to push on to greater adoption through a combination of excessive capital costs and inevitable logistical challenges of implementing a new system country-wide.
“There continues to be a lot of interest in smart metering technology, including wireless smart metering,” said Abdelrahman Abdellatif, Principal Consultant, Energy Solutions, Huawei Enterprise Middle East. “However, utilities companies are currently confronted with the high capital expenditure of implementing wireless smart metering.”

Abdellatif adds, however, that decision makers in a number of utilities companies in the region have recognised that smart technology solutions can play a vital role as the industry movement to cope with new sources of renewable energy continues to gather pace.

Indeed, according to Wasim Taqqali, Utilities Industry Manager with Accenture Middle East, the deployment of smart meters in the Middle East is still in its early stages, and electricity and water utilities in the region can be split into three groups.

The first group, accounting for the majority of utility companies, in countries such as Jordan, Lebanon, Syria, Iraq, Yemen, and even Oman and Bahrain in the Gulf, have yet to start the introduction of smart meters. The second group, such as utilities in Saudi Arabia, Qatar and Dubai, are still in the pilot phase, while the third are actively deploying the technology. But only one utility in the UAE, Abu Dhabi’s ADWEA, has fully completed the phase-one rollout of smart meters for electricity and water.

Having a regulatory mandate in place was a key factor in ADWEA’s decision to deploy smart metering, said Taqqali, while the business incentives include improved metering accuracy, lower operating costs and potential reductions in peak demand.

Yet despite this progress there are still countries in the Middle East that struggle to embrace smart metering. Whilst the installation costs can be significant – particularly in populous countries like Egypt and Saudi Arabia – in some cases awareness of the benefits of smart metering is still limited, while the two-way communications infrastructure needed to operate smart metering is also lacking.

There is also the simple fact of familiarity, said Taqqali. “Sometimes, the government departments responsible for electricity and water tariffs are simply reluctant to break old habits and adopt the new pricing designs available with smart metering, such as Time of Use (ToU) and Critical Peak Price (CPP) tariffs. Greater flexibility in introducing new tariff structures will also smooth the adoption of smart metering technology.”

Smart metering can also lead to reductions in peak demand, helping to defer huge capital investment needed to manage the power and water requirements of the region’s expanding urban environments and infrastructure. It also reduces non-technical losses, such as theft and losses due to poor equipment maintenance and calculation errors.

“The biggest barrier is arguably the fact that most utility companies in the Middle East are government owned and still provide heavily discounted water and electricity, often below the cost of production. So with consumers having little incentive to manage consumption, and producers having no motivation to generate a profit, smart metering is yet to be given the priority it deserves.”

There are grounds for optimism, however. Earlier this month, Saudi Arabia’s AEC, ICT Europe – a bank that offers advisory services to OEM’s looking to invest in the Middle East – and Enel, an Italian-based player in the power and gas markets, signed a Memorandum of Understanding (MoU) in Riyadh aimed at smart grid area implementation within Saudi Arabia and the GCC.

The MoU has been signed with a focus on delivering world class performance in smart grids and power distribution capabilities. The collaboration is a response to the Kingdom’s plan to embrace smart grid technology. The energy trend today is moving towards integrated networks, which requires better management of assets, peak demand and better response to faults.Under the collaboration, it will bring together local and international technologies in areas of Smart Grids, Advanced Metering Infrastructure, Network Automation, Distribution Management Systems and Smart Cities.

“It is an important step in the context of expanding our value chain across the region. By joining forces with ICT Europe and Enel we will significantly advance our smart grid solutions. This MoU shall enable fast-track technology transfer of smart grid technology, thus creating job opportunities for national talents, whilst in the meantime integrating national requirements regional electrical companies, regional renewable energy initiatives as that headed by King Abdullah City for Atomic and Renewable Energy (K.A. CARE) and the National Electricity Cogeneration Regulatory Authorities (ECRA),” said Dr Ghassan Al-Shibi, President and CEO of AEC.

Francesco Costanzo, CEO at ICT Europe said: “…it is our vision to bridge the technology gap that exists in the Saudi Market, by bringing leading international technology companies, such as Enel Distribution, that are willing to transfer technology and invest in the Kingdom of Saudi Arabia through strong and credible local partners, such as AEC. We don’t only nurture and manage the relationship between the partners, but also invest in promising opportunities such as the Smart Grid which for us is a prime example of our business model.”

In addition to efficiency and reliability gains, smart grid technologies can attain easier integration of renewable energy sources, such as solar energy. The potential efficiency gains and power distribution alternatives can also further strengthen the region’s energy security as all GCC currently depend mostly on fossil fuels for their energy needs.

This is one of the key drivers behind smart metering integration. It is a truism that there is unsustainable demand for water and electricity in the Middle East, and a dearth in responsibility. As energy sources diversify, technologies such as smart metering will become imperative. There is no doubt that the deployment of solar energy in the Gulf to address domestic demand is gathering pace, said Taqqali, but the reliability and quality of power generated by renewable sources can vary.

“That has been the experience overseas in countries with a relatively high penetration of renewable energies. Smart metering may therefore become extremely important in ensuring smooth adoption of clean energies in the Middle East, helping to maintain security of supply and the satisfaction of the end-user,” he said. “Smart metering allows utilities to forecast demand more accurately and therefore plan network expansion more confidently. The fact that some countries in the Middle East have capacity shortage while others enjoy relative over-capacities indicates a lack of accurate data for proper forecasting.”

Attitudes are changing said Abdellatif, and decision makers in a number of utilities companies in the region have recognised that smart technology solutions can play a vital role as the industry movement to cope with new sources of renewable energy continues to gather pace. Encouragingly, there is “an ever increasing pressure from regulatory authorities for businesses to decrease levels of carbon footprint,” he added.

Smart technology solutions such as Huawei’s end-to-end communication solutions, service solutions and office informatisation solutions can accommodate the flow of energy between new sources of supply and new forms of demand. This could enable greater response, interactivity and transparency in today’s business climate.

Huawei has recently successfully rolled out a number of smart projects globally. In addition to a communications network for a power company in the GCC, it developed an advanced metering infrastructure solution for the state grid in Heilongjiang in China. Huawei also rolled out a master station, and a campus network solution for the State Grid of China Dispatch, where it established connection capabilities to all of its dispatch centres, installed end-to-end security and reliability, designed HQoS and two isolated dispatch networks – this is currently the largest special network in China – and installed 15,000 routers and switches.

Going forward there is no doubt, as Abdellatif testifies, the improved financial climate has strengthened the likelihood of a successful adoption of smart metering technology. But there are still other, related challenges inherent in the market that must be overcome.

“The recovering economic climate has undoubtedly eased the challenges of rolling out smart metering technologies. However, a number of key issues that remain include: the sector’s legacy ICT infrastructure and building a strong business case for smart metering; The readiness of utilities companies to change their business model to fully leverage the features of smart metering which includes dynamic and real-time pricing and providing incentives to consumers to contribute to the management and control of their power consumption; engaging telecom operators to play an active role to support the utilities sector for adoption of smart grids,” he said.

Such challenges may exist in the region; however, it doesn’t mean there isn’t progress. As mentioned, the UAE stands out in the GCC as an early pioneer of smart metering. But other countries are showing signs of catching up. In May, Bahrain’s Electricity and Water Authority announced a radical IT system overhaul as it casts one eye on a new era of efficient energy management.

In what will become the Kingdom’s largest ever utility-based IT project, EWA will automate key operational processes, initiating a bold step-change in customer service and overall performance in line with Bahrain’s 2030 economic vision.
The project will entail the introduction of utility industry-specific solutions from world-leading business software company SAP, including customer relationship management, billing, metering and network asset management.

SAP’s suite of business solutions will, among other things, speed up the billing process, mitigate disconnection problems, enhance fault detection capabilities and control customer demand and load profiles more effectively.
Crucially, the project, which is SAP’s largest of its kind in Bahrain, will accelerate a transition to a smart energy infrastructure that incorporates renewables and cutting-edge metering. “Sustainable development in Bahrain can only progress if we are capable of unlocking more effective ways of capturing, managing and distributing electricity and water,” said Shaikh Nawaf bin Ibrahim Al-Khalifa, CEO of EWA.

“This requires awareness, determination and, crucially, it requires innovative technology capable of revolutionising core processes. With our eye on Bahrain’s future generations, and the help of companies like SAP, we are committed to stamping out inefficiency, minimising emissions, embracing renewable energy, and making the smart grid a widespread reality.”

With a wider adoption of the technology, buyers demands are likely to evolve, and it is already patently clear, says Abdellatif. Now buyers are demanding integrated ‘end-to-end’ smart grid solutions including AMI, MDM, IDN and DDN. The ability of the vendor to make future enhancements to the solution is another key issue, as is the ability of the vendor to maximise the existing ICT infrastructure.

Despite the significant hurdle of the global economic crisis, and a somewhat entrenched apathy towards implementing new technologies, there can be no doubt that smart metering in the Middle East is set to play a key part in its utilities going forward and in its drive for more sustainable energy.

As Taqqali said: “The future for smart metering in the Middle East is bright and the UAE in particular will make considerable advances in 2014. A road map is already in place and a pilot project was introduced in Dubai last year. Abu Dhabi will also expand smart metering for new and existing customers. We expect Saudi Arabia and Qatar to follow in the UAE’s footsteps in a few years, while other countries may take longer.”

Potential benefits of smart meters
- Eliminate manual meter reading
- Provide realtime data to help with load balancing
- Enable dynamic pricing (raising or lowering prices based on demand)
- Provide detailed feedback on consumer usage habits
- Help consumers understand how they can lower bills
- Ultimately, help reduce per capita consumption

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