GCC utilities are embracing a smart vision through smart meters
Regional utilities are accelerating the deployment of smart meters as consumers seek better insights into their consumption of electricity and water at a time when every drop counts due to increasing user tariffs and subsidy reforms.
In a region undergoing rapid economic growth and an unprecedented energy demand, the need for a stable and reliable energy supply and management is every GCC country’s priority.
While smart metering for both water and electricity has been on the horizon in the GCC over the past few years, its adoption is more prevalent in some places than others. However, it remains a pioneering and an important tool for a utilities sector under pressure to operate with finite resources.
In Saudi Arabia, for instance, the plan for large-scale smart metering implementation, supporting Saudi Electric Company’s (SEC) goal for enhanced energy efficiency, has been set in motion.
With the number of metering points continuously on the rise, especially in the residential sector, Saudi Arabia aims to install around 12 million smart meters across the Kingdom by 2025. This is no mean feat, but nevertheless, the country is determined to hit the target. And one quick way to achieve that would simply be to go local.
“The general consensus is that it makes perfect business sense to start manufacturing smart meter products inside the Kingdom,” says Frank Gutzeit, CEO Diehl Metering. “We are alive to the peculiar needs of the region in terms of product specifications and the desire to fast track the phasing out of the mechanical metering technology that cannot meet the required efficiency levels.”
“We are largely driven by the GCC market demand to develop this kind of technology,” adds Gutzeit. “The ultrasonic water meter technology in comparison to the old fashion mechanical metering technology is able to resist sand in the tubes as well as air in the pipes, which is very common in this region.”
“This technology along with the added communication technology abilities means that the GCC is among the few markets for highly advanced smart meter products.”
Mr. Gutzeit says that requirements for GCC smart metering customers were very demanding as regional governments step up efforts towards becoming smart cities, built on smart networks to enhance efficiency.
In November, Diehl metering and Saudi Arabia’s Abunayyan Holding Company signed strategic cooperation agreements including a state of the art assembly line in Saudi Arabia for Ultrasonic water meter technology.
The move, says Gutzeit, will bring high-performance, reliable and sustainable smart metering solutions “Made in Germany” to the kingdom, and allows for the intense transfer of expertise to, Abunayyan Holding, one of the leading solution providers in Saudi Arabia’s electricity and water sectors.
Through their partnership that began in 2008, the two companies have been able to supply over 700,000 HYDRUS ultrasonic water meters to Saudi Arabia. Their team of experts have implemented comprehensive and fully automated fixed network projects enabling the fully automated reading, analysis and management of HYDRUS water meters in various cities starting in Dammam since 2011.
The two companies are now implementing a localisation strategy in Saudi Arabia that will enable local production of smart metering products such as static ultrasonic water meters to help meet growing demand.
Saudi Meter Company, a subsidiary of Abunayyan Holding, will be mandated to localise the HYDRUS ultrasonic water meters for the domestic market. Abunayyan Holding will as a result acquire key components and production technologies along with dedicated training from Diehl Metering. The start of production in Riyadh is planned to commence in Q3 / 2018.
“Interest in smart metering technology, including wireless smart metering appears to be growing very fast,” says Khalid Abunayyan, president & CEO Abunayyan Holding. “However, utilities are currently confronted with the high capital expenditure of implementing wireless smart metering.”
Abunayyan 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 moves to cope with new sources of renewable energy and step up water conservation efforts.
Diel Metering has so far supplied over 1.8 million of its ultrasonic meters (water and thermal energy) in the GCC and has implemented some of the largest and more advance AMI solutions in the GCC, including Saudi Arabia, UAE and Bahrain.
The majority of GCC countries are already rolling out smart metering systems through their utilities providers. Only one utility in the UAE, Abu Dhabi’s ADWEA, has fully completed the phase-one rollout of smart meters for electricity and water.
While the obvious business incentives include improved metering accuracy, lower operating costs and potential reductions in peak demand, ADWEA’s decision to deploy smart metering was largely driven by the existence of a regulatory mandate.
Yet despite this progress, there are still countries in the Middle East that still 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.
The energy trend today is moving towards integrated networks, which require 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.
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. 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, says Gutzeit, 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 says.
“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.”
Another smart metering company, Iskraemeco, signed a contract with SEC in 2015 for the rollout of 55,000 smart meters. Iskraemeco says it began supplying SEC with the smart meters in Q4 2015. The smart meters will allow the utility to improve power distribution by providing better energy conservation and management, improving meter reading accuracy, reporting tampering and theft, and providing accurate consumption data to consumers.
SEC will also be in a unique position to identify real-time energy consumption patterns for all the users in its network and consequently get a clearer picture on the demand and supply of energy. Iskaraemeco says its MT880 meters are compactable with high temperatures and humidity levels characterising the country.
Dubai Electricity and Water Authority (DEWA) plans to install one million smart meters across the emirate by 2020, replacing all mechanical and electromechanical meters in time for Expo 2020.
DEWA’s smart meter initiative is part of a major drive towards enhance electricity and water transmission and distribution networks for the next 10 years.
“Our objective in the transition to become the smartest city in the world is to achieve the happiness of society and provide instant and seamless smart services anytime, anywhere,” says Saeed Mohammed Al Tayer, MD & CEO DEWA.
“The smart grid will contribute to the infrastructure by connecting renewable sources of energy and promoting environmental initiatives supported by qualified staff thus building a sustainable future for Dubai.
“Our experience in implementing the smart grid strategy is unique because it is fully-integrated. DEWA has developed the smart grid strategy which is a key component of a smart city. We have developed plans and programmes for demand side management, energy efficiency and operational improvement under the smart grid strategy.
“These programmes include advanced metering infrastructure, asset management, demand-side management, distribution automation, information technology infrastructure, substation automation, system integration, telecommunications, and efficiency, reliability, and availability of energy supplies,” he adds.
“One of the most important factors for the success of smart cities is the seamlessness and availability of round-the-clock integrated and connected services that meet daily living requirements. In 2009, DEWA started its smart transformation. It was the first government organisation to achieve a 100% smart transformation, less than a year after the Smart Dubai initiative was announced.”
While the UAE and Saudi Arabia standout in the GCC as early pioneers of smart metering, other countries are showing signs of catching up. 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,” says 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.”
Last year, Kuwait’s Ministry of Electricity and Water (MEW) said it was currently putting the final touches on a plan to replace the old meters with smart meters, which will lead to the operation of the centralised system that consists of 1.2 million smart meters within seven years towards the implementation of the new water and electricity charges.
The plan includes the development, administration and operation of smart meters and the communication network through a telecommunication company registered in the Central Agency for Information Technology (CAIT).
The winning company will install the systems, programmes and applications in the headquarters of the ministry in South Surrah to be ready for operation. The ministry has set the conditions for executing the plan; such that the systems, programmes, applications and licenses will cover 1.2 million smart meters, as well as support the future development and expansion works for a period of 84 months or seven years in various sectors - commercial, investment, private, industry, government and agriculture. The smart meters will be installed in residential, industrial and commercial areas.
According to a recently published TechSci Research report “GCC Smart Grid Market 2012-2026”, the GCC smart grid market is projected to grow at a CAGR of 13.5% during 2017-2026. The smart grid market is expected to gain momentum in the GCC region on account of increasing government focus on upgrading power infrastructure.
Per capita consumption of electricity in the GCC countries is significantly higher than the global average and development of infrastructure and growing population would result in further boosting the electricity demand in the coming years.
With global utilities’ expenditure on smart meters forecast to reach $15bn in 2018 according to the report, a significant share of this investment is expected to come from the GCC as the region forges ahead with its smart grid ambitions.
“Smart grid technologies assist in integration of renewable energy to the grid and the GCC nations have focused on development of solar power plants, thereby creating new avenues for smart grid business in the region,” says Karan Chechi, Research Director with TechSci Research, a research based global management consulting.
“The benefits associated with smart grid technologies such as better outage management, proper asset management, improved billing and customer information find widespread application in the GCC countries.”
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, adds Chechi. It also reduces non-technical losses, such as theft and losses due to poor equipment maintenance and calculation errors.
Despite the success registered by smart meters, there is 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.
But the biggest barrier is arguably the fact that most utility companies in the region 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.
Attitudes are changing says Chechi, 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 adds.
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.
Going forward there is no doubt, as Gutzeit 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,” he says.
“Another issue is 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.”
Industry players also call for the need to engage telecom operators to play an active role to support the utilities sector for adoption of smart grids.
With a wider adoption of the technology, buyers’ demands are likely to evolve, and it is already patently clear, says Gutzeit. 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 constrained government expenditure in the region rendered by low oil prices, 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.
“The future for smart metering in the Middle East is bright and the UAE in particular will make considerable advances in deployment over the years ahead. 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 Bahrain to follow in the UAE’s footsteps in a few years, while other countries may take longer,” says Gutzeit.