In an Expert Focus article for Waterbriefing, James Fotouhi, Water Technology Market Analyst at BlueTech Research, argues that while there is a market for smart metering technology, this will only be when it manifests itself as a clearly justifiable business decision.

James Fotouhi: There is a great deal of excitement surrounding the potential for “smart” meters to revolutionize the management of water distribution networks. For example, there is the opportunity to use advanced data analytics to reduce the significant quantities of water lost through leaks (up to 40% in many systems), also called “non-revenue water” (NRW).

One might be swayed to believe all the hype given the extent to which many major utilities in North America and Europe are replacing old, non-automated meters with “smart metering” technology. However, important technological considerations must be studied to fully understand the meaning of this smart meter growth – a topic further examined in the latest BlueTech^® Research Insight Report.

To have a meaningful discussion about smart water meters, it is necessary to distinguish between the two primary data collection systems that comprise the space: automated meter reading (AMR) and advanced metering infrastructure (AMI)

The first method of data collection, AM reading, is conducted using vehicles equipped with mobile radio receivers that drive by households and pick up a smart meter’s transmission. The second method, AM infrastructure, collects data through a fixed wireless network in real time and transfers it to a centralized data hub.

AM infrastructure requires a significantly larger upfront investment of capital, as a new smart meter might cost anywhere from US$60-$200 per unit and the network infrastructure cost can average from $200-1000 per meter installed. Both systems save the utility money in terms of reduced labour costs, as meter reading staff can be substantially reduced, but AM reading accomplishes this at a much lower upfront cost.

This real time data network is necessary for utilities to be able to use advanced analytical tools for detecting leaks and optimizing system flows; however, most utilities in North America - and nearly all utilities in Europe- are opting to forego these networks and install or continue to use AM reading.  Of the 39 million smart watermeters installed in North America by 2010, 92% were AM reading type meters (see Figure 1).  The data is even more dramatic in Europe where very few AM infrastructure type systems have been installed.

Figure 1: USA and Canada Smart Meter Installation Breakdown (2010)¹

The few utilities that use a fully AM infrastructure system are either pilot projects or already have the needed wireless network installed (such as New York City and San Francisco), so the overall project cost was limited primarily to the new meters.  Adoption among other utilities will be a much greater financial challenge.

Numerous industry experts claim²that utilitiescontinue to work with AM reading because thedata analytics using real time meter readings do not demonstrate a clear value proposition to justify the high upfront costs of network installation.For example, knowing about a leak does not give a utility the funds to deal with it effectively.  Approximately 80% of the costs associated with a drinking water system are tied to the distribution infrastructure such as pipes and pumping stations³. The 2013 water infrastructure survey by the USEPA indicated that the US needs to invest $247Bn in distribution infrastructure over the next twenty years to continue to provide safe drinking water⁴.  How does the estimated $2.6Bn lost per annum in the US to NRW fill this infrastructure gap? Simply put, it does not. 

The vast infrastructure challenge of the 21^st century will require more than just data to bridge this gaping void.Furthermore, most utilities already have historical data about system behaviour that is largely unused. This suggests that moving to a data-driven approach for distribution management and leak repair represents a fundamental cultural shift within the structure of a utility.

Meter radio frequency (RF) signals are also not standardized and are usually proprietary signals that only the meter provider can receive.This makes utilities even more reluctant to invest in an expensive data network, as it would essentially lock them into using only one meter provider for all installation and future procurement cycles.

There is indeed a market for smart metering technology, but only when it manifests itself as a clearly justifiable business decision.  And thus far, AM infrastructure systems have yet to prove this.

Notes:

1. Figure 1: USA and Canada Smart Meter Installation Breakdown (2010)