For example, countries with lockdowns are seeing major decreases in energy consumption though residential energy use has generally increased, commercial and industrial has plummeted (which accounts for more than 60% of energy consumption in the United States). Unsurprisingly, COVID-19 is amplifying these concerns around top-line revenue and bottom-line costs more than ever. Both trends have therefore meant less revenue and utilities must increasingly find ways to create new revenue streams and/or improve profit margins (by reducing operational costs) if they want to avoid the ‘death spiral’. However, utilities are increasingly facing pressure to conserve more energy by reducing average residential and industrial consumer’s demand and more customers are starting to generate their own power with residential solar. For decades, utilities have primarily generated revenue by selling as much energy as possible put another way, the more energy customers consume, the more money utilities make. Often, utilities don’t realize the magnitude of their own challenges until a major event forces a confrontation with them and COVID-19 is highlighting more than a few.Įven before the current crisis, utility operating models and margins have become increasingly challenged. Shortly after, Investor-owned Utility spend on disaster management solutions skyrocketed. In 2012, it took almost three weeks to restore power to 8.7 million end-users after Hurricane Sandy destroyed the Mid-Atlantic and New England regions of the United States. Nevertheless, COVID-19 is perhaps highlighting the need for automation faster than utilities would like or even realised.ĬOVID-19 will accelerate utility adoption of software and services A full analysis of the numbers/situation is included within the Omdia Smart Utility Meter Intelligence Service (click here for more information). However, the balance will continue to be pushed towards the pessimistic case if lockdowns and severe restrictions remain in place for key markets into/beyond Q3 of 2020. the gradual lifting of restrictions in some markets), Omdia considers the ‘true’ forecast to be much closer to the optimistic scenario rather than the pessimistic scenario. Based on the current situation and short-term outlook (i.e. Additionally, all enforced demand would see longer delays, especially for ‘developing’ sub-regions (which are deeply tied to the economy), but also for Europe. Notably, extended disturbances in vendor supply chains will likely take years to recover (if at all) in the pessimistic scenario. However, total declines could reach up to 9 times that percentage in the worst-case scenario. In general, stockpiling practices would mitigate the disruption to vendor supply chains, and countries with mandated installation deadlines would maintain utility demand. In the best-case scenario, total cumulative meter shipments (electricity, gas and water) from 2019-2025 will decline by 3.2%. These utilities will therefore not resume operations until it becomes financially suitable to do so. On the other hand, utilities who invest in AMI based primarily on an organic business case aren’t legally obligated to invest in AMI. However, utilities with legal obligations to install smart meters (as in many European countries for electricity and gas) face penalties/fines for delays and will therefore recover faster. In general, all utility rollouts are likely to encounter at least some degree of delay. Yet, despite slowdowns in hardware markets, the pandemic might actually accelerate the adoption of software and services in the future.Ĭumulative meter shipments decline by 3.2% over the next five years in the best-case scenario Depending on the length of lockdowns, two potential scenarios could impact the top-level shipments forecast in different ways. In the short-term the number of infections within a country is the largest factor in halting any rollouts, but the pace of recovery is strongly connected to the original drivers behind any smart meter rollout – enforced legislation or organic investment opportunity. At the same time, however, COVID-19 could drive more spend than ever before on ‘beyond-the-meter’ software and services over the next ten years. Total communicating meter shipments from 2019-2025 could fall by as much as 28% due to COVID-19 (worst-case scenario). As COVID-19 halts the global economy, the Smart Buildings and Energy Infrastructure team at Omdia built a framework to assess the impact of COVID-19 to the smart metering industry in a recent white paper.
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