The soaring cost of energy, the aging of the electricity grid, national security concerns, and government regulation are creating a boom in smart utility meters and the semiconductors that go into them.

Some 50 million old meters in the United States are likely to be replaced by advanced meters by 2010 at a cost of about $18 billion, according to a recent analysis by Deutsche Bank. Worldwide, only 6% of electricity, 8% of gas, and 4% of water meters are even automated, according to Texas Instruments Inc. which sells a variety of chips for meters. In fact, in the electric industry alone, 500 million meters worldwide could be replaced over the next 10 years, resulting in semiconductor sales of at least $7.5 billion, according to Mark Buccini, director of strategic marketing for Texas Instruments’ microcontroller products.

Powerful forces generate smart market

Tight energy supplies and rising costs are forcing electricity providers to more effectively measure, monitor and control how electricity is allotted and distributed. The rolling blackouts and power outages of recent years have made it all too clear that the electric grid has reached its limits.

Worldwide, governments have begun to push utilities to modernize the grid. In the United States, two federal laws – the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 – have outlined policies and incentives for developing a smart grid. But because utilities are regulated at the state level, adoption has not been uniform, said Matt Spaur, product manager in charge of AMI (advanced metering infrastructure) business development at Itron Inc, a utility meter and software company in Liberty Lake, Wash. So far the utility commissions in two states – California and Texas – have been the most proactive in promoting so-called AMI systems. In one of the largest projects to date, called SmartConnect, Southern California Edison plans to replace 5.3 million standard meters in residential and commercial buildings with AMI systems between 2009 and 2012. Itron landed a $480 million contract with Edison to supply the smart meters. And in Texas, meter vendor Landis+Gyr Holdings Pty Ltd is supplying Dallas utility Oncor Electric Delivery Co with $360 million worth of smart meters for three million homes and small businesses.

Electronics have been used in meters for decades, initially replacing electromechanical components with microcontrollers. But as electric utilities were deregulated, they wanted to collect more data so they could plan their buying and reselling of power on a more competitive basis, said Kourosh Boutorabi, VP and general manager of the meter business unit at Teridian Semiconductor Corp, an Irvine, Calif-based designer of analog and mixed-signal ICs that has been involved in the meter market since the 1980s. That led to time-of-use meters, which incorporated a real-time clock that enabled meters to track how much energy was used at different time intervals. Then utilities started incorporating low-power radios that enabled automated meter reading.

Now with AMI, utilities are evolving into a network model with two-way communication between the utility and individual households. That communication will enable the utility to monitor and control energy use of individual appliances within a household. For example, during a heat wave the utility could lower a homes’ AC and turn off their water heaters in order to avoid a blackout. A study by the US Department of Energy's Pacific Northwest National Laboratory shows that if households had digital tools to control temperature and price preferences, peak loads on utility grids could be cut by up to 15%, translating into $70 billion dollars saved over a 20-year period on new power plants and infrastructure expenditures.

More smarts, more semiconductors

At the heart of the smart meter is a single-chip meter – a microcontroller that does the calculation, sends the information to a display, and stores the information to be sent. The communications can be provided in several ways, but one of the most common designs uses two different communications chips. First, it includes a proprietary, usually 900-MHz radio that sends data to a neighborhood concentrator, which then uses some other long-range communications technology to send the data back to the utility. Second, the meter has a device that enables communication to the home area network. In addition, some meters, particularly in Europe, incorporate a chip for communications over power lines, said Buccini.

Chip companies are already seeing increased revenues from the smart-meter market. Last year revenue from Teridian’s metering products doubled, according to Boutorabi, and the company expects another 70% growth this year. Metering products will probably make up close to 50% of Teridian’s revenue this year, compared to only about 10% two to three years ago, he added.

Several US meter makers have started using Zigbee chips for the link between the meter and the house, and Zigbee vendors see smart meters as a very promising market for their technology. In fact, the Zigbee Alliance recently specified a public application profile for smart energy in record time, developing it in about one-fifth the time it usually takes, noted Bob Gohn, VP of marketing at Ember Corp, a Zigbee chip and networking company in Boston. “Energy management is probably the most exciting and the fastest moving market for us right now,” he said. “There’s tremendous amount of urgency to get some of these systems in place.”

Indeed, Itron’s Spaur said that, as big projects like SmartConnect ramp up, shipments of smart meters will soar. “Looking at the requests for proposals and what the regulators are signing off on in terms of rate adjustments to cover these investments, we’re looking at a market in five years of at least 60 million of these smart meters in the United States,” he said. “And a large number of those will be connected to a home area network, and that home network will have at least one device that can talk to the meter.”

That has chip companies salivating. Remember that $7.5-billion market number from Texas Instruments? That’s just for electricity meters. Buccini said that there will be additional sales in networking equipment and automated devices like thermostats within the home.

“The base function – the electricity meter part – is probably the smaller part of the market,” he said. “The communications piece is as much as three times as big.”

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved