The GCC utilities industry is undergoing rapid transformation that continues to place technology and innovation at the core of this journey. The focus is gradually shifting from an infrastructural expansion agenda, to how best utilities can optimise their assets and operations.
One technology that has been on the horizon over the past few years, with its adoption more prevalent in some countries than others, is smart metering. Smart metering has recently gained momentum to match the growing need for water and electricity conservation on the demand side.
While a number of utilities projects remain on hold in the wake of a slowdown in public expenditure occasioned by low oil revenues, smart metering remains a pioneering and an important tool especially at a time when both utilities and consumers need to be more efficient.
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. We have seen demand heating up over the past few years largely buoyed by the need to be efficient and the growing adoption of renewable energy,” says Dr. Floris Schulze, managing director CESI Middle East.
“Despite current economic challenges, there is a lot optimism that the future will even be brighter. We hope to see more investments in smart metering across the region.”
CESI, a technical consulting and engineering company headquartered in Italy was recently awarded the second phase of the Automated Meter Reading (AMR) technology implementation project by Nama Group (NG) Oman. The objective of the AMR rollout is to implement a central system in order to obtain customer readings remotely.
With such a system, the Authority for Electricity Regulation in Oman will be able to provide companies and customers with interface access to their AMR information; enable competition and customers switching between supply companies; and provide consumption analysis that will allow better loss management strategies and theft detection.
CESI will manage the project activities end-to-end and to ensure the proper coordination and delivery of the several contractors and service providers and manufacturers involved in the implementation.
In June 2014, US company Northeast Group predicted that Middle East and North African (MENA) countries will spend $9.8bn on smart grid infrastructure by 2024, including smart meters, distribution automation and smart city technology.
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.
Having a regulatory mandate in place was a key factor in ADWEA’s decision to deploy smart metering, 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.
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.
There is also the simple fact of familiarity, says 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. Early this year, smart metering company Iskraemeco announced that it had entered into a contract with Saudi Electric Company (SEC) for the rollout of 55,000 smart meters.
Iskraemeco said it began supplying SEC, some 55,000 smart meters 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, said Iskraemeco.
SEC will also be able 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.
The decision to install smart meters comes as Saudi Arabia is experiencing a growing energy demand due to growth of the economy. Iskaraemeco says its MT880 meters are compactable with high temperatures and humidity levels characterizing the country.
In 2010 SEC deployed around 50,000 smart meters in Saudi Arabia by implementation of a smart pilot project. With the number of metering points continuously on the rise, especially in the residential sector, the utility aims to install around 12 million smart meters across the Kingdom by 2025.
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.
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, says Dr. Floris, 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.”
Dr. Floris says that utilities companies are currently confronted with the high capital expenditure of implementing wireless smart metering.
He, however, adds 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.
“Attitudes are changing 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,” says Dr. Floris.
Another company that is making inroads in smart metering deployment is Huawei. The company 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.
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.
Going forward there is no doubt that 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, says industry players.
“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,” says Taqqali.
“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.”
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. 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.”
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.
The first phase will see 200,000 smart meters in place and operational by January 2016, the utility has announced.
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 add.
“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.”
In June, 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 residential, industrial and commercial areas.
With a wider adoption of the technology, buyers’ demands are likely to evolve, and it is already patently clear, says Dr. Floris. 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.
“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 to follow in the UAE’s footsteps in a few years, while other countries may take longer,” says Dr. Floris.