US demand to rise more than 11% annually through 2015
Smart meter product and service demand in the US is projected to increase more than eleven percent annually to $4.4 billion in 2016. Advances will be driven by the rising penetration of smart meters, particularly advanced metering infrastructure (AMI) products. In addition, the rising share of smart meters in use over the decade supports demand for related parts and services as well as for replacement of older models.
Increasing penetration rates to drive growth
A critical issue when examining the market for smart meters is the penetration rates for these products (i.e., the share of the entire installed base of meters which is accounted for by AMI or AMR products). In 2011, there were approximately 325 million electric, gas and water meters installed in the US. Of these meters, more than 145 million -- or 45 percent -- were smart meters. Through 2016, the penetration rate for smart meters is expected to continue to increase rapidly, rising to 63 percent of all meters installed.
After 2016, the penetration rate for smart meters is expected to continue to increase at a healthy, albeit at a slower pace, as several segments of the market begin to mature. Still the penetration rate for smart meters will continue to rise and by 2021 there will be approximately 285 million smart meters in use, representing more than 75 percent of all meters installed. The highest penetration rate is expected in electric meters, with smart meters representing more than 90 percent of all meters in use by 2021.
Electric market to outpace natural gas, water segments
The penetration rates between the different segments of the market are expected to rise at different paces, with the electric market seeing the fastest increases, rising eight percent annually to 75 percent of all electric meters installed by 2016. In addition, the electric market will see the fastest increases in AMI penetration, with AMI meters expected to be more than half of all smart meters installed in the electric segment by 2016.
Reflecting the rapid increases in meter penetration, demand for smart meters will also increase most rapidly in the electric market, with gains of twelve percent annually through 2016. While not rising as fast as in the electric market, demand in both the natural gas and water segments will also increase rapidly, approaching ten percent annually in each of those markets.
Northeast, Midwest regions to be fastest growing markets
Through 2016, demand for smart meters will rise most rapidly in the Northeast and Midwest regions, primarily because these regions have been slower to roll out large scale smart meter installations, particularly installations of AMI meters in the electric market. As utilities in these regions begin to roll out smart meters, demand will rise. In contrast, demand in the West region will decline, primarily reflecting an elevated level of installations, as several large electric meter rollouts were completed in 2011.