The global market for smart electricity meters returned to double-digit year-over-year growth of 10 percent in 2014 after a brief market slowdown in 2013, according to the latest market update from IHS Inc. (NYSE: IHS), the leading global source of critical information and insight. This growth, which is a return to historical levels for smart metering, shifted global market shares away from dominant Western suppliers and towards Asian suppliers, as the Asian market expanded and the European and American markets grew more slowly than expected.
North America experienced a decline in smart meter shipments in 2013, which -- along with continued delays to the rollouts expected in Europe -- dampened global growth to about 5 percent. Chinese state-run utilities continued their rapid replacement of outdated basic electromechanical meters in 2014, and other countries expanded their communicating meter capabilities, which led to higher growth rates.
“While many European suppliers are likely to be relieved by the recent flurry of rollouts awarded in the region in 2015, they are still struggling with many issues caused by the rollout delays,” said Jacob Pereira, smart utilities infrastructure analyst for IHS.
“These delays have caused suppliers in Europe to cede global share to Chinese vendors that are winning bids in the Asia-Pacific region, as well as in developing markets in Africa and Latin America. In addition, the slow-moving European market is taking its toll on suppliers there, requiring them to try to extend limited cash flow to managing investor expectations, as manufacturers have been awaiting rollouts for well over five years.”
According to the IHS Smart Electricity Meters Intelligence Service, the largest Western suppliers, which tend to focus on the higher-margin markets of North America and Europe, lost market share in 2014.
They often deal in the huge Chinese market through partnerships and other third-party methods, rather than directly, as local manufacturers do, making their share appear lower. Since China is by far the world's largest market, these partnerships help to reduce their share overall.
“Although some Western suppliers are quite active in other developing markets in Latin America, Africa, and Southeast Asia, the demand for smart meters is generally much lower there,” Pereira said.
