Gas Meters Installed Base and Demand

There are 396 million gas meters in the world today with annual demand rising to an estimated 34.9 million in 2012. Accompanying this figure is a large number of refurbished meters, which have been verified, recalibrated, and used for replacement. Refurbishment of meters may increase if European countries follow in the footsteps of Germany, where new metrology regulations have removed the age limit and have increased the amount of refurbishment taking place in that country.

Unlike electricity and water, piped gas is not available in every country. Most of the piped gas is natural gas although there is still some city gas manufactured from coal or oil and some LPG is delivered by pipeline, mainly to industrial consumers.

Even within regions there are wide variations in the penetration of gas. For example, in northern Europe, Germany is the second largest gas consumer after the United Kingdom. However, the Scandinavian countries are small users of gas because of the use of coal in Denmark and hydropower in the other three countries, and increasingly nuclear, despite Norway being the largest gas producer in Europe and one of the largest in the world.

With global demand for LPG rising to 34.9 million meters in 2012, annual growth will be 4.0%. There will be variations in the growth rates in different regions of the world due to significant domination by a number of major markets. Growth of 8.7% in China, as the country converts from city gas to natural gas and the government promotes the use of gas as a clean fuel, extensive expansion of gasification in Russia, and continued growth in the USA at 5.5% will lift the world average, compensating for slower growth in other countries.

In value terms, the world market will grow to US$1.6 billion in 2012. The main growth will be in Asia, which will increase from US$439 million in 2007 to US$516 million, and Europe, which will grow from US$335 million to US$384 million. North America will increase from US$286 million to US$374 million.

The United States and Japan are the two largest markets for gas meters (with Japan including LPG meters). The US market is forecast to grow at an annual rate of 5.5% from 5.6 million meters in 2007 to 7.3 million in 2012. Gas meter growth will reflect surges in household growth and increasing AMR deployment. To date, the largest AMR installations in North America have been in the electricity utility sector; however, the gas utility sector is now expected to start gaining momentum.

Japan will grow by 1.4% from 5.2 million (piped natural gas and LPG) to 5.6 million meters in 2012. Growth will be considerably higher if installation of a new residential ultrasonic meter is not restricted to replacement of existing mechanical meters.

Growth in Europe will be the slowest, increasing at 2.8%. In the CIS, the intensive gasification of new regions of Russia will lead to growth of 4.4%, with slower growth in the other republics. According to industry reports, the market in Germany is in decline since metrology changes now permit gas meters to remain in service after 24 years, as long as they meet verification requirements.

China is the third largest gas meter market in the world with 29 million consumers and is poised to overtake Japan to become the second largest by 2010. The government’s decision to develop the natural gas market and to increase its share in primary energy holds significant challenges for local gas distribution companies, which are accustomed to distributing manufactured gas. The majority of Chinese cities have traditionally been supplied with manufactured gas, and there is now a need for a nationwide standardised approach to gas conversion. The largest single gas distribution company in Shanghai has 3.37 million customers.

The number of cities using natural gas has been predicted to increase to 270 in 2010 but this may be optimistic. India is still a small market for gas meters but will grow very fast in the next few years as new distribution networks for residential supply come into service. Demand for gas has grown by 6.5% annually and was expected to reach a rate of 13% in 2005. Two distribution companies (GCGL and MGL) have 450,000 customers between them, and Gail, the national natural gas transmission utility, has formed a number of distribution partnerships to expand distribution to 15 cities. The growth of customers and meters is estimated to be at least 15% per year.

ESIs of the US, Canada and Australia

The Electricity Supply Industries of the United States, Canada, and Australia are similar in many ways. All three are large federally constituted countries, with a combination of federal and state or provincial legislation and control. The federal governments generally establish broad policies and then it is the responsibility of the state or provincial government to implement these.

The Electricity Supply Industry in the USA is predominantly investor-owned, so privatisation has not been a pressing issue. There are some large federal and state-owned utilities, and a large number of municipally-owned distribution companies, many of them small.

Electricity Market Deregulation has had a mixed history in the US. Partly because of the disaster in California a number of states have put electricity market deregulation plans on hold. Among the 24 states that have enacted electricity deregulation plans, results are mixed and some of these are now delaying implementation or even reversing the process. Rising prices, spiralling demand and limited supply in some areas have raised questions about the viability of electricity market deregulation.

Pennsylvania’s deregulation experiment, enacted in 1998, has been a success and is cited as a model for electricity market deregulation. The story is very different in California, which in 1996 became one of the first states to enact an electricity restructuring plan. Not long after the plan went into effect, price increases began to erode public support for deregulation. Criticism of deregulation intensified in the summer of 2000, when limited power supplies and increasing demand caused the wholesale price of power to soar throughout the state and in some areas the retail price of power fluctuated directly with the wholesale market, causing electric bills to double. The problem intensified in the winter of 2000/01, as the state's electric utilities faced a financial crisis and consumers were met with electricity shortages and skyrocketing prices.

Canada and Australia are very mixed markets. Both countries have a number of large, vertically integrated Crown or State / Province owned companies which dominate the regional industry. They also have many privately-owned companies in some states. Market deregulation in Canada was first introduced in the province of Alberta and Ontario followed later. Ontario has been much influenced by events in California and in response to price rises after deregulation the government imposed retail price caps. The other provinces of Canada are all watching the situation and biding their time. Electricity market developments in Australia have been largely dependent on geography.

The restructuring of the Australian Electricity Supply Industry has now been proceeding for 14 years since the Electricity Supply Industry itself set up an industry reform working group during 1990. Originally, in some Australian states (e.g. Victoria, South Australia and Tasmania) the four Electricity Supply Industry functions were carried out within a single, vertically-integrated, monopoly business. In other states (e.g. New South Wales and Queensland) generation and transmission were contained in a single monopoly business, while distribution and retail supply were carried out by a number of businesses, each with a monopoly franchise covering a specified geographical area within the state. A major objective of Electricity Supply Industry restructuring in Australia has been to unbundle the four Electricity Supply Industry functions into separate businesses. Several competing generation businesses have been established in each state, as has a single monopoly transmission business, while the geographical monopoly franchises for distribution have been retained in each state. In some states, the number of franchises, and therefore of distribution businesses, has been reduced.

A vigorous wholesale market, the National Electricity Market (NEM) has been established and operates in the interconnected states of New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory and Tasmania. Western Australia and Northern territories will always be excluded because of the lack of interconnections and the vast distances covered.

Electricity Deregulation in the CIS states

A large gulf existed between the mode of operation of the energy sector in the CIS states and the former Eastern European countries before the collapse of the central economies, and the new market oriented systems being introduced now. It is difficult to over emphasise the extent of the change in the culture which has to be overcome. In some cases utility services were provided free and not even costed properly, even for management purposes. While this was the case in the former countries of Eastern Europe it was even more so in the old Soviet Union republics and it is not easy to change.

There has been some electricity market deregulation in Armenia, Georgia, Kazakhstan, Moldova and a considerable amount in the Ukraine. Russia is now well into restructuring of the electricity sector and this is scheduled for completion by the end of 2008. This has involved the dismemberment and reorganisation of the huge assets of ROA UES and the regional energos, and the creation of a totally new market oriented system with separate companies. Foreign investors are already entering the Russian electricity market and buying stakes in some of the large new companies.

Wholesale electricity markets have been opened in Georgia, Kazakhstan, Russia and the Ukraine but there has not yet been any opening of retail markets. This has been delayed by the long standing subsidisation of retail markets for residential users and the need to approach this in stages.

Meters - a Global Snapshot

There are an estimated 2.7 billion meters in the world. These consist of 1,583 million electricity meters, 396 million gas meters and 736 million water meters. The three sectors have quite different patterns of usage.

Every country has an electrical supply and almost universally every electricity point has a utility meter or a sub-meter, although there are a very few cases where electricity is not metered, such as in some agricultural areas of India. Gas is nearly always metered but the number of countries with piped gas supply is much smaller because there may be no indigenous gas supplies or the cost of constructing a pipeline is disproportionate to the potential consumption. In some countries water supply is not metered for domestic connections but paid for out of a standing charge.

Annual demand for meters in 2007 was 221 million meters, consisting of 122 million electricity meters, 28 million gas meters and 71 million water meters.

Demand has started to fluctuate from year to year because of the increase in large contracts for solid state or advanced meters. These contracts inflate demand in the course of their duration and then depress it when they are complete and there is a reduced need for replacement of aged meters.

Growth in market volume will be 3.0% a year for electricity meters, 4.3% for gas meters and 4.3% for water meters. In value terms, demand will rise from $7.1 billion in 2007 to $8.8 billion in 2012 (in 2007 $).

Over half of the world’s meter demand is in Asia, and this region is dominated by China. Asia Pacific accounts for 59.5% of all meter demand, Europe accounts for 13.3% and North America for 13.7%.