Growth expected to return to European utility meter markets

Growth expected to return to European utility meter markets

The European market for utility meters was worth US$1.5 billion in 1996. With growth expected to return to the market, revenues are projected to approach US$1.7 billion in 2003. The growth predicted is typical of such a mature market, and it appears that the adoption of value-added technology will significantly boost the utility meter industry.

This forecast comes from Frost & Sullivan, the international marketing consulting company, in its latest energy and environmental sector market analysis. The study covers meters used by the electricity, gas and water industries for domestic, commercial industrial and utility supply network metering applications.

Frost & Sullivan identifies the programme of deregulation of European energy markets as the major factor influencing this industry. Many markets are undergoing fundamental change causing demand to restructure, and in some cases investment is being delayed until market conditions stabilise.

According to Alex Hyde-Parker, Research Analyst at Frost & Sullivan, the utility meters market underwent a period of serious contraction between 1993 and 1996, as the effects of the Europe-wide recession and new market entrants ensured that competition remained intense. The recessionary conditions during this period caused utility meter prices to fall throughout Europe, a trend which is forecast to end in 1998(see Table III).

With greater convergence of pan-European prices, Frost & Sullivan's forecasts show price rises returning to this market from 1998, as increasing consumer expectations result in companies tending to offer value-added products as well as a range of related services.

This is predicted to be the most important method of price maintenance in this market.

According to the survey,Germany is the largest market for utility meters within Europe, accounting for more than one quarter of revenues in 1996. The UK accounted for just over 20 per cent, and the French market was the third largest. As the less mature markets show greater growth prospects, the largest markets are expected to lose some of their relative importance.

The electricity meters sector was by far the largest sector of the utility meters market in Europe,with a share of 43.1 per cent in 1996. This is primarily because the electricity meters market has a higher average price than both gas and water meter sectors,due in part to the faster rate of technological adoption.

In its analysis of the major technological trends, Frost & Sullivan's report notes that the maturity of the utility meters market does not remove the need to innovate. There have been developments in electromagnetics for water metering and in ultrasonics for gas metering, although neither of these techniques has yet become established.

With advances in electronics, information technology and data communications, the meters market has received new impetus. These developments have allowed new companies to enter the market, specialising in the new technologies. In cases such as energy management systems, the use of information technology is so great that it seems likely that the market may become the target for computer development companies.

These technological developments are taking place predominantly in the industrial and commercial sectors of the market. For the available technology to really penetrate the market fully it needs to be adopted within the domestic sector. But this is being restrained by lack of consumer awareness, household ownership of the meters, and high installation costs, among other things.

Currently, the European utility meters market is dominated by large multinational companies, although with a few exceptions they tend to specialise in specific utility areas.

Schlumberger is the only company that produces meters for all applications in all utility areas.

For further information,please contact Kristina Menzefricke. Tel: +44 171 915 7824; Fax: +44 171 730 3343; E-mail: menzefricke@frost.comor see the company's Website (www.frost.com).