Palace Group

The report, though, adds that in spite of these growth drivers, the industry faces several other factors that will be impediments to progress. For one, new smart meters cost more than standard water meters, presenting a budgetary challenge to many water utilities. Smart meters also require additional IT expertise to facilitate data collection and data management – not always a welcome change to risk-averse system operators. And many water utilities are concerned about potential push back from consumers, given the levels of resistance that some electric utilities have faced from customers in their smart meter roll-outs. With the rise in prominence of smart water meters, as stated above, it is imperative that we refer to the technology functionality and the capital costs associated with implementation of the technology. This has to be looked at together with the financial benefits to the consumer as the end user, in my view, as well as
benefits for a municipality or a bulk water supplier.

How smart water meters function

Smart water meters integrate with other smart devices to create a whole ecosystem of home efficiency in that through the use of a smart water meter device, a user would use less water as he is paying directly for the water used. A user sees what he is paying for and thus is inclined to adjust his habits in order to minimise his costs. In a way, a smart water meter works similarly as a smart electricity meter. The difference is that a smart water meter measures and manages water usage and loses whilst a smart electricity meter measures and manages electricity usage and losses.

Since municipalities aspire to collect accurate revenue from consumers, ie end users of the meters, so do consumers look for a simpler cost effective way of managing their expenditure on such expenses for basic needs as water, well, to a large extent. So let us now consider the financial aspect of this technology
then and see how it fares against the study mentioned at the beginning of this article.

A comparative view of deployment of smart water meters

The research cited above states that smart water meters are an expensive technology. Indeed, the capital cost of a smart water meter is costly, but the life cycle cost is far less than a conventional water meter. That is the underlying reason why the uptake, should be faster than imagined. However this is not happening at a rapid rate, so reports research analysts.

A report written by Neil Strother (Pike Research, 6th April 2012) said that the deployment of smart water meters remains a slow-moving segment of the smart grid market when compared to smart electric meters, but recent moves by various water utilities are somewhat encouraging. This report was specifically on the American market.

Simply put, asserted Strother, smart water meters lack some of the big drivers surrounding electricity and gas meters. Pike Research’s most recent report, added Strother, on smart water meters, "Smart Water Meters", explains why. It notes that in the U.S. at least, stimulus money for projects has dried up, and many water utilities lack the capital to invest in the more expensive meters on their own. So, they take a slower approach. Also, many utilities lack the staff and skills to handle the increased volume of data that comes once smart water meters are installed. Moreover, regulators have been less aggressive in mandating smart water meters compared with electricity.

For South Africa, the hurdles that are preventing the technology from being embraced by municipalities and utilities in general is different in a way. The main two reasons are lack of awareness on the product and the other is that for a long time, there had been nothing compelling South African municipalities to collect water bills from consumers for them to then pay the bulk water supplier. However, this appears to be changing somewhat as the water utilities are getting serious about their own revenue protection mechanisms. This compels water distribution utilities to do likewise.

In Europe, the deployment of smart water meters appears to paint a different picture to that of the South African market.  Seth Cutler, writing for the online magazine, Water World, said in Europe alone, smart water metering is expected to generate a cumulative investment of $7.8 billion by 2020. Should the investment environment improve, he said, bolstered in part by strong government support, this market should grow further to $13.4 billion over the same period. While initial investments are heavily in smart water meters and installation fees, data and network management quickly grows to provide a majority of yearly revenues for the market, he added in this article.

Consider the following value proposition for this technology.

1. For a municipality, efficient revenue collection and enhancement is a major advantage smart water meters technology. Realising an increase in revenue collection in turn makes these entities profitable thus in a better position to deliver various services to the communities
2. A consumer gains control of their consumption, thus eliminating the disadvantageous matter
   of disconnections due to unpaid water bills without their being aware or alert to this fact
3. Smart water meters might help identify waste. They might be used by the water company to
   identify network leaks and by householders to identify leaks in their properties. They might help households identify unnecessary consumption and, with the application of a little intelligence, identify inefficient appliances.

In a nutshell, by paying for water consumption efficiently, it is the logical conclusion that the water tariff would decrease.