Smart meters and the construction of power consumption information systems
Smart meters and the construction of power consumption information systems
Business Model Description
Smart meters are the basic modules of advanced metering infrastructure for smart grids and the Internet of energy. They are essential to realize power load management, distributed energy metering, grid operation, power dispatch, power trading, and quality monitoring.
Expected Impact
The application of smart meters can save the time cost to pay the electricity bills, save energy and provide data for government decisions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Guangdong
- China: Tibet
- China: Liaoning
- China: Hunan
- China: Guizhou
Sector Classification
Infrastructure
Development need
Significant differences in terms of quality of the infrastructure exist between urban and rural areas in china. In rural areas, power grids are costly yet of poor quality, and water quality needs to be further improved. (1) China’s circular economy development faces great challenges including lack of standardization, difficulties in recycling low-value material etc. (2)
Policy priority
The 14th 5-Year Plan highlighted the importance of building a modern network of infrastructure that is smart, eco-friendly, safe, and reliable. (3)The State Council issued Action Plan for Cabon Peaking, in which promoting circular economy was listed among the ten major actions. (4)The "No. 1 Central Document" for 2021 also highlighted the need to imporve rural infrastructure (5)
Gender inequalities and marginalization issues
Significant differences in the quality of infrastructure between urban and rural areas in China exist. Rural residents struggle to get access to quality and green infrastructure.
Investment opportunities introduction
The IOAs in the infrastructure sector center around low-carbon waste treatment, as well as building safer and smarter supply systems of water and electricity.
Key bottlenecks introduction
Infrastructure construction requires large amounts of investment, most of which is government-led or requires subsidies. In some fields, such as waste management, policies and regulations are to be improved; in the field of water and energy consumption, pricing mechanism is also in need of improvement.
Utilities
Development need
Growing electricity demand driven by economic growth and the accerlerated green transformation have posed challenges to the current power system. As renewable energy such as solar and wind are volatile in nature, a stable, safe and smart power system is essential to adapt to the increasing share of renewable energy in energy mix. (6)
Policy priority
The 14th Five-Year Plan proposed to enhance Ultra-High Voltage transmission, speed up the progress in transformation towards smart grid as well as the construction of smart microgrids, reinforce the connections of generation-grid-load-storage, boost consumption and storage of clean energy, and improve power transmission to remote areas. (3)
Gender inequalities and marginalization issues
Power supply, safety, and quality of rural power systems have been improved through rural grid construction and upgrading projects. However, the grid equipment in rural areas are still not smart enough compared with urban area (7)
Investment opportunities introduction
The IOAs in this sector center around enhancing smart power systems and improving the grid's compatibility with multiple energy sources.
Key bottlenecks introduction
The current pricing mechanism for electricity should adapt to the new power system that focuses on new energy, so as to reasonably allocate the consumption cost of new energy among the power generators, the grids, and the customers.
Electric Utilities and Power Generators
Pipeline Opportunity
Smart meters and the construction of power consumption information systems
Smart meters are the basic modules of advanced metering infrastructure for smart grids and the Internet of energy. They are essential to realize power load management, distributed energy metering, grid operation, power dispatch, power trading, and quality monitoring.
Business Case
Market Size and Environment
> USD 1 billion
From 2021-2026, smart meters and the construction of power consumption information acquisition systems are expected to bring a total market demand of over 200 billion yuan. The smart electricity market would maintain an average annual growth rate of 20%-30% in the next two or three years. (8)
Indicative Return
> 25%
According to Jiangsu Linyang Energy Co., Ltd., Hexing Electrical Co., Ltd., and Hangzhou Sunrise Technology Co., Ltd., the average gross margin of smart power meters and systems is around 35.06%. (9)
Investment Timeframe
Medium Term (5–10 years)
According to Jiangsu Linyang Energy Co., Ltd., Shenzhen Clou Electronics Co., Ltd., and NARI Technology Co., Ltd.'s investment and fundraising reports, the average payback period of smart electricity projects is 5.4 years. (10)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Impact Case
Sustainable Development Need
Due to volatility nature of renewable energy, increasing the share of renewable energy in China’s energy mix require transformation of its power system to be more flexible. Thus, the intelligence level of current power system and demand-side management needs to be improved.
Gender & Marginalisation
Compared with urban areas, grid equipment is not smart enough in rural areas. Low quality and less smart power grid in rural areas will affect rural households’ access to clean energy (7)
Expected Development Outcome
Smart meters will help realize electricity consumption monitoring, cascade pricing, load management which contributes to better demand-side management to improve energy efficiency and power system flexibility, reducing carbon emission from energy sector.
Gender & Marginalisation
The development of the smart meter industry can conduce to large-scale construction projects such as the rural infrastructure digital transformation and rural power grid upgrading as well as improve power distribution networks in remote areas.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
The share of non-fossil energy in China's primary energy consumption reached 15.9% in 2020.
The "14th Five-year Plan" stated that the share of non-fossil fuel in China's total energy consumption should be increased to around 20%.
Secondary SDGs addressed
Directly impacted stakeholders
Planet
Corporates
Indirectly impacted stakeholders
People
Outcome Risks
Smart meters and online bill payments are not friendly to elderly people unfamiliar with technology, who might need extra help.
Impact Risks
Certain functions may fail to perform when disturbed by the external environment. Meanwhile, as smart meters would collect user information, information leakage may occur.
Impact Classification
What
The outcome is very likely to be positive. Smart meters can help save energy, enable double-way communications between users and the grid and support government decisions.
Risk
Certain functions may fail to perform when disturbed by the external environment. Meanwhile, as smart meters would collect user information, information leakage may occur.
Impact Thesis
The application of smart meters can save the time cost to pay the electricity bills, save energy and provide data for government decisions.
Enabling Environment
Policy Environment
(Policy document): In 2021, the 14th Five-Year Plan proposed to speed up the smart transformation of power grid infrastructure as well as the construction of smart microgrids, strengthen smart adjustment of the power system, reinforce the connections of generation-grid-load-storage. (3)
(Policy document): In 2019, the government published the "Strategic Outline of Digital Village Development", stating that digital village is a vital part of digital China development. Digital transformation of rural infrastructure should be promoted, which includes smart grid construction. (14)
(Policy document): In 2020, the National Energy Administration’s "Guiding Opinions on Establishing a Sound Long-term Mechanism for Clean Energy Consumption" pointed out that we should promote the construction of flexible direct current and smart grid. (15)
Financial Environment
Financial incentives: NDRC and NEA proposed: 1) increase investment and state-owned capital budget support, setting up fund for pilot projects; 2)promote the establishment of a diversified financing system. 3) a certain share of benefits should be reinvested in technology innovation. (19)
Other incentives: As pointed out in the State Grid’s "Opinions on Accelerating Construction of Strong Smart Grid", 2011-2015 were the comprehensive construction phase of smart grid with about 2 trillion yuan of investment, and during 2016-2020 the investment is around 1.7 trillion yuan. (20)
Regulatory Environment
(Regulation): The smart meters following new standards should meet the requirement that "product design and component selection should ensure that the service life is greater than or equal to 16 years". The documents also specified the acceptable failure rates from the date of acceptance. (16)
(Regulation): According to the "Measures for the Supervision and Administration of the Licensing for Manufacturing or Repairing Measuring Instruments", requirements are specified to pass the examination and obtain a license for manufacturing or repairing measuring instruments. (17)
(Regulation): "Technical guidelines for power distribution automation information system" is widely used for information integration between the State Grid's distribution automation system and related professional systems, promoting data integration in the marketing and distribution business. (18)
Marketplace Participants
Private Sector
Key companies include Linyang Energy Co., Ltd., Hexing Electrical Co., Ltd. Lihe Venture Capital participated in the angel round financing of To Solid Electronics., and GF Xinde participated in the Series A financing of Linyang Energy. (21, 22)
Government
Shenzhen and Guangzhou, Guangdong Province, provide funds and financial subsidies for smart grid companies. Nanjing, Jiangsu Province, is running a pilot program to promote the implementation of non-intrusive electricity consumption detection using smart meters.
Non-Profit
China Instruments Manufacturers Association, Electrical instrumentation Branch
Target Locations
China: Guangdong
China: Tibet
China: Liaoning
China: Hunan
China: Guizhou
References
- (1) National Development and Reform Commission, Ministry of Finance, Ministry of Housing and Urban-Rural Development, State Administration for Market Regulation, and National Energy Administration, 2020, Opinions on the High-Quality Development of Urban Water, Electricity, Gas and Heating Industry By Reviewing and Standardizing Charges, http://www.gov.cn/zhengce/content/2021-01/06/content_5577440.htm
- (2) National Development and Reform Commission, 2021, "Fourteenth Five-Year Plan for the Development of Circular Economy", http://www.gov.cn/zhengce/zhengceku/2021-07/07/5623077/files/34f0a690e98643119774252f4f671720.pdf
- (3) Central Government, The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
- (4) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030, http://www.gov.cn/zhengce/content/2021-10/26/content_5644984.htm
- (5) State Council, 2021, Opinions on Comprehensively Promoting Rural Revitalization and Accelerating the Modernization of Agriculture and Rural Areas, http://www.moa.gov.cn/ztzl/jj2021zyyhwj/zxgz_26476/202102/t20210221_6361865.htm
- (6) China Electricity Council, 2021, 2021 Electricity & Other Energy Statistics, https://www.cec.org.cn/upload/1/editor/1640595481946.pdf
- (7) Popular Utilization of Electricity, 2021, Current Situation and Problems of Rural Power Grid Development in China http://www.chinaqking.com/yc/2021/3052106.html
- (8) Forward Intelligence, 2021, Overview of 2022 China Smart Grid Industry, https://www.qianzhan.com/analyst/detail/220/211110-9f5f794b.html
- (9) Jiangsu Linyang Energy Co., Ltd. 2020 Annual Report, 2021 https://pdf.dfcfw.com/pdf/H2_AN202104221487066201_1.pdf Hexing Electrical Co., Ltd. 2020 Annual Report, 2021, http://static.cninfo.com.cn/finalpage/2021-04-12/1209671987.PDF Hangzhou Sunrise Technology Co., Ltd. 2020 Annual Report, 2021, http://static.cninfo.com.cn/finalpage/2021-04-07/1209643444.PDF
- (10) Hangzhou Sunrise Technology Co., Ltd. 2020 Annual Report, 2021 http://static.cninfo.com.cn/finalpage/2021-04-07/1209643444.PDF Shenzhen Clou Electronics Co., Ltd. 2021 Annual Report, 2022, https://pdf.dfcfw.com/pdf/H2_AN202204261561803427_1.pdf?1651014071000.pdf NARI Technology Co., Ltd. 2020 Annual Report, https://q.stock.sohu.com/newpdf/202144090055.pdf
- (11) Forward Intelligence, 2020, Current Market and Competition Landscape of Smart Meter Industry in China, https://www.qianzhan.com/analyst/detail/220/201201-b67c4bcd.html
- (12) State Grid's E-commerce Platform, 2021, Announcement on the 23rd procurement in 2021, https://ecp.sgcc.com.cn/ecp2.0/portal/#/doc/doci-bid/2021041958475007_2018032700291334
- (13) Haiwai Net, 2022, Smart bill payment, basic component of smart cities, https://mp.weixin.qq.com/s/0jSxp-6mUTQQhsLIiN70Iw
- (14) General Office of the CPC Central Committee and the General Office of the State Council, 2019, Strategic Outline of Digital Village Development, http://www.gov.cn/zhengce/2019-05/16/content_5392269.htm
- (15) National Energy Administration, 2020, Guiding Opinions on Establishing a Sound Long-term Mechanism for Clean Energy Consumption, http://www.nea.gov.cn/2020-05/19/c_139069819.htm
- (16) https://www.ybzhan.cn,2020, How will the smart meter market change as the service life expectancy increases from 10 to 16 years? , https://www.ybzhan.cn/news/detail/87444.html
- (17) State General Administration of the People's Republic of China for Quality Supervision and Inspection and Quarantine, 2008, Measures for the Supervision and Administration of the Licensing for Manufacturing or Repairing Measuring Instruments, https://www.pkulaw.com/chl/3d7d8e4fb3bbd5adbdfb.html?keyword=%E5%88%B6%E9%80%A0%E3%80%81%E4%BF%AE%E7%90%86%E8%AE%A1%E9%87%8F%E5%99%A8%E5%85%B7%E8%AE%B8%E5%8F%AF%E7%9B%91%E7%9D%A3%E7%AE%A1%E7%90%86%E5%8A%9E%E6%B3%95&way=listView
- (18) BJX.com.cn, 2014, The State Grid Standard for Distribution Automation undertaken by the State Grid Tianjin Electric Power Research Institute is officially released, https://news.bjx.com.cn/html/20140925/550225.shtml
- (19) National Development and Reform Commission and National Energy Administration, 2015, Guiding Opinions on Promoting the Development of Smart Grids, http://www.nea.gov.cn/2015-07/07/c_134388049.htm
- (20) State Grid, 2010, Opinions on Accelerating the Construction of Resilient Smart Electrical Grids, https://wenku.baidu.com/view/cda5420cbb68a98271fefa65.html
- (21) ITJUZI.COM, 2021, Huzhou To Solid Electronics Co., Ltd., https://www.itjuzi.com/company/61844
- (22) ITJUZI.COM, 2021, Jiangsu Linyang Energy Co., Ltd., https://www.itjuzi.com/company/72572