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Advanced metering infrastructure (AMI) revenue in Europe is expected to grow from $1.13 billion in 2011 to $3.72 billion in 2016 at a compound annual growth rate of 26.9%, finds a new report from Frost & Sullivan.

The report, titled "European Advanced Metering Infrastructure Market," says that legislation and standardization are set to catalyze the AMI market in Europe. Market participants are working toward standardization and fulfilling regulatory requirements for the development of smart meters and AMI to begin mass rollouts.

"Emerging smart grid technologies, which support enhanced energy management, will boost the installation of AMI in Europe," notes Neha Vikash, Energy & Power Supplies research analyst at Frost & Sullivan. "The market is expected to witness higher growth not only in smart meters and the installation segments, but also in communications networks, [meter data management], and customer and program data management segments as well."

Most companies in the AMI space are not just the hardware (meter) providers, the report adds. They combine them with important services and appropriate functionalities in communication infrastructure and data management. These are the key technologies for the deployment of innovative solutions, according to Frost & Sullivan. Installation of hardware does not generate a constant stream of revenue.

Despite its obvious benefits, smart meter implementation reveals regional disparities, the report says. Market growth has been faster in Western and Northern Europe. The lack of regulatory drive and utility implementations has affected installation rates in Central and Eastern Europe (CCE), but Frost & Sullivan expects that smart metering activity in the CEE region will follow the Western European knowledge wave and experience.

"It is also expected that once large-scale rollout activity begins in Central and Eastern Europe, the pace of implementation will be faster compared to that of Western Europe," adds Vikash. "Regulatory approval, along with increased competition, aging infrastructure and new technology, will continue to drive investments in advanced metering and intelligent grid technologies."

Nevertheless, the report says European Union (EU) member states that lack the regulatory push for deployment will experience large-scale implementation after 2015, as they have to comply with the EU's Third Energy Directive, or pay a high penalty fee.

"AMI is an important step toward achieving the EU 20-20-20 goal, which states that by 2020, 80 percent of households must have smart meters and complete rollout achieved by 2022," explains Vikash. "Government mandates will, therefore, be a key driver for AMI deployment."

In addition to legislation, the lack of communication standards and security issues also play a major role in determining market prospects, the report adds. In fact, data security is an issue among all member states, but it is of higher importance in the U.K., Germany and the Netherlands. Frost & Sullivan says this has resulted in a delay in smart meter rollout plans by utilities.

"Standardization is likely to affect future smart meter sales, development and innovation," concludes Vikash. "Meters complying with security requirements as per the standardization mandate as well as satisfying regional legislative security requirements are likely to encourage customers to adopt smart meters."





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