COVID-19 will affect the market for U.S. residential smart meters in the short term, according to 451 Research, as both new and replacement residential smart power, gas and water meter shipments decline due to strained budgets. However, shipment growth will resume in 2021, leading to a 2.7% annual growth in smart meter shipments through 2024, with longer-term U.S. smart meter growth driven by advantages to both utilities and customers.
A residential smart meter uses advanced electronic technology to record and transmit meter data to a source outside the property, whether a nearby utility company employee or a network. Smart meters serve as a cost-saving technology for utility companies. Rather than sending out a meter reader every month to every home in the coverage area, smart meters allow the utilities to receive this data remotely. The first iteration of smart meters accomplished this via short-range radio from the smart meter to nearby utility employees, but now the consumption data is more likely to be transmitted via networks directly to the utility. Network transmission also allows two-way communication, so utilities can also communicate and push updates out to the meters.
New residential smart meter shipments totaled 22.8 million units in 2019, and 451 Research expects them to decline by 11.1% in 2020 to 20.3 million. The decline is led by the smart power (or electric) meters, with shipments expected to fall by 1.4 million units, while smart gas and water meters should drop by a combined 1.1 million units. The overall decline is a reflection of COVID-19 effects on the US economy, with the additional expense of smart meters in a time of shrinking budgets causing utilities to forego purchase and installation of new smart units. This affects the penetration of smart meters in new housing units to some extent, but is having a greater effect on the replacement cycle of existing home smart meters, extending it by six to twelve months.
Smart power meters are well-positioned to weather the extended replacement cycle, as the incumbent meters in most cases are smart meters. Conversely, gas and water utilities are more likely to replace standard meters with smart meters. Though foregoing smart meters for a limited period does save some immediate expense for gas and water utilities, it hurts them as well by limiting the greater visibility into customer usage that smart meters would provide.
The downturn in smart meter shipments will be felt strongly across the second half of 2020 and into early 2021, before recovering later in that year. However, smart meter shipments in 2021 will still be below 2019 shipments, which will not be exceeded until 2022. Smart power meters will continue to dominate, constituting a majority of smart meters shipped throughout the forecast period. Smart gas and water meters will grow at a faster clip, although they start from a lower base than smart power meters.