A new report from Navigant Research examines the global market opportunity for prepaid electric metering, including global market forecasts for shipments, installed base, and revenue through 2024. According to the report, the research firm expects the global installed base of prepaid metering customers to grow from 31.7 million in 2014 to 85.2 million in 2024, with a compound annual growth rate (CAGR) of 10.4%.
Though the overall adoption of prepaid electric metering is expected to increase due to increased acceptance by utilities and customers alike, the trend is developing differently depending on the market and geography. According to the report, in markets like southern Africa and some countries in Asia Pacific, the use and deployment of conventional prepaid metering systems is well-established and growing. For instance, Indonesia has made prepay a priority and is deploying conventional prepaid meters at a rapid pace.
In North America and most of Europe, penetration is less established and is expected to move ahead at a slower, yet steady, pace. For North America, the installed base of prepay meters is expected to grow from 650,000 to 3.1 million during the forecast period, with a CAGR of 17.0%. Utilities that have installed advanced metering infrastructure (AMI) systems and smart meters with remote disconnect and that operate in states where prepaid metering is permitted are the ones expected to help drive this growth.
“Utilities see prepaid metering as a way to avoid bad debt and increase cash flow,” says Neil Strother, principal research analyst with Navigant Research. “Advanced smart meters and utility back-office processes can remotely enable customers to pay for electricity ahead of usage without having to install a prepay-only meter and, in addition, some customers are finding prepay programs to be helpful in managing their budgets and becoming more energy efficient.”
While prepay programs are expected to expand during the forecast period, they are also expected to face resistance from reluctant regulators, customers unaccustomed to this model, and a lingering stigma that prepay is for the financially challenged, according to the report. For prepay to flourish, Navigant Research believes there would need to be a major shift among regulators and a strong push by larger utilities.
The report, “Prepaid Metering,” examines the global market opportunity for prepaid electric metering, including the meters and related software and services. It provides an analysis of the drivers and barriers shaping the markets for conventional prepaid, smart prepaid thick, and smart prepaid thin meters, along with key technology issues. Global market forecasts for shipments, installed base, and revenue, segmented by region and meter type, extend through 2024. Key vendor profiles and a discussion of broad metering trends are included, as well.
Customer Side Concerns
Perceived benefits for customers in the report include: greater control of budget; No surprises; improved energy efficiency; and possibly reducing arrears over time. In spite of these drivers, there are some notable barriers to greater prepaid adoption noted in the report.
Objections from consumer groups. Vocal consumer groups such as the AARP have taken a stand against prepaid metering because it could result in shutoff of low-income customers and vulnerable groups like senior citizens or those with life-threatening medical conditions.
Regulation. Similarly, in some jurisdictions, regulators oppose prepaid metering because they see fear vulnerable customers could have their electricity disconnected, and thus utilities are restricted from offering prepay as an option.
Cost to implement. Setting up a prepaid metering system involves added costs for a utility in terms of new meters and software and services.
Different rate structures. Some utilities charge different rates for prepay customers than for post-pay, creating uncertainty among customers trying to decide.
Lack of systems integration. Some standalone prepaid systems present a challenge
when trying to connect with other utility automation systems.
An Executive Summary of the report is available for free download on the Navigant Research website. (Registration required.)
