December 23, 2011 - Rapid adoption of smart meters to save energy and improve grid efficiency means an opportunity for a broad range of semiconductor suppliers.

Power utilities are expected to rapidly adopt smart electricity meters over the next few years, tripling shipments by 2016 (62 million units vs. 20.5M in 2011), according to IHS iSuppli. Government support and regulations are the key drivers to replace conventional meters with new smart models; e.g., the US Smart Grid Investment Grant (SGIG), and the European Union is targeting 80% conversion to smart meters by 2020, representing 180M unit shipments. For now, though, deployments are slower than expected, partly due to current economic conditions (fewer investments for smart grids) and wary customer acceptance. "The original motivation for replacing conventional meters with smart meters was energy savings," said Jacobo Carrasco Heres, industrial electronics research analyst for IHS. It's hoped that instrumentation of the grid via smart meters will help utilities more efficiently plan electrical generation and manage resources. And on the consumer side, combining smart meters with "smart home" features, e.g. a dashboard that tracks electricity consumption for appliances and devices, would go a long way to convincing consumers that the technology really is useful.

Of course, all these intelligent devices depend on a range of semiconductor technologies: IHS sees sales of chips used in smart meters doubling by 2016 to $1.1B. Most of the market will be in ICs for metrology and communications, including microcontrollers, digital signal processors, and microprocessors. But smart meters also will use system-on-chip devices to integrate most of the functionalities into a single device.