Impact of Covid-19 Outbreak on Smart Meter Market
COVID-19 pandemic has reduced the profitability of businesses across all the industries. Although the power sector has not been as negatively affected compared to other sectors, the electricity consumption by industrial and commercial customers is noticeably less. Moreover, the power sector has witnessed a falling demand and price reduction trend across the world. Various regions, including many European countries, are heavily impacted and have recorded all-time low electricity prices in the first quarter of FY’2020. Moreover, due to the severity of the COVID-19 outbreak, many industries are only focusing on essential work. This has resulted in a pause on electric component installations. Manufacturers of hardware devices in the smart grid market are facing several issues related to order closures due to global lockdown. For instance, Con Edison (US) has halted all meter readings and installations of smart meters in the US. Additionally, in March, Fitch Ratings revised the outlook for ConEdison’s revenue growth. The revised outlook shows weakened credit metrics for the company. The revenue of the company has been impacted by reduced kilowatt-hour sales and escalation of bad debt expense.
FIGURE: SMART METER INSTALLATION IN THE US FROM 2012 TO 2020
Utilities across the globe have announced the suspension of disconnection due to non-payment and delayed payment plans of customers impacted by the outbreak, which is resulting in earning downgrades. Lockdowns in most cities are expected to continue to curb the electricity demand, hampering the sales of utilities and other companies operating in the power sector. For instance, ABB (Switzerland), one of the global market leaders in the power industry, has also indicated that it is expected to face a decline in profitability in 2020 due to lower production volumes in all its businesses compared to the sales volume in 2019.
Source: Primary Experts, Secondary Sources, and MRFR Analysis
Source: EIA and Smartenergy.org