T&D World Magazine

The Surprise Winners in the $34 Billion Smart Grid Market

As smart grid programs advance in Europe, North America, and Asia, utilities across the globe are installing smart meters and other intelligent hardware. While this roll-out promises to usher in an era of more efficient grid management, it also spells a 900% increase in the quantity of data that utilities will need to communicate, manage, and analyze over the next decade. As a result, utilities will invest heavily in technologie,s enabling them to capitalize on this flood of data, driving the global smart grid market from $12.8 billion today to $34.2 billion in 2020, according to a new report from Lux Research.

In addition to the report, Lux Research will further explore the topic in a complimentary webinar, Beyond the Meter: How IT and Telecommunication Companies will Benefit from the Expanding Smart Grid, scheduled for Feb. 9 at 11:00 EST.

The report, titled “The Data Revolution: How Intelligent Hardware Will Drive the $34 Billion Smart Grid,” projects the growth of data over the coming decade, and examines how this growth will drive utility investment in related smart grid applications. Specifically, it models the growth of 13 applications that generate, communicate, or use data for the smart grid.

“Many people think ‘smart meters’ when you talk about the smart grid, because meters will generate most of the new data. But the volume of data generated isn’t the only factor fueling growth in the smart grid market,” said Steve Minnihan, a researcher for Lux Research and the report’s lead author. “Intelligent distribution applications, for example, can isolate an electrical fault and restore power in a matter of seconds. While such applications generate less data than smart meters, their data carries a far greater value.”

In creating its report, Lux Research performed a rigorous bottom-up analysis of existing smart grid project roll-outs as well as targets put forth by utilities and regulating bodies. It also took a top-down approach, factoring in the maximum penetration rates for different grid technologies based on cost-benefit analyses. Among its key findings:

  • Led by China, Asia will generate the most growth in smart grid data. With a current market potential of 183 million residential meters, China’s residential market is already 38% larger than that of North America. Additionally, given that China’s urban population has grown 2.7% annually between 2005 and 2010, its residential meter market will see increasing growth potential over the next decade.
  • Intelligent distribution, not smart meters, is the application to watch. The growing smart meter market will plateau at $4 billion mid-decade and begin declining in 2018 as the largest markets approach saturation. Intelligent distribution hardware, conversely, will see continued expansion throughout the decade, fueled by adoption in China and North America.
  • Telecom and IT incumbents will ride a wave of growing opportunities. Growing demand for logistics and analysis hardware will lead utilities to adopt technologies developed by the telecommunication and information technology industries. As a result, incumbents like Cisco, General Electric, and Oracle have an explosive growth opportunity in smart grid.
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