Increases in Substation-Related Automation and Integration Program Spending Reported by World’s Major Utilities

March 22, 2006
The Newton-Evans Research Company has released findings from its newly published four-volume research series entitled The World Market for Substation Automation and Integration Programs in Electric Utilities: 2005-2007

The Newton-Evans Research Company has released findings from its newly published four-volume research series entitled The World Market for Substation Automation and Integration Programs in Electric Utilities: 2005-2007. The new study compares the current round of research findings with earlier studies conducted by the company.

Newton-Evans Research estimates the current annual global spending for substation automation and integration programs at about $550-600 million, with an overall potential market size of nearly $40 billion.

Additional Observations:

  • The years 2002-2004 were slow growth--or no growth--years in most categories of intelligent electronic equipment sales related to the modern, increasingly digital, electric power substation. Few retrofit programs were undertaken except for the most critical of substations.
  • Increasingly, it is becoming more difficult to separate substation product classifications as manufacturers tout their platforms as "multifunctional" and the product positioning of many electronic devices now cuts across multiple product classifications.
  • Newton-Evans further estimates that only about 12% of utility operated substations have been fully automated and integrated by year end 2005. Most of these are in fact newly or recently constructed substations.
  • Most substation equipment manufacturers (mid size and smaller companies) and integrators surveyed in the second half of 2005 have indicated some moderate-to-good growth market conditions within their utility sales sectors, resulting in sales that are as much as 5% to 15% higher than 2003 or 2004 sales levels.
  • Economic growth has continued in many electricity dependent sectors. In turn, this spurs demand for increased electric power, and increasingly reliable power. This results in internal planning for infrastructure and automation programs.
  • There remains some concern in the industry about the dearth of skilled engineering resources due to retirements and layoffs. This may further impact the ability of technology supplier companies to engage utilities for other than short-term requirements. However, third party engineering and integration service firms are now making significant strides in winning substation automation-related business from planning to design to construction.
  • If distributed generation activities continue to increase across the world, there is some positive benefit that will occur for the substation automation, integration and retrofit business, as utilities become more involved with DG efforts.
  • In summary, retrofit substations will be upgraded as warranted, based on load growth, criticality to customers, and development of DG programs. New substations will increasingly be designed and constructed as integrated and automated remote assets for the utility.
  • Protocol use and plans among North American electric power utilities continue to differ from the trends among utilities in the international communities. North American utilities continue to strongly support DNP3, and will likely migrate to a LAN version of this protocol. See the comparative charts at the end of the release.
  • International utilities tend to use IEC protocols. Currently, the 60870-5-103 protocol is popular, especially in Europe, while migration to IEC 61850 is underway in Europe, the Middle East and Africa, and among some of the largest utilities elsewhere. Nonetheless, Latin American and Asian Pacific utilities report strong use of Modbus and Asia-Pacific utilities tend to align themselves more with DNP 3 at the present time.

The four volumes of reports comprising the 2005-2007 series on substation automation and integration have been published by Newton-Evans Research during the first quarter of 2006.

  • Volume One is the North American market study of more than 100 participating electric utilities.
  • Volume Two contains information on the international substation automation marketplace, based on study participation from 53 utilities in 36 countries throughout the world.
  • In Volume Three of the study, nearly 50 suppliers of substation automation systems, equipment and services are profiled.
  • Volume Four is an assessment of the North American and international substation automation market.

Additional topics being covered in the series of substation studies include cyber and physical security practices, voltage ranges used to power substation automation equipment, external systems linkages to the substation, preferred equipment suppliers, and an assessment of where the world¡¦s electric power substations are positioned along a five-phase path to complete automation.

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