This week, we take a closer look at the US smart grid market, its growth, investments made, forecasts and the benefits recorded by utility companies from deploying smart grid technologies.
According to research companies, the US has the world’s most mature smart grid infrastructure market. This is a result of increases in investments made in smart grids over the past decade and beyond.
Smart grid funding
Through the Smart Grid Investment Grant programme, $8 billion in investments has been made towards smart grid rollout between 2010 and 2015. Over 50% of the investment was made in advanced metering infrastructure (AMI).
From 2010 to 2015, 99 smart grid projects across the country have received federal financial assistance for up to 50% of project costs.
Over the next decade, investments in smart grid infrastructure will reach $110 billion, according to Northeast Group. The AMI sector alone is expected to witness $12.8 billion in investments over the next decade as utilities install smart meters to remaining customers without the new digital meters.
The US federal and state governments, utility companies, environmental organisations and financial institutions have ensured the availability of funding in the form of loans and grants towards research, development, commercialisation and implementation of new digital technologies.
For instance, the Department of Energy has hugely invested in innovative energy technologies through national laboratories and by providing funding to help energy solution startups to expand their operations.
The New York State Energy Research and Development Authority (NYSERDA) is an example of a leader in supporting and financing the development and adoption of smart technologies. The New York State government has through NYSERDA invested billions of dollars in innovation of smart energy technologies as the region pursues to improve grid reliability, expand clean energy technologies, reduce carbon emissions and keep energy bills low under its Reforming the Vision programme. Other organisations include the Massachusetts Department of Energy Resources.
Regulatory policies supporting smart grids have simplified utilities adoption of the systems.
Smart meter benefits
This has resulted in several investor owned utilities including the Southern California Edison, Pacific Gas & Electric, Florida Power & Light, Oncor, and Georgia Power completing full rollout of AMI technologies.
However, investments made have allowed the deployment of smart meters to half of the 130 million consumers by January 2017, according to Markets and Research.
The AMI sector has witnessed huge investments due to the ability of the technology to help utility companies secure revenue collection through accurate meter reading and energy billing.
Smart meters enable quick detection of meter tampering, a development which is helping utilities to reduce non-revenue expenses. Moreover, AMI systems enable energy providers to integrate programmes such as demand response to be able to meet energy demand during peak periods.
The introduction of the Clean Power Plan during the Obama administration has seen a shift of the US energy market from conventional energy resources to renewable energy generation.
However, utility companies have been struggling to meet demand due to the fluctuating nature of renewables.
Smart meters have proved to be the right solution to help utilities to have real time data regarding the performance of energy networks to be able to match energy supply with demand.
Companies like ComEd have witnessed reductions in energy use during peak periods as a result of employing smart meter-enabled demand response initiatives.
Since investing in smart grid in 2012, ComEd has achieved $1.5 billion in savings for its four million customers, reduced the frequency of outages by 46% and reduced the duration of outages lowered by 47%.
US smart grid market forecasts
Over the next decade, the distribution automation sector will dominate the US smart grid market ahead of the smart metering sector, according to Research and Markets.
This will be driven by utilities investing in the development of self-healing energy networks, able to remotely identify faulty areas, fix faults own their own or notify field workers and utilities headquarters.
Investments in such grid capabilities will help reduce the time spent to restore services in the event of outages during harsh weather conditions. Past interruptions to grid operations due to harsh weather is driving investments in self healing capabilities.
However, Market Research Market denies that the distribution segment will take over dominance of the smart grid market from the AMI sector.
Instead, Market Research Market predicts the US smart grid market will grow by 13% to reach $26.7 billion over the next five years, with the AMI sector dominating other segments.
However, Ben Gardner, president of Northeast Group, says utilities will increase integration of distribution automation and AMI technologies and sharing of infrastructure to reduce operational costs.
According to Gardner, technology vendors have already begun tailoring AMI-DA integrated solutions evidenced by increases in mergers and acquisitions amongst solution providers for example the acquisition of Silver Spring Networks by Itron.
State adoption of smart grid tech
Energy market regulations at state level has led to disperancies in the adoption of smart grid technologies across the US.
Some states have developed smart grid plans and have been proactive to achieve goals set under the frameworks. Others have been reluctant.
The 2016 Grid Modernisation Index, issued by GridWise and the Smart Grid Policy Center, ranked illinois and California the leading states in smart grid policy development and implementation, customer engagement and grid operations.
Anne Pramaggiore, CEO at ComEd, said the implementation of the Future Energy Jobs Act and the NextGrid initiative in Illinois has driven the utilities investments towards modernising its energy infrastructure and technologies and has helped “…to deliver the best four years on record of power reliability and service to our customers.”