Smart grid revenues to exceed $125 bn in 2017

Farah Saeed,
Principal Consultant,
Frost & Sullivan
Mountain View, CA, U.S.A. — (METERING.COM) — March 2, 2012 – Smart grid market revenues are expected to increase over the next five years from $23.97 billion in 2010 up to $125.15 billion in 2017, according to Frost & Sullivan.

However, despite the heavy investments, the industry is far from achieving its goal of deploying a true smart grid. Manufacturers promoting their smart grid technology to utilities have to contend with several issues such as securing financial backing, marketing in a highly cyclical and unpredictable market, and consumer backlash.

“Solution providers are realizing that the implementation of a smart grid requires a communal effort involving stakeholders from different entities to ensure a seamless integration,” commented Frost & Sullivan principal consultant Farah Saeed. “In the past two to three years, the industry has experienced an increase in exclusive and nonexclusive partnerships and alliances across industries to guarantee a trouble-free implementation of the smart grid.”

According to Frost & Sullivan, utilities acknowledge that smart grids are the need of the hour, as the rising use of electric vehicles, distributed generation, and inadequate investment in generation, transmission, and distribution infrastructure elevates the risk of potential voltage fluctuations and power interruptions.

Investments in smart grid are also partly driven by the need to integrate renewable power, including solar, biomass, wind and hydroelectric, on to the grid.

In the U.S. 30 states have renewable portfolio standards, which require electric utilities to generate a certain amount of electricity from a renewable power source. In Europe, the European Commission has established a directive to cut greenhouse gas emissions by 20 percent from the 1990 levels, produce 20 percent of energy from renewable sources, and increase energy efficiency by 20 percent by 2020.

Although the need for smart girds is apparent, the decision making process is slow due to uncertain economic conditions. Following the 2008 to 2010 economic slowdown, many utilities are hard pressed to justify investments in smart grid to their stakeholders, regulatory bodies and consumer groups.

The high unemployment rate among residential customers is forcing regulators to carefully deliberate the merits of smart grids. In such a scenario, solution providers must work jointly with utilities to demonstrate and communicate the key benefits of investing in smart grids, said Frost & Sullivan.