Smart-grid spending to hit $200 billion by 2015
Governments and utilities are expected to ramp up their investments in the electrical smart grid, spending a total of $200 billion worldwide from 2008 through 2015, says a new Pike Research report released Monday.
The term "smart grid" is shorthand for a number of technologies intended to automate and digitize management of electrical power. By computerizing the 20th century electrical system, utilities and others in the power industry hope to manage and control electrical output more efficiently and reliably. Though smart grid sounds like it’s a single system, it’s more an array of different tools and technologies, from smart meters to solar power, all designed to reduce costs, waste less energy, and provide better networking and communications between homes and utilities.
(Credit: Pike Research)
Technologies to automate the grid are expected to win around 84 percent of that $200 billion, says Pike. Smart metering systems to track and analyze the usage of electricity, gas, and water will grab 14 percent, while systems to provide juice to electrical cars will garner the remaining 2 percent.
"Smart meters are currently the highest-profile component of the Smart Grid, but they are really just the tip of the iceberg," said Pike managing director Clint Wheelock in a statement. "Our analysis shows that utilities will find the best return on investment, and therefore will devote the majority of their capital budgets, to grid infrastructure projects including transmission upgrades, substation automation, and distribution automation."
Though the grid has seen some technological advancements, it still suffers from a lack of intelligence and automation that would provide greater efficiency and cost savings, according to Pike. Four key goals will drive higher investments in the grid: improving reliability and security; improving operating efficiencies and costs; balancing power generation supply and demand; and reducing the overall electrical system’s impact on climate change.
So far, development of the grid has been hurt not just by technical and financial limitations but also by a lack of vision and common standards, outdated regulations, and misunderstanding and even mistrust on the part of the industry over how the public consumes electricity, says Pike. As as result, government and industry bodies see the investment in the grid as a high priority.
As part of its push toward greener and more efficient technology, the U.S. government recently said it would spend about $3.4 billion of stimulus money on state-run smart-grid projects, with utilities kicking in another $4.7 billion. With such strong investment, Pike believes that industry revenues from the smart grid will likely reach their peak in 2013 and then taper off to become a smaller but still robust market over the foreseeable future.