The Benefits of Smart Grids Include Fighting Climate Change

Upgraded electrical networks also encourage the integration of renewable energy sources, like wind power and photovoltaic energy, into utilities’ power generation portfolio, further reducing the need to burn oil, gas or coal to meet our ever-growing electrical power needs.

Upgrading electrical networks into smart grids also allows them to act as a communication infrastructure reaching from the energy source all the way to the customer’s premises, permitting real-time adjustments of electrical demand and delivery, according to NextGen Research’s study “Smart Grid Applications: Demand Response, Decentralized Generation and Smart Meters Increase Electrical Networks’ Capabilities, Efficiency and Reliability”.

Enabling advanced information technology and communications tools to operate through that infrastructure will permit utilities to optimize power generation and delivery.

The study’s author, Atakan Ozbek, notes that “economic considerations are also key” for the deployment of smart grids, since they will “reduce transaction costs and increase the profitability of technology investment for renewable energy and for advanced communications.” Further, he observes that “political pressure will be on the utility sector to deploy smart grid networks,” since regulators and politicians alike will value such deployments “for their ability to create jobs as the job market continues to tighten due to the ongoing economic contraction.”

NextGen Research foresees modest growth in smart grids in 2009; growth will start to take off more significantly starting in 2010, as distribution of governmental smart grid stimulus funding begins in earnest. Over the forecast period, NextGen Research expects global spending on smart grids, including hardware, software, installation, integration and any related value-added services, will grow to account for $33.4 billion in revenues in 2014 on a cumulative basis, up from $12.1 billion in 2008.

According to Mr. Ozbek, the pace of mergers and acquisitions in the smart grid sector will increase in the coming months. “We also expect to see a new batch of technology companies entering the smart grid market, as federal monies increasingly support smart grid R&D across North America and, to a lesser degree, in Europe.”

NextGen Research is the emerging technology arm of ABI Research ( NextGen Research informs clients of the outlook for applications currently in use and the opportunities presented by new technologies, so they can make sound business decisions.

Cumulative Spending on Smart Grids to Exceed $33 billion in 2014, According to NextGen Research

Most electrical power networks are antiquated. In North America, for example, much of the electrical transmission and distribution infrastructure is more than 50 years old, and was not designed to handle modern load requirements, or to provide much in the way of information to system operators. In order to respond in a timely way to the increasing power demands of modern consumers and businesses, utilities need to upgrade the current grid to a "smart grid" that will allow electricity producers to match energy demand with supply efficiently over an integrated, continuously monitored, resistant-to-failure electrical network.

According to a new study by NextGen Research, "Smart Grid Applications: Demand Response, Decentralized Generation and Smart Meters Increase Electrical Networks’ Capabilities, Efficiency and Reliability" (URL: utilities and governments around the world spent more than $12 billion upgrading, strengthening and "smartening up" their electrical power grids in 2008, an amount projected to grow to more than $33 billion through 2014.

The study’s author, research analyst Atakan Ozbek, says he found no clear leadership of the smart grid sector between North America and Europe, the two regions showing the highest levels of smart grid-related development. "While the European markets have a higher number of installed smart meters, one of the essential components of future smart grid networks, the US smart grid market has seen a greater level of activity since late 2007." He adds that by the end of the study’s forecast period (2014), the US will overtake Europe in its number of smart meters installed.

Mr. Ozbek finds it encouraging for the smart grid sector that governments are allocating billions for upgrades to existing electrical networks to improve their reliability, interactive capabilities, and openness to renewable energy sources. However, he says, a lack of industry-wide smart grid standards is hindering the sector’s growth potential. A number of different electrical and electronic/IT systems must cooperate in a smart grid; a lack of standards means integrators must learn which systems will work together out of the box and which require substantial additional integration. "The early movers, like PG&E and Austin Energy, should take advantage of their early participation in the field to establish open standards," which would allow smart grid deployments to progress more quickly, with predictable costs.


5.1. ABB
5.2. Advanced Control Systems
5.3. Arcadian Networks
5.4. AREVA
5.5. Capgemini
5.6. Comverge
5.7. E.ON
5.8. Echelon Corporation
5.9. Électricité de France (EdF)
5.10. Elster LLC
5.11. EnerNOC
5.12. Ente Nazionale Per l’Energia Elettrica (ENEL)
5.13. GE Energy
5.14. Google
5.15. Görlitz AG
5.16. GridPoint Inc.
5.17. Honeywell
5.18. IBM
5.19. Iberdrola S.A.
5.20. Infotility
5.21. Itron Inc.
5.22. Landis + Gyr
5.23. Pacific Gas and Electric
5.24. PowerGrid Communications
5.25. SAP AG
5.26. Siemens Energy Inc.
5.27. Silver Spring Networks
5.28. Trilliant Networks
5.29. Xcel Energy