Smart Grid Markets on the Move

on March 15, 2013 at 9:00 AM

An interesting new report from Pike Research puts a spotlight on virtual power plants (VPPs) which, while not a new concept, appear to be ready for prime time. Pike’s research suggests that after a decade of pilot projects testing and validating VPPs as a smart grid platform, we will see significant growth over the next few years.

Pike is forecasting the total worldwide capacity of VPPs will jump from 3,800 megawatts this year to 15,400 MW by 2020 – a five-fold increase.

“VPPs represent an ‘Internet of energy,’ tapping existing grid networks to tailor electricity supply and demand services for a customer, utility, or grid operator,” says Pike principal research analyst Peter Asmus. “By stretching supplies from existing generators and utility demand reduction programs, they deliver greater value to the customer while also creating benefits for the host distribution utility and the transmission grid operator.”

Smart meter growth spurt

IDC Energy Insights reports a whopping increase in worldwide smart meter shipments in 2012 – year-over-year growth of 182% and a nearly 40% increase over Q3 2012. That means some 20.6 million units were shipped last year.

The markets driving that growth are in the Asia Pacific region, where the numbers suggest an explosion in the AMI space – up 48.9% sequentially and 779.6% year over year, according to IDC. Growth was more modest in EMEA where shipments increased 36.6% year over year.

The arrow points the other way in the Americas with the 2009 stimulus having crested; IDC says the decline continued, falling 10.8% quarter over quarter and 47.7% year over year.

So where is the market headed? Here’s one perspective:

“The market for basic smart metering systems continues to expand,” said Dean Chuang, senior research analyst for IDC Energy Insights. “Much of the activity we’ve observed in recent quarters has been targeted towards basic infrastructure and operational issues, such as billing and non-technical loss.”

“Conversely,” Chuang adds, “deployments in more mature markets have slowed, as global economic uncertainty has increasingly driven utilities and regulators to reflect upon the near-term cost/benefit of AMI deployment. Utilities and vendors are still learning how to communicate the benefits of AMI as foundational infrastructure; we expect activity to pick-up as the industry develops experience with AMI and continues to integrate applications beyond billing.”

Another take on the AMI market, this one from Pike Research, suggests the number of smart meter deployments (estimated at a total of 832 million smart meters during the 2011-2020 timeframe) implies that quite a few utilities have yet to set out on an advanced metering infrastructure course but are likely to do so over the coming seven years.

The total smart grid technology and related application market is expected to reach $80.6 billion by 2016 at a CAGR of 28.7% from 2011 to 2016, according to a new report from research firm MarketsandMarkets. The report indicates Australia, the UK, France, Italy and the U.S. have the highest potential for expanding smart grid technologies and suggests communications networks will account for a big share of it.

Pike Research, meanwhile, is forecasting the smart grid technologies market – which it views as transmission upgrades, substation automation, distribution automation, smart grid IT/OT and smart metering — will grow from $33 billion annually in 2012 to $73 billion by the end of 2020, totaling $494 billion in cumulative revenue over that period.

As the Pike report notes, though many smart grid programs based on these technologies are underway, the scale of what remains to be done is enormous: “A number of countries with populations over 100 million have not yet seen notable smart grid deployment activity, and Africa, with its population of 1 billion, has seen very little at all. All of this suggests that the market is likely to continue robust growth beyond 2020.”