The smart-grid market in the United States will grow 70 percent to $9.6 billion by 2015, according to a Sept. 24 forecast from GTM Research analyst David Leeds. The market research company currently pegs the market at $5.6 billion.
The term smart grid refers to a next-generation electricity delivery network designed to monitor household and business consumption and automate control mechanisms. Rather than depending on a single technology, smart grids consist of a web of networks allowing real-time communication between users and power providers.
The expansion will be driven by federal grants for utility modernization, competition between utilities companies and investments in smart-grid technology by large IT companies, according to GTM Research. For example, utilities can submit their plans and budgets for approved smart-grid projects by Sept. 30 to qualify for a share of the $3.4 billion in federal stimulus grants.
GTM Research analysts calculated the 2015 forecast by compiling outlooks in four core technology sectors: advanced metering infrastructure, distribution automation, home area networks and smart utility enterprise.
"Over the next 10 to 15 years, GTM Research expects the distinction between 'smart grid' and traditional grids to dissolve," Leeds said.
The smart grid is not just about adding communications capabilities to the electricity grid. It also requires integrating back-end utility systems so that companies can analyze the data being generated and act accordingly, he said. With business intelligence in place, smart grids can adjust supply for a specific area based on demand and time of the day, reroute the distribution path if there is a problem in a section of the grid, and support new applications, such as renewable and electric transportation.
GTM Research analysts estimated that large-scale deployment and integration would cost about $165 billion.
Since the deployment timeline is about 20 years, according to the report, full penetration is still decades away. Even so, utility companies are increasing investment in advanced metering infrastructure, such as smart meters, energy displays and appliance controls. These projects will allow utilities to move away from flat-rate billing to variable rates depending on usage and let consumers adjust their usage patterns accordingly, the report said. It also predicted that smart-meter deployments would reach 48 percent nationwide by 2015.
Utility companies are not the only ones looking at this market: Some of the biggest names in technology are building smart-grid offerings. Cisco Systems has an extensive line of energy-monitoring devices, routers and management software, such as the Cisco Network Building Mediator, which tells managers how much power is being used by elevators, heating and cooling systems in a building. IBM offers consulting, design and implementation services to utilities companies, while Intel has been working on IEEE standards for smart-grid technologies.
A separate report released by Pike Research on Sept. 22 predicts that utilities companies will depend on outside experts to deploy, manage and maintain these grids. Global spending on smart-grid management services is expected to grow to $821 million in 2011, up from $470 million this year. Smart-grid management services alone will generate $4.3 billion in revenues by 2015, according to the report.
While there are economic benefits to improving electricity distribution, the growing popularity of electrical transportation is a bigger driver for smart-grid investment, according to both market research companies. The number of plug-in cars and trucks in the United States is expected to reach 841,000 by the end of 2015, Pike Research said.
GTM Research identified systems integration and data management solutions as additional areas of investment.
"The day is quickly approaching when the bulk of new hardware, software and systems added to grids will be intelligent," said GTM Research's Leeds.