Surprise winners in $34 billion smart grid market

As smart grid programs advance in Europe, North America, and Asia,utilities across the globe are installing smart meters and otherintelligent hardware.

While this roll-out promises to usher inan era of more efficient grid management, it also spells a 900 percentincrease in the quantity of data that utilities will need tocommunicate, manage, and analyze over the next decade. As a result,utilities will invest heavily in technologies enabling them tocapitalize on this flood of data, driving the global smart grid marketfrom $12.8 billion today to $34.2 billion in 2020, according to a newreport from Lux Research.

“The Data Revolution: How Intelligent Hardware Will Drive the $34 Billion Smart Grid”
In addition to the report, Lux Research will further explore the topic in a complimentary webinar, “Beyond the Meter: How IT and TelecommunicationCompanies will Benefit from the Expanding Smart Grid,” scheduled forFebruary 9th at 11:00 EST.

The report, titled “The DataRevolution: How Intelligent Hardware Will Drive the $34 Billion SmartGrid,” projects the growth of data over the coming decade, and examineshow this growth will drive utility investment in related smart gridapplications. Specifically, it models the growth of 13 applications that generate, communicate, or utilize data for the smart grid.

“Many people think ‘smart meters’ when you talk about the smart grid, because meters will generate most of the new data. But the volume of datagenerated isn’t the only factor fueling growth in the smart gridmarket,” said Steve Minnihan, a researcher for Lux Research and thereport’s lead author.

“Intelligent distribution applications,for example, can isolate an electrical fault and restore power in amatter of seconds. While such applications generate less data than smart meters, their data carries a far greater value.”

In creating its report, Lux Research performed a rigorous bottom-up analysis ofexisting smart grid project roll-outs as well as targets put forth byutilities and regulating bodies. It also took a top-down approach,factoring in the maximum penetration rates for different gridtechnologies based on cost-benefit analyses. Among its key findings:

* Led by China, Asia will generate the most growth in smart grid data.With a current market potential of 183 million residential meters,China’s residential market is already 38 percent larger than that ofNorth America. Additionally, given that China’s urban population hasgrown 2.7 percent annually between 2005 and 2010, its residential metermarket will see increasing growth potential over the next decade.

* Intelligent distribution, not smart meters, is the application towatch. The growing smart meter market will plateau at $4 billionmid-decade and begin declining in 2018 as the largest markets approachsaturation. Intelligent distribution hardware, conversely, will seecontinued expansion throughout the decade, fueled by adoption in Chinaand North America.

* Telecom and IT incumbents will ride a waveof growing opportunities. Growing demand for logistics and analysishardware will lead utilities to adopt technologies developed by thetelecommunication and information technology industries. As a result,incumbents like Cisco, General Electric, and Oracle have an explosivegrowth opportunity in smart grid.

“The Data Revolution: HowIntelligent Hardware Will Drive the $34 Billion Smart Grid,” is part ofthe Lux Smart Grid and Grid Storage Intelligence service. Clientssubscribing to this service receive ongoing research on market andtechnology trends, continuous technology scouting reports andproprietary data points in the weekly Lux Research Smart Grid and GridStorage Journal, and on-demand inquiry with Lux Research analysts.



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