Large spending surge in smart technologies predicted

Nearly 75% of the smart grid money will reportedly come from utilities updating their grids, while industrial giants work to secure their piece of the pie.


By Maria Gallucci at SolveClimate

No one doubts that any big renewables push — like President Obama's call to get 80% of U.S. power from cleaner sources by 2035 — will demand an upgrade of the nation's electrical systems to digital "smart" grids. But is it happening?

New research by Lux Research suggests that the answer is yes. The firm predicts a $20 billion spending surge in smart technologies in the next ten years, led by electric utilities and global grid giants like ABB, who are ready to cash in on the power revolution.

The January report finds that the new digital grid networks will pump out 900% more data to electric utility companies by 2020, as they install millions of smart meters, the in-home devices that report energy usage.

To handle the data explosion, utility companies and industrial power firms are expected to nearly triple the current $12.8 billion smart grid market to $34.2 billion by investing in the distribution hardware, management software and information technology (IT) needed.

Nearly 75% of that money will come from utilities updating their grids to make way for the smart grid revolution, Steve Minnihan, a Lux Research analyst and the lead author of the report, explained.

Smart Grids: 'Absolutely Essential' for Clean Power

On a traditional electrical grid, the intermittent flows from wind farms or solar plants can sag or surge. To compensate, fossil fuel-powered energy then ticks up or down. But the movements are not adequately controlled and can lead to costly stoppages, energy leaks and overwhelming voltage levels.

The global expansion of smart grids means that renewable energy sources could increasingly hop onto a system that tracks energy flows in real-time and responds immediately to digital commands, thus taking much of the risk out of going green. With a more efficient connection, more clean energy could reach consumers rather than get held up on an outdated grid.

Since its start in 2006, Petra Solar has reportedly won around $6 million in grants from the Solar Energy Grid Integration System (SEGIS) program by the U.S. Department of Energy to study how solar penetration affects electrical grids. The firm then went on to build its SunWave module, which features a solar panel and microinverter that attach to power poles to create a smart grid network in half an hour's time, Shihab Kuran, president and CEO of Petra Solar, said.

Industrial Giants, Led by ABB, Prepare for Surge

Global manufacturing giants are already prepping themselves for the spending surge on smart grid technologies that is being spurred by utilities. Companies like ABB, Siemens AG and General Electric (GE) are nabbing leading telecommunications and IT firms to bolster their data-processing portfolios, hoping to secure their piece of the $34.2 billion pie.

Last May, ABB reportedly spent $1 billion to acquire Atlanta-based Ventyx, a major software, data and advisory services provider for utilities and smart grid markets. In December and January, ABB added Insert Key Solutions (IKS) of Pennsylvania and Obvient Strategies Inc. of Georgia, both privately owned specialist software providers, to its Ventyx portfolio for undisclosed amounts.

Last fall, GE acquired large smart grid software companies Opal Software of Australia and SNC-Lavalin's Energy Control Systems of Montreal for undisclosed amounts. Earlier this year, the corporation acquired Remote Energy Monitoring, a software and hardware firm in Australia and the U.K. that helps households and utilities to more efficiently manage energy usage.

Early last year, Siemens said its goal is to receive orders worth more than $8.3 billion for smart grids by 2015. The company made $38 billion in sales on energy-conserving electricity grids, wind power and solar energy last year.

- Edited by Amanda McLeman, Consulting-Specifying Engineer,

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