Smart Grid Development Is Not Limited to the U.S.
Over the last year, so much of the focus on the developing Smart Grid has been related to the American Recovery and Reinstatement Act (ARRA) stimulus opportunities and resulting funds now being administered by the Department of Energy. The U.S. government awarded over $3.4 billion of matching grants for the development of Smart Grids. The funding will enable more than $8 billion worth of intelligent energy technology projects and will provide a significant stimulus to the growth of this sector.
Naturally, given that this is a U.S. federal agency, the projects being funded are primarily within the United States, although certainly U.S. funding is also flowing abroad. What should not be overlooked is the significant amount of activity that is happening on the world’s stage. In fact, when placed side by side, the U.S. projects do not overshadow what is taking place internationally. Even a number of developing countries like India, China and Brazil are also looking to make their power grids smarter and taking noteworthy steps toward the deployment of new Smart Grid technologies.
According to new projections substantiated by a number of sources, the number of smart electric meters deployed worldwide is expected to rise from a 2009 level of 76 million to reach more than 250 million by 2015, representing a penetration of 18 percent of all electric meters globally. Further, global spending on Smart Grid technologies should reach $200 billion during the period from 2008 to 2015, and most of that money will be spent on automation initiatives. And other projections claim that from 2011 to 2015, the global household smart appliance market is projected to grow from $3.06 billion to $15.12 billion.
Certainly, the U.S. federal economic stimulus is a significant factor in driving the Smart Grid market forward. But other countries appear to be looking toward the U.S. financial packages and vetting the creation of their own financial or policy incentives. Interestingly, regardless of what country or region of the world, debates over how to define the concept of “Smart Grid” are common place. In the United States, the decision about the best technology solution can vary from utility to utility, city to city, and state to state. Internally it is essentially the same dynamic. Each country has its own vision of what a real “Smart Grid” is, and every country has a different time frame in mind for implementing these visions.
A recent study by Zpryme Research and Consulting identified the top 10 countries by Smart Grid federal stimulus investment for 2010, and listed them as follows:
Top Ten Smart Grid Federal Stimulus Investments by Country, 2010 (in U.S. Millions)
China: $7,323
US: $7,092
Japan: $849
South Korea: $824
Spain: $807
Germany: $397
Australia: $360
UK: $290
France: $265
Brazil: $204
The following information, compiled from recent industry announcements and news articles, provides a brief snapshot of noteworthy Smart Grid market activity in select regions.
Europe
A recent scanning of market news in Europe provides a handful of noteworthy items.
The European Union recently enacted a “Third Energy Package” in September 2009, which aims to see every European electricity meter “smart” by 2022. Energy efficiency and reliability have been among the top motivating factors for smart meter deployments.
The ZigBee® Alliance—an association of companies creating wireless solutions supporting energy management in residential, commercial and consumer electronics applications—is expanding its participation in the European Union’s various standardization efforts. The Alliance will focus on the European Union’s Smart Grid programs and on meeting the needs of the EU implementation of ZigBee Smart Energy in the Home Area Network (HAN). To accomplish these objectives, and support a thriving membership base, the Alliance is establishing a European headquarters.
A significant dynamic pushing forward the Smart Grid sector in Europe is the integration with renewables. The EU could meet an initiative of utilizing 90 percent renewable energy, only, by 2050 via adding intelligence to its existing grids and building a cross-border Smart Grid infrastructure. Previously, the EU’s Renewables Directive approved a binding goal requiring 20 percent of the bloc’s energy supply to be derived from renewable sources by 2020.
The challenge with the European market is that, unlike the United States, EU regulators have not been as forthcoming with permanent financial incentives for Smart Grid, which has resulted in a number of European utilities being risk adverse to making large investments in new technologies.
Asia
Asia’s spending on Smart Grids is expected to outpace the United States, with China alone seen investing (US) $7.3 billion in the sector this year. China is predicted to be one of the hottest Smart Grid markets in the coming years given its energy needs are expected to double in 10 years, and the country’s dominant power distribution company, State Grid Corp., has a goal of building out a Smart Grid by 2020.
In fact, China specifically has been identified as a country that it is pursuing Smart Grid as aggressively, or more aggressively, than any other country in the world right now, and is expected to follow the United States with a market share of 11.6 percent ($355 million). In 2015, China is projected to account for 18.2 percent ($2.76 billion) of the global household smart appliance market. China alone could spend over (US) $100 billion upgrading its power distribution over the next 10 years.
Despite this aggressive activity in China, within the Asian Pacific region Japan and South Korea, which actually are a step ahead of China in the building of intelligent power distribution networks, are also ramping up Smart Grid investments. Both are ear-marking spending of more than (US) $800 million for 2010.
As in the United States, regulatory mandates requiring utilities to constantly upgrade their grids are a factor in the Asian Smart Grid market. Currently, Australia, New Zealand, Singapore, South Korea, and Japan have announced major packages to stimulate Smart Grid development.
The Asia Pacific countries’ efforts to meet their Green Energy objectives have boded well for the Smart Grid market in the region, as various governments have issued regulatory mandates requiring utilities to modernize their grids. The utilities, spurred on by government funding and the cost saving benefits of the advanced technology, have started moving toward Smart Grids.
Some examples of the activity throughout Asia include:
Chinahas been rigorously investing in smart meters and will replace 300 million electricity meters over the next five years. The Chinese government has been increasing investment into Smart Grid technology to prepare for national energy needs that are expected to double in ten years.
Various governments in the Asia Pacific region, including Australia, New Zealand, Singapore, South Korea, and Japan, have issued regulatory mandates requiring utilities to modernize their grids.
The South Korean government announced its plan to establish a national Smart Grid and urged the formation of active global partnerships to disseminate the technology at an early date. In fact, South Korea is expected to take a leading role in developing a Smart Grid in the Asian Pacific region. The Ministry of Knowledge announced that officials from Korea and Australia have agreed to expand cooperation in developing a Smart Grid system, an interactive electricity supply system based on information technology. Under the agreement and according to the South Korean government, South Korea and Australia will combine efforts in energy and resource development, vowing to expand cooperative measures on cultivating natural gas and resources.
However, while the developed nations have taken to Smart Grids, the lack of finance has restrained their widespread adoption in the developing countries of Malaysia, Indonesia, Thailand, and the Philippines. Once these countries learn from the experience of other nations and realize the cost and environmental benefits of large-scale Smart Grid implementations, their governments are likely to increase support to utilities through funding plans.
The International Conference on Electricity Distribution (CIRED) has not come up with any target for Malaysia to be in the Smart Grid era for now. Nevertheless, the CIRED Malaysia Association chairman, Azman Mohd, stated that during last year’s Climate Summit in Copenhagen, Prime Minister Najib Tun Razak mentioned the country’s aim to reduce greenhouse gas emissions by 40 percent by 2020.
So far, only Australia has made it mandatory for utilities to install smart meters, but as the case for Smart Grids gets stronger, other countries in the region are expected to follow suit.
Australia
In Australia, the alliance known as Smart Grid Australia requested funding for a Smart Grid demonstration project and the Government responded with the provision of AU$100 million for a National Energy Efficiency Initiative to develop an innovative Smart-Grid energy network. Combining broadband with intelligent grid technology and smart meters in homes, this demonstration project will enable greater energy efficiency and better integration of renewable energy sources, such as solar and wind power. Funding will be provided to a consortium of state and local government, public and private energy companies and other private sector investors for the large scale demonstration of integrated Smart Grid technologies. Perhaps the most interesting element of the Smart Grid demonstration project is that it is linked to the National Broadband Network (NBN). It clearly shows the trans-sector thinking the government has embarked upon. The Australian government showed leadership in May 2009 when it announced a (AU) $100 million investment in a new Smart Grid demonstration project.
* According to the Energy Efficiency and Conservation Authority (EECA), there is sufficient spare capacity in the grid available at off-peak times to allow charging all of New Zealand’s cars and other light vehicles if these were replaced by electric vehicles.
Brazil
Along with Asia, Latin America is also a region of the world that is showing significant Smart Grid activity. Since 2007-2008, there has been a growing interest in smart energy technologies among Latin American countries, with Brazil leading the way. In many countries, power companies have undertaken pilot projects in Smart Grids combined with broadband over powerline (BPL) technologies.
Latin America, and, again, particularly Brazil, is growing, with projected GDP growth between 2010 and 2013 exceeding the US, Canada, the European Union, and Russia. In fact, from 2007 to 2017, energy consumption in Brazil is expected to increase by approximately 60 percent.
With this growth will also come increased consumption, which often parallels growth in GDP. This anticipated consumption will result in new demands for electricity.
Accordingly, Brazil’s energy regulator, Aneel, announced tentative plans for a nationwide rollout of smart metering, expecting to replace approximately 63 million electricity meters in the country with smart meters by 2021.
While Brazil has a growing renewable energy sector, the aging infrastructure has made incorporating renewables difficult. Renewable energy, like hydro, biomass and wind will account for between 16 and 34 percent of new generation adds over the next few years. While this may be viewed as an opportunity, integrating these renewables into the distribution grid will also present challenges, as the grid was initially designed for one-way power flow, from a central generating facility to the consumer. A Smarter Grid will be needed to help integrate this renewable power into the grid.
Some additional examples of the activity throughout Latin America include the fact that Echelon Corporation (NASDAQ:ELON) and ELO Sistemas Electronicos S.A. (ELO) announced a strategic alliance to bring Smart Grid solutions to the Latin American energy market. ELO, the number one supplier of electronic meters and systems in the Brazilian electricity supply market, has become a value-added reseller of Echelon’s market-leading Networked Energy Services (NES) System, an advanced metering infrastructure solution. Echelon and ELO’s collaboration will be the first extension of Echelon’s advanced Smart Grid solutions to the Latin American region.
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