Smart Cities

Analysts are Slashing Their Forecasts; But Smart Grid Will Weather The Economic Storm Better Than Most

This is a very scary time for the world economy as it makes little progress to overcome the aftershock from the 2008 financial meltdown.The future for just about everything is being heavily marked down, so it’s hardly surprising that analysts are giving the thumbs down to the market valuation of Smart Grid players. They are forecasting a sharp decline in utility demand for Smart Grid as they defer spending until the economy picks up. You cannot argue that present economic woes will have a negative impact on the business and will reduce demand but the extent of this will be decided by the ROI on Smart Grid investments and the cash than can be generated from improved productivity and reduction of wasted energy. This is not a 'nice to have' but a 'must have' product. The US could become one of the more difficult markets to trade in because utilities and regulators focus really hard […]

Stay ahead of the pack

with the latest independent smart building research and thought leadership.

Have an account? Login

Subscribe Now for just $200 per year per user (just $17 USD per month) for Access to Quality Independent Smart Building Research & Analysis!

What Exactly Do you Get?

  • Access to Website Articles and Notes. Unlimited Access to the Library of over 1,700 Articles Spanning 10 Years.
  • 10% discount on ALL Memoori Research reports for Subscribers! So if you only buy ONE report you will get your subscription fee back!
  • Industry-leading Analysis Every Week, Direct to your Inbox.
  • AND Cancel at any time
Subscribe Now
This is a very scary time for the world economy as it makes little progress to overcome the aftershock from the 2008 financial meltdown.The future for just about everything is being heavily marked down, so it’s hardly surprising that analysts are giving the thumbs down to the market valuation of Smart Grid players. They are forecasting a sharp decline in utility demand for Smart Grid as they defer spending until the economy picks up.

You cannot argue that present economic woes will have a negative impact on the business and will reduce demand but the extent of this will be decided by the ROI on Smart Grid investments and the cash than can be generated from improved productivity and reduction of wasted energy. This is not a 'nice to have' but a 'must have' product.

The US could become one of the more difficult markets to trade in because utilities and regulators focus really hard on minimising customer bills during difficult economic times.However this has already been the case during the last 2 years; fortunately the stimulus programs compensated. A significant proportion of these funds are still in the pipeline, sufficient to keep the investment program rolling for up to a year but then its impact on investment will rapidly fall off.

Some rights reserved by Horia Varlan

The North American electrical utility market spent something like $23 billion on Electrical Transmission and Distribution equipment in 2010. ‚  The vast majority of this was spent on retrofit and refurbishment of existing systems and much of this was replaced with Smart Grid ready equipment, ensuring a steady base load of business. Judging by the creaky state of the network if they reduce expenditure here then blackouts will increase leading to a further deterioration year on year. We suspect that the customers would prefer to pay a little more for a reliable electrical supply.

The priority will be spending on automating the transmission and distribution network to achieve balance and voltage optimisation. However integration programs that bring together information to enable more efficient overall control of the grid will take lower priority despite the fact that they can help reduce outages and protect revenues and pay back on their investment.

Northern Europe has a much more reliable grid system but customers pay a lot more for having one. However the politicians are now realising that they can’t take this for granted much longer and it may not be possible for a Smart Grid to finance itself from increasing utility revenues.If the low carbon economy is to be realised in the planned time span, then governments will have to engage in some serious stimulus programs along the lines of the US model.

In Europe the drive to reduce dependence on nuclear and conventional power at the same time as increasing renewable electrical generation cannot be achieved without a massive investment in Smart Grid.

... within 2 years China will be largest single market for electrical transmission and distribution equipment in the world.

In Germany the decision to rapidly close down all nuclear power stations requires a doubling of effort in Smart Grid deployment. The question now is do they have much choice but to slow down the nuclear closure and CO2 reduction programme and spend more on getting the economy back on track.

We suspect that both in Europe and North America compromises on the low carbon economy agenda will have to be made. One solution here is for more use of natural gas to be allowed to generate power from the latest advanced gas turbines that are 60% fuel efficient; a 15% increase in efficiency on existing systems.

They have the capability to rapidly increase and shut down load giving the kind of flexibility to compensate for the downside of renewable power. This would put less strain on the grid and allow more time for Smart Grid to be introduced in a much more integrated and balanced way rather than spending the lion’s share of investment on smart meters when they can’t deliver their full potential until all aspects of smart grid are in place.

Investment in smart grid may lack growth in the next 2 years in the developed economies of the world but the present programmes in China and Asia will press on and within 2 years China will be largest single market for electrical transmission and distribution equipment in the world.

Most Popular Articles

Kieback&Peter Cube Berlin
Energy

Kieback&Peter Building Automation Business & Financials Examined

In this Research Note, we examine Kieback&Peter, one of the long-established German manufacturers and systems integrators of building automation solutions and services. This analysis is based on their December 2023 filing of their 2022 company accounts and more recent announcements. Kieback&Peter GmbH & Co. KG was founded in 1927 in Berlin, Germany. This family-owned medium-sized […]

Alibaba Smart Buildings
Smart Buildings

“Open Sesame” Exploring Alibaba’s Smart Building Approach

Initially launched in 1999 as an online marketplace for Chinese-made products, The Alibaba Group has gone on to become one of the biggest companies in the world with a market cap of over $210 billion. While online retail remains Alibaba’s core service offering, the firm has expanded into a huge range of activities, including comprehensive […]

Allegion 2023 Financials Examined
Security

Allegion Access Control Business & Financials 2023 Examined

In this Research Note, we examine Allegion plc, a pure-play provider of security and access solutions. Our analysis is based on their 2023 annual results, presentation, earnings call and 10K Report. We highlight growth in electronic security products, software and corporate venture capital investments in 2023. Note that we reviewed Allegion’s May 2023 Investor Day […]

Subscribe to the Newsletter & get all our Articles & Research Delivered Straight to your Inbox.

Please enter a valid email

Please enter your name

Please enter company name

By signing up you agree to our privacy policy