Global smart grid investment reached $14.9 billion in 2013, up from the $14.2 billion recorded in 2012, and with final annual figures for 2014 soon to be released, the strong global growth trend is expected to continue this decade.
Home automation companies received the most VC funding within the smart grid sector. The top disclosed transaction in 2014 was Google’s acquisition of Nest Labs for $3.2 billion, followed by the $200 million acquisition of SmartThings by Samsung Electronics and the $150 million acquisition of Aclara Technologies by Sun Capital Partners.
Smart metering accounted for just under half of the total smart grid spending worldwide, with distribution automation and other integrated demonstration projects rounding out the total.
Read more in our Smart Grid Business report - http://memoori.com/portfolio/the-smart-grid-business-2012-to-2017/
China spent $4.3 billion on smart grid in 2013, with a large part of that going on the installation of 62 million meters. China now has around 250 million smart meters installed but has indicated that it will push out the end-date for completing its metering programme from 2015 to 2017. China now has more than twice as many smart meters installed as the total number of households in the US.
In fact, China finished 2013 as the world’s largest smart grid market, exceeding the US in dollar investment for the first time as the North American market continued to slow.
The North America smart grid market shrunk significantly in 2013, falling 33% to $3.6 billion as the last of the US stimulus-funded projects wound down. However, the US remains a significant market for smart grids and figures grew conservatively from Q2 to Q3 last year.
Europe may lag the US and China in terms of overall smart grid investment, but it’s still a multi-billion-dollar market for smart meters, distribution automation, and the next wave of distributed, renewable energy integration.
So says the European Commission’s Joint Research Centre (JRC), who released a report tallying more than 450 projects representing a collective investment of €3.15 billion ($4.28 billion) across the 28 EU member states, plus Switzerland and Norway.
That tally includes 50 new projects, worth a combined €475 million ($646 million), that have started since the JRC’s last report, which covered projects through late 2012. Over that time, 400 new companies entered the smart grid sector in Europe.
Meanwhile, India is looking to smart grid infrastructure to help tackle an out-of-control electricity theft problem and improve reliability. Theft costs the Indian power sector $16.2 billion per year. India's government has already committed billions of dollars in funding for smart grid infrastructure and cumulative spending is forecasted at $21.6 billion over the period 2015-2025, according to a study published by Northeast Group, LLC.
"India loses more money to theft than any other country in the world," said Ben Gardner, President of energy advisory Northeast Group. "The state of Maharashtra—which includes Mumbai—alone loses $2.8 billion per year, more than all but eight countries in the world. Nationally, total transmission and distribution losses approach 23% and some states' losses exceed 50%. Most Indian utilities are financially unsustainable."
India's central government has responded with billions of dollars in promised funding for smart grid infrastructure. In November 2014, Prime Minister Modi announced $4 billion in funding for smart metering programs. Additionally, over $8 billion is available for loss reduction programs and dozens of projects are now underway across India's 29 states.
"India's electricity demand growth is set to exceed 7% per year over the next decade," added Gardner. "In addition to smart metering, current pilot projects focus on distribution automation and wide area measurement, as well as home energy management and IT. Overall power sector investment will include adding 43 million new electricity connections and nearly 3 million kilometres of new circuits."
For international vendors, largely closed out of the China market, India represents the largest long-term Smart Grid opportunity in the world. International vendors will have to compete against leading Indian vendors like Secure, Genus, HPL, Larsen&Toubro, Avantha, Reliance and others.
According to the International Energy Agency (IEA), world electricity demand is predicted to grow at a 2.2 percent compound average annual growth rate from 2012 to 2035, and 62 million kilometres of transmission and distribution lines will need to be added, refurbished or replaced to meet the growing demand.
In the IEA's baseline scenario, the global power sector will require some $16.4 trillion in investment over the next 30 years, with transmission and distribution infrastructure representing the largest subsector share. Around the world, governments, businesses and citizens are beginning to understand that aging electric grids are not equipped to be the critical infrastructure of our energy future and are actively investing in a smarter grid.