China’s smart grid strategy to drive $20bn SCADA boom

China’s drive to develop its smart grid will see the value of its market for supervisory control and data acquisition (SCADA) systems grow seven-fold from $3bn last year to $20bn by 2020, according to new research.

This massive expansion will result in China increasing its share of the global market from 45 per cent in 2012 to 61 per cent by the end of the decade, say analysts at consulting firm GlobalData.

SCADA is an industrial control system used to gather data from sensors and instruments located at remote sites and then transmit and display this data at a central site for control or monitoring purposes.

It is also used to collect and analyse data in real time and the systems are integral to smart grid networks.

GlobalData says China’s aim to become the world leader in smart grid technology “will prove the key driving force in SCADA revenue growth, with the country’s transmission and distribution infrastructure investments unmatched globally”.

However, the company warns that “as the reliance upon smart grid systems grows, the threat of cyber-attacks becomes ever more significant”.

According to GlobalData’s report, developing effective security against threats such as the Stuxnet and Night Dragon attacks is the “greatest challenge facing the global SCADA industry today”.

“The use of malware and viruses is becoming increasingly common, raising the future risk of attacks on SCADA control centres,” it states.

A recent report from DNV KEMA warned that the energy sector in the Middle East is more vulnerable to cyber attacks than any other power market in the world.

And the company stressed that “a cyber attack on crucial energy supplies and transiting routes in this region would impact the entire world”.

Meanwhile, China’s need to address its imbalanced energy supply is making it the world leader in smart grid development.

Coal remains China’s primary source of power generation, and 76 per cent of the country’s coal resources are located in Shanxi, Inner Mongolia, Shaanxi, Xinjiang, and other northern and western regions.

However, the country’s energy consumption needs are mainly concentrated in the more industrialised economies in the eastern and southern regions.

Navigant Research in the US estimates that smart grid development in China will generate $127bn in cumulative revenue from now to 2020.

The Chinese government’s current energy strategy calls for “strengthening the construction of the smart grid” and this is resulting in considerable investment and development in the country’s power infrastructure.  

“The area of strongest smart grid growth in China will be transmission upgrades, anticipated to reach more than $72 billion in revenue by 2020 on a cumulative basis,” said Bob Lockhart, senior research analyst at Navigant.

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