Source: Pike Research
The smart grid market has been powered over the past few years by highly visible, consumer-facing deployments of smart meters. Many of these deployments will be completed in the middle part of the decade, and smart meter installation activity is projected to slow down as a result not only of the completion of large utility installations, but also a reduction in stimulus funding in the United States and the utilities’ desire to focus on projects that can more quickly deliver a positive return on investment.
The market is shifting from the high unit volume, less expensive nodes used in smart meters, to somewhat lower unit volume, yet higher value, networking equipment and communications gear found in substation automation projects, distribution network upgrades, and other projects that offer a path to a fully integrated grid-wide communications system. According to a new report from Pike Research, shipments of communications nodes associated with the smart grid will climb to nearly 103 million in 2020, from just over 58 million in 2011. Revenue from this equipment will peak at $2.96 billion in 2014, the cleantech market intelligence firm forecasts, returning to just under $2.6 billion per year in 2020.
“The sheer size and scope of smart grid communications efforts has created some gold rush characteristics in the market, as traditional communications and IT companies view the electric utility industry as a potentially high-growth adjacent market,” says vice president Bob Gohn. “While overall, the market is still robust, with a good deal of diversity and opportunity, investment in advanced metering infrastructure (AMI) networks will be reduced starting in the second half of the decade, as utilities focus on high-return grid enhancement projects that provide important reliability, security, and efficiency gains, with less need for the challenging process of customer education.”
Indeed, poor levels of education and communication with the public for some smart meter rollouts have raised the antennas of ratepayers and politicians alike, and they are pushing utilities to more clearly define how smart meters and other smart grid technology will benefit the public. As a result, utilities are readjusting their educational tactics, as well as launching smaller, less visible smart grid projects that can quickly and easily demonstrate real-world benefits to ratepayers, not just the utility.