Smart grid market defies hurdles with $81B forecast

The global smart grid market is forecast to approach $80.6 billion in 2016 from $22.8 billion last year at a CAGR of 28.7 percent. This is driven by the primary advantage offered by smart grids: efficient energy distribution and transmission.

Smart grids are revolutionizing the power grid by using advanced metering infrastructure to reduce the transmission and distribution loss. This includes software such as SCADA, DRM, DMS, MDMS, etc., and communication networks such as WiFi, ZigBee and Z-Wave. The technology balances electricity supply and demand and improves grid reliability by monitoring the frequency and duration of power outages and the number of disturbances, including reduction of regional blackouts.

Reduction in transmission and distribution loss, coupled with an increase in energy efficiency, is one of the major drivers of the smart grid market. Various countries are playing important roles in the commercialization of the smart grid market and passing on mandates and regulations. The high cost of installation of the entire smart grid network is one of the restraints of the smart grid market. Another major restraint is the lack of interoperability of standards. There are huge amounts of investments happening in the smart grid market that hold opportunity for growth. Prepaid electricity is also en-route, wherein the users will prepay for the electricity consumed.

Lack of interoperability standards exists at all the levels in a system. There are numerous service providers across the globe with different standards of operating and meeting a common consensus is very important for the growth of any industry. This is lacking in the smart grid market as every country has its own rules and mandates. This leads to a slower adoption of technology and increases risks for the industry as a whole.

The current trend prevailing in the smart grid technology market is the upgrade of old technology as well as adopting new technology that will lead to a more efficient electricity use. The increase in investment from the governments as well as the utilities' point of view is expected to reach a billion mark in the next five years. This market forecast is from MarketsandMarkets.