2010 Global Smart Grids - An Industry in Transformation

Publication Overview

This report provides valuable insight into the key trends taking place in terms of worldwide smart grid development. The report explores the concept of smart grids in terms of the larger global picture by drawing on the unique strategic vision BuddeComm has developed in this emerging sector. The report provides an overview of the current smart grid and smart meter industry and also explores the issues impacting on consumer perception. It discusses smart grids in relation to the Copenhagen Summit and smart energy in terms of distributed (renewable) energy. Smart grids are a key element in the development of Smart Cities and the report provides insight into Smart City developments and the broader Communications Revolution taking place.

Subjects covered include:

  • Global smart grids overview;
  • Analysis of the industry moving into 2011;
  • Smart grids and consumer issues;
  • Global smart meters overview;
  • Smart grids in an environmental context;
  • Smart grids and the Communications Revolution;
  • Smart grids and Smart Cities;
  • Regional overviews.

Researcher:- Kylie Wansink, Paul Budde, Lawrence Baker, Lucia Bibolini, Peter Evans, Lisa Hulme-Jones, Paul Kwon, Henry Lancaster, Peter Lange, Stephen McNamara.

Current publication date:- November 2010 (7th Edition)

Next publication date:- November 2011

Executive Summary

Smart Grid development involves many different elements

Smart grids are now well and truly on the agenda of most electricity companies around the world - and indeed on many of their governments’ political agendas. It has become increasingly clear that smart grids are able to transform the energy industry, and that a much broader group of industries are also affected by this, such as the IT, telecoms, white goods, renewables, management consultants, storage and transport sectors.

The electricity grid is becoming the enabler in many industry changes, and by making it an intelligent grid and adding telecoms to it, the power will shift away from the electricity companies to the customers – and the appliances that will be developed will assist this process; some of that on a machine-to-machine (M2M) basis. For more information, see chapter 1.1, page 1 - Global smart grids – overview and insights

While progress has certainly been made in the development of smart grids; it is important to note that due to its very nature, the concept continues to be ill-defined and rather fluid. This makes it difficult to develop firm plans of action, especially when considering that smart grids involve several key elements – the grid itself, the consumer home energy network, and the facility to include and manage renewable energy and e-cars. For more information, see chapter 1.2, page 10 – An industry in transformation

The electricity utilities started off with one of the smart grid elements, the smart meter, and that still dominates many of the developments. At the same time, it does to a certain extent; limit more truly ‘smart’ developments. However smart meters do have the ability to enable more complex time and usage-based tariffs, which will drive change in customer behaviour and create increased opportunity for differentiation by the utilities. They also set the stage for greater use of discounts and incentives, and a wider range of product offerings, including micro-generation and non-energy products. For more information, see chapter 2.2, page 20 – Smart meters – overview and insights

Unfortunately, marketing the benefits to the customer has been something of an afterthought in the development of smart meters and smart grids, and the industry is paying dearly for that oversight. There appears to be very little interest among customers in regards to smart grids and smart meters, and this is mainly because the benefits have not been communicated well to consumers. Perhaps if the industry had had a smart grid vision instead of a smart meter vision, they would have been able to explain to the customer that they would be provided with tools that would enable them to manage their energy use better. This would result in saving energy which would ultimately lower the costs - to such an extent that it could even lead to a neutral outcome in relation to the ever-increasing electricity prices. For more information, see chapter 2.1, page 15 – Smart grids and consumer issues

Environmental policy remains one the key global problems being faced around the world. While the climate change issue has dropped off the headlines, it is still very high on most countries agendas. With fossil fuel energy being the single largest culprit in the problem, no matter how one looks at this issue, the overriding solution is to move as quickly as possible away from fossil fuels to renewables.

A significantly large part of the population is interested in lowering their CO2 footprint. Furthermore there is evidence that this and other energy saving measures can lead to overall savings of around 30%. This could largely offset the increases in electricity prices. Disruptive energy developments from new energy service providers which will lead to the development of new business models around distributed (renewable) energy, will also add to the dynamics of this emerging market. For more information, see chapter 3.2, page 28 – Smart grids and renewables

The Copenhagen Summit was the first global event where countries came together to address a common cause. This in itself was an enormous achievement – a beacon to illuminate future global policy-making. The complex dynamic surrounding the carbon price still needs to be resolved, but it also became clear that smaller steps are necessary, and that now is the time to try and create some wins here, particularly in the area of smart energy. In other words, can we save energy through smart grids, smart infrastructure, smart buildings, smart transport and smart cities? For more information, see chapter 3.1, page 25 – Smart grids after the Copenhagen Summit

The concept of smart cities and smart communities is based on intelligent infrastructure such as broadband (FttH) and smart grids, so that connected and sustainable communities can be developed. However, before these smart communities can be built, trans-sector policies and strategies need to be developed. They can’t be built from the current silo structure that dominates our thinking; rather it requires a holistic approach which includes environmental issues such as energy self sufficient buildings, energy exchanges for renewable energy and e-cars, delivery of e-health, e-education, e-government services as well as digital media and Internet services. For more information, see chapter 4.2, page 37 – Overview of smart cities

The communications revolution is an important element of the broader ICT revolution, and it is unfolding before our very eyes. We are right in the middle of a transition from old communications structures to new intelligent structures that are fully interactive and video-based. This is not simply a technology-based development – it brings with it massive changes to the way we live, work and communicate. It impacts on healthcare and education, as well as on environmental services such as smart electricity grids. This necessitates collaboration between the various industries such as utilities, telcos, IT, vendors and consultants. As well as the benefits the transformation brings to the nation, it also brings with it massive new business opportunities. The energy industry will be one of the last on the planet to be affected by the ICT revolution and a total business transformation will be required over the next 5-10 years. For more information, see chapter 4.1, page 33 – Smart grids and the communications revolution

Key insights:

  • The jury is still out on how smart grids are going to be developed. Will the industry lead the development of smart grids? Will it be government-mandated or will disruptive elements force changes in a traditionally risk-averse and slow-moving industry? For more information, see chapter 1.2, page 10 – An industry in transformation
  • ‘Smart’ means communication and many countries are also addressing their broadband infrastructure. Of course, a smart thing to do would be to roll out fast broadband infrastructure in combination with smart grids and, wherever applicable, other smart infrastructure. For more information, see chapter5.1, page 51 – NBN infrastructure. 
  • Clean energy is rapidly becoming the new political tool. Fossil fuel based energy has wielded enormous political power over the last 50 years. Clean energy will most certainly follow in its footsteps and will become an important source of geo-political power. For more information, see chapter 3.2, page 28 – Smart grids and renewables
  • The greatest achievement in Copenhagen was that the governments of the world sat down together and worked on a global problem. For more information, see chapter 3.1, page 25 – Smart grids after the Copenhagen Summit
  • We are in the middle of a communication revolution. After the massive deployment of microchips we have now reached a mass deployment of IT. The arrival of the Internet started the communications revolution, which, like the other major techno-economic revolutions of the last 200 years, will deliver great economic and social benefits. The communications revolution will see the national and global focus shift to e-health, e-education and smart grids. For more information, see chapter 4.1, page 33 – Smart grids and the communications revolution
  • Smart grid developments in the US have rapidly gathered momentum following the Obama administration’s $4 billion stimulus package for smart grids. Consequently, the proportion of US homes equipped with smart meters is estimated to rise from 6% in 2010 to 50% by 2020. For more information, see chapter6.1, page 59 – Regional overviews, North America.
  • Europe has become a major proponent of smart grid infrastructure and smart metering. A growing number of countries have smart meter policies in place, while most others have drafted policies to take effect during 2011. For more information, see chapter 6.3, page 62 – Regional overviews, Europe.
  • Despite the cheap energy available in the Arab world, in many countries energy shortfalls are either evident already or anticipated in the near future. Consequently there is more interest in the Middle East in smart grids and related intelligent energy technology than perhaps might be expected. For more information, see chapter 6.5, page 66 – Regional overviews, Middle East.
  • Smart grids can help solve Africa's power crisis. For more information, see chapter 6.4, page 64 – Regional overviews, Africa.
  • Many governments across Asia have been starting to explore smart grid technology, while being cautious over security risks associated with new infrastructure. For more information, see chapter 6.6, page 69 – Regional overviews, Asia.
  • An Australian consortium is developing Australia’s first commercial-scale smart grid which will also be one of the largest and most integrated smart grid projects anywhere in the world. For more information, see chapter 6.7.1, page 74 – Regional overviews, Australia.
  • Since 2007/08, there has been a growing interest in smart energy technologies among Latin American countries, with Brazil leading the way. For more information, see chapter6.2, page 61 – Regional overviews, Latin America.

Paul Budde
November 2010

Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents

  • 1. Key Insights into Global Smart Grids
    • 1.1 Global smart grids – overview and insights
      • 1.1.1 A concept, not a technology
      • 1.1.2 Smart grid vision
      • 1.1.3 Smart grid market
      • 1.1.4 Government policies and regulations
      • 1.1.5 Smart energy
      • 1.1.6 Smart grids, smart infrastructure, smart buildings and smart cities
      • 1.1.7 Opportunities for the smart infrastructure
    • 1.2 An industry in transformation
      • 1.2.1 Industry still facing serious problems
      • 1.2.2 Smartening up the grid
      • 1.2.3 Government policies and regulations
      • 1.2.4 Smart grids is a telecoms play
  • 2. Insights into Consumer Issues
    • 2.1 Smart grids and consumer issues
      • 2.1.1 Customers need to become central
      • 2.1.2 Brief case study: BGE smart grid services
      • 2.1.3 Smart appliances
    • 2.2 Smart meters – overview and insights
      • 2.2.1 Market summary
      • 2.2.2 Smart meters and consumer issues
      • 2.2.3 Smart meters and the utilities
      • 2.2.4 Other smart meter opportunities
  • 3. Smart Grids in an Environmental Context
    • 3.1 Smart grids after the Copenhagen Summit
      • 3.1.1 The global political situation after Copenhagen
      • 3.1.2 The disappointments
      • 3.1.3 The achievements
      • 3.1.4 The way forward
      • 3.1.5 Analysis of the Copenhagen Summit (December 2009)
    • 3.2 Smart grids and renewables
      • 3.2.1 Introduction
      • 3.2.2 Renewables should drive the energy agenda
      • 3.2.3 Geo-political power based on clean energy
      • 3.2.4 No investments without an ETS
      • 3.2.5 Energy saving not in the interest of the retail owners
      • 3.2.6 Disruptive energy
  • 4. Strategic Vision for Smart Grids
    • 4.1 Smart grids and the communications revolution
      • 4.1.1 The communications revolution
      • 4.1.2 Key role for utilities
      • 4.1.3 How to proceed
      • 4.1.4 What are the challenges?
      • 4.1.5 Conclusions
    • 4.2 Overview of smart cities
      • 4.2.1 Introduction
      • 4.2.2 Building Smart Cities to Ease the Stress
      • 4.2.3 Key Components of Smart Cities
      • 4.2.4 Strategies for Smart Communities
      • 4.2.5 Brief Examples of Smart Communities
      • 4.2.6 Intelligent/smart technologies and systems
      • 4.2.7 Intelligent Communities Forum
  • 5. Development of National Broadband Networks (NBN)
    • 5.1 NBN infrastructure
      • 5.1.1 National Broadband Network Company
      • 5.1.2 Open network = innovation and affordability
      • 5.1.3 Technology critical consideration
      • 5.1.4 Wireless broadband
      • 5.1.5 Other quick-win areas
      • 5.1.6 Trans-sector government
      • 5.1.7 Using electricity infrastructure to roll out broadband
  • 6. Regional Overviews
    • 6.1 North America
      • 6.1.1 Overview
    • 6.2 Latin America
      • 6.2.1 Overview
    • 6.3 Europe
      • 6.3.1 Overview
      • 6.3.2 EC response
      • 6.3.3 EU regulation
      • 6.3.4 Case studies
    • 6.4 Africa
      • 6.4.1 Overview
      • 6.4.2 South Africa
      • 6.4.3 Angola
      • 6.4.4 Uganda
      • 6.4.5 Senegal
    • 6.5 Middle East
      • 6.5.1 Overview
      • 6.5.2 UAE
      • 6.5.3 Israel
      • 6.5.4 Saudi Arabia
    • 6.6 Asia
      • 6.6.1 Overview
      • 6.6.2 China
      • 6.6.3 South Korea
      • 6.6.4 Singapore
      • 6.6.5 Malaysia
    • 6.7 Pacific Region
      • 6.7.1 Australia
      • 6.7.2 New Zealand
  • 7. Glossary of Abbreviations
  • Table 1 – Value of the global smart grid market – 2009; 2030
  • Table 2 - Top ten government investments in smart grids
  • Table 3 – Worldwide installed base of smart meters – 2009; 2015
  • Exhibit 1 – Smart Grid applications
  • Exhibit 2 – Challenges smart grids can address
  • Exhibit 3 - International Smart Grid Action Network
  • Exhibit 4 – AT&T interested in smart grids
  • Exhibit 5 – What makes a Grid smart?
  • Exhibit 6 – Electricity industry transformation process
  • Exhibit 7 – How other industries transformed
  • Exhibit 8 – Smart Grid Exchange Initiative in China
  • Exhibit 9 – The cost of smart meters
  • Exhibit 10 – The disappointments of Copenhagen
  • Exhibit 11 – The achievements of Copenhagen
  • Exhibit 12 – Smart grids for distributed renewables
  • Exhibit 13 – Starting dates of the five technology cycles of the last 200 years
  • Exhibit 14 – Key elements of techno-economic revolutions
  • Exhibit 15 – Smart City – Masdar City – Abu Dhabi
  • Exhibit 16 – Smart Homes
  • Exhibit 17 – Example of trans-sector collaboration in a Smart City
  • Exhibit 18 – Smart shopping
  • Exhibit 19 – Learning from e-cars
  • Exhibit 20 – Xcel Energy’s Smart Grid City
  • Exhibit 21 – Southern California Edison, California
  • Exhibit 22 – American Recovery and Reinvestment Act 2009
  • Exhibit 23 - Examples of smart grid applications in Israel
  • Exhibit 24 – Smart grid implementation areas for South Korea
  • Exhibit 25 – Phased implementation plan of Jeju smart grid: 2010 - 2013

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Number of pages 100

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Last updated 19 Nov 2010
Update History

Analyst: Kylie Wansink

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