Smart Grids Market Size, Share & Trends Analysis Report By Hardware (Sensors, Programmable Logic Controller, Smart Meter, Networking Hardware), By Software (Advanced Metering Infrastructure, Smart Grid Distribution Management, Smart Grid Network Management, Grid Asset Management, Substation Automation, Smart Grid Security, Others), By Services (Consulting, Deployment and Integration, Support and Maintenance) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Smart Grids Market Size

The global smart grids market size was valued at USD 57.12 billion in 2023 and is projected to reach from USD 67.97 billion in 2024 to USD 273.34 billion by 2032, growing at a CAGR of 19% over the forecast period (2024-32). 

The Smart Grid refers to an electrical grid with advanced automation, communication, IT, and IOT systems that can control the power flow or curtail the load to match generation and monitor power flows from points of generation to points of consumption in real-time or near real-time. It can be attained by implementing efficient transmission and distribution systems, system operations, consumer integration, and renewable integration. Smart grid solutions help in monitoring, measuring, and controlling power flows in real-time which can contribute to recognizing losses so that appropriate technical & managerial actions can be taken to arrest the losses.

Some of the key features of a smart grid are automated outage management and faster restoration, better energy management, dynamic pricing mechanisms, real-time monitoring, web portals & mobile apps, in-house displays, and many others. These grids can coordinate the needs and capabilities of all energy players and end-users to optimize power usage, which in turn reduces costs and environmental impact. Rising urbanization is also a major factor augmenting the smart grid's market growth. According to the United Nations Department of Economic and Social Affairs, the urban population of the world has grown at a rapid rate from 751 million in 1950 to 4.2 billion in 2018. In addition to this, it is also projected that approximately 68% of the world's population will live in urban areas by 2050. 

Smart Grids Market Growth Factors

Supportive Government Policies and Regulations to Augment the Demand for Smart Grids

The various initiatives supportive policies and regulations laid by the governments are expected to increase the demand for smart grids across the globe. The increasing need to alleviate climate change for renewable energy expansion is further anticipated to drive smart grid initiatives worldwide. Additionally, various governments have started investing in smart grid technology as it is expected to help them in achieving their carbon emission reduction targets and enable long-term economic prosperity.

• For instance, the U.S. installed around 76 smart meters in 2017 under AMI (Advanced Metering Infrastructure) and is anticipated to install approximately 90 million meters by the year 2020.

In addition to this, under the Smart City Initiative Indian government has a target of installing 130 million smart meters by the year 2021, which is also anticipated to boost the growth of the smart grid markets.

Rising Investments in Smart Grid Projects to Propel Market Growth

The rise in investments in smart grid projects across the globe is expected to propel the growth of the market.

• For instance, the Government of Canada is committed to building a clean energy future, and therefore, the Parliamentary Secretary to the Minister of Economic Development and Official Languages and Member of Parliament for London West, Kate Young, on behalf of the Honourable Seamus O'Regan, Canada's Minister of Natural Resources, announced an investment of 5.1 USD million in London Hydro to develop and deploy a smart microgrid in the West 5 net-zero energy community.

In addition to this, the American Recovery and Reinvestment Act (ARRA) which is a part of the US federal government, has also allocated 3.4 USD billion and 615 USD million for smart grid investment grants to utilities and demonstration projects.

Furthermore, countries like the USA, India, China, and others are investing heavily in smart city initiatives, which are predicted to create lucrative opportunities for the smart grid market during the forecast period.

• For instance, Japan is assisting India in developing its smart cities initiatives by investing USD 4.5 billion in the first phase of the DMIC (Delhi-Mumbai Industrial Corridor) project which is expected to install 130 million smart meters by the year 2021.

Moreover, the Power Grid Corporation of India has also planned to invest 26 USD billion in the upcoming five years which will further boost the smart grids market growth.

High Costs for Deployment of Smart Grid Technology Solutions to Restrict the Market 

The initial phase of smart grid deployment requires a lot of capital as compared to conventional grids, which may hamper the growth of the global smart grid market. The local and national governments play a vital role in transforming infrastructures. The smart grid technology demands huge investments to set up the transmission network between the customers and the smart grid.

In addition to this, effective deployment of the smart grid requires strong coordination across customary organizational boundaries, significant process change, as well as rigorous governance. Therefore, high investments required for fruitful deployment of smart grids could add up to the governments’ economic burden along with high operational and maintenance costs post-deployment. These are also a big concern for the utility providers which is anticipated to restrict the growth of the market.

Regional Insights

North America: Dominant region

North America is anticipated to hold the maximum share in the global smart grids market during the forecast period. The growth can be attributed to the adoption of the latest technological advancements, such as AMI, smart grid distribution management, smart grid communication, and substation automation in the region.

In addition to this, the government has been actively involved with the energy efficiency and management standards for the residential sector, while the public and investor-owned utilities are also considering reducing the energy cost and consumption as a major priority factor in their management strategies which is anticipated to boost the demand for smart grids in the region.

The rapid infrastructural development in the region will also play an important role in the growth of the global smart grid market.

• For instance, in Mexico, the government is planning to open SEZ across the country to promote economic growth in the region which is expected to propel the demand for the smart grid.

Furthermore, large-scale investments in smart grid and smart city projects and the need for better smart grid and control mechanisms in the region are also anticipated to boost the growth of the market in North America.

According to the statistics shared by the International Energy Agency (IEA), the U.S. overtook China in 2019 and increased its investments by 12% to lead grid investment. Moreover, it was also projected that it is anticipated to spend USD 2.1 trillion by 2035 in the smart grid technology market to develop grid technologies and infrastructure to prepare for high penetrations of renewable sources.

Europe: Fastest growing region with the highest CAGR

Europe is expected to be the second-largest region in the global smart grids market owing to the rising shipments and deployment of smart meters in countries like Germany, France, and the U.K. which is bolstering the demand for smart grid solutions in the European Union. According to the European Investment Bank, tens of millions of smart meters are being installed across Europe. The British government has ordered a smart meter in every home by the end of 2020 and the U.K. roll-out is projected to have about 53 million new electricity and gas meters, with an estimated investment of USD 13, 204.04 million.

In addition to this, the adoption of smart grid technologies in the region is also expected to boost market growth. As per the European Commission, approximately 72% of European consumers will have a smart meter for electricity” by 2021 which shows the growth opportunities for smart grids in the region.

Segmental Analysis

Recent Developments

• In September 2019, Schneider Electric expanded its business by opening a smart distribution center in Brazil which has helped in reducing the delivery time to customers and optimizing supply chain operations by reducing equipment downtime and overall power consumption. The distribution center is accessible to customers, partners as well as educational institutions to experience and learn about the company's most innovative technologies delivered through its IoT-enabled, open, interoperable architecture, and EcoStruxure. 
• In August 2019, Energy Efficiency Services Limited, which is a joint venture of four public sector enterprises under the Union Ministry of Power announced that India had planned to invest USD 379.35 million in the smart meter project in Uttar Pradesh which will enable the major players to pump huge investments into smart grid project in the global market.
• In June 2018, GE Power’s Grid Solutions business launched a new Advanced Distribution Management Solution (ADMS) in collaboration with Tata Power Delhi Distribution (Tata Power - DDL) that is specially designed for India with advanced features, such as monitoring, planning, security, and analysis.
• In July 2018, ABB acquired GE Industrial Solutions to expand in North America to strengthen its product portfolio in the electrification area.
• In 2017, ABB India restored and modernized the critical 1,035 MW Sharavathi hydropower plant in Karnataka, which accounts for approximately 25% of the state utility Karnataka Power Corporation’s power generation. The efforts of ABB India were recognized by the India Smart Grid Foundation (ISGF) Innovation Award, and therefore, it was awarded the “Smart Technology of the Year 2016” for this project.