Smart Grids Market Size will Predicted to Grow at a 7.2% CAGR During Forecast Period
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, as well as renewable integration. Smart grid solutions help in monitoring, measuring, and controlling power flows in real-time that 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 for optimizing power usage, which in turn reduces costs and environmental impact. Rising urbanization is also one of the major factors augmenting the market growth for the smart grid. 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 population will live in urban areas by 2050.
| Report Metric | Details |
|---|---|
| Base Year | 2022 |
| Study Period | 2016-2029 |
| Forecast Period | 2023-2031 |
| CAGR | 7.2% |
| Market Size | USD Million in 2029 |
| Fastest Growing Market | North America |
| Largest Market | Asia pacific |
| Report Coverage | Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends |
| Geographies Covered |
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The various initiatives and 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 the 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.
The rise in investments in smart grid projects across the globe is expected to propel the growth of the smart grids 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 is 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.
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 grid could add up to the governments’ economic burden along with high operational and maintenance costs post the deployment. These are also a big concern for the utility providers which is anticipated to restrict the growth of the market.
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 smart grids 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 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.
The global smart grid market comprises a significant number of big players. These players are adopting strategies such as partnership, collaboration, merger and acquisitions, and expansion as their major business growth strategy to increase their market share and sustain in the market.
