A few months ago the US International Trade Administration, ITA, devoted a report to the Smart Grids market. Since 2014, Smart Grids are among the 19 “top export markets for US industries” alongside civilian nuclear, cloud computing, medical equipment, medicines and renewable energies. France is ranks 5th in the world for digital Smart Grid technologies.
US Department of Commerce – Photo credit: NCinDC in cc
The 2016 Smart Grids Top Markets Report divides the Smart Grids market into three sub-markets: transmission and distribution equipment, digital Smart Grid technologies and storage. Unsurprisingly, the ITA considers American Smart Grid players to be the “world leaders”.
The ITA mentions various initiatives, such as the Energy Independence and the 2007 Security Act (EISA) or the 2009 American Recovery and Reinvestment Act. Their impact on investments is estimated at 4.5 billion in public funds, 5.5 billion for the modernization of the electricity network and 7.5 billion invested in deployments of Smart Grids.
30 billion USD annual market
The ITA is finding it difficult to assess global spending on Smart Grid network modernization and technology, ranging from USD 15 billion to USD 500 billion a year, depending on the sources and technologies that are taken into account. The ITA focuses its analysis on the growth trajectory of the sector: “based on strong growth over the last decade, it’s expected to continue to grow”. Based on the work of Bloomberg New Energy Finance, GTM Research, Navigant and Transparent Market Research, the ITA estimates that annual spending on the Smart Grids sub-sectors will increase by 5 to 18% per annum over the next decade. “Forecasts vary considerably from one sub-class to another, but spending in all areas is expected to increase in both established and emerging markets.” In its most likely scenario the ITA estimates the size of the Smart Grids market at USD 30 billion, all sectors combined.
According to the ITA, in 2013 China surpassed the United States in terms of investments in Smart Grids. In the emerging economies of Southeast Asia, India, Africa and South America, “investments are focused on reducing online losses and building new infrastructure to meet the increasing demands of 1.2 billion people “. Europe, North America, East Asia, Australia, and New Zealand are putting more emphasis “on deploying advanced metering infrastructure and data analysis to better exploit the potential of cloud computing.”
According to the ITA, the United States is “globally competitive in the supply of goods and services in these markets and is a key test bed for power utilities focused on experimenting with new business models.”
Global trade in transmission and distribution equipment fell by 4% in 2015. With sales estimated at USD 2.0 billion in 2015, US companies are thought to have a market share of 8%. Canada and Mexico continue to account for 45% of exports for US manufacturers. The largest declines occurred in Sweden, Brazil, Russia, Japan and Singapore but were offset by US exports to Mexico, Korea and Italy. The ITA remains broadly optimistic for the next five years, both for investment growth (driven by the increase in electricity consumption in emerging countries) and for US industrial exports.
The ITA is also banking on the development of new solutions in ultra-high voltage (UHV) transmission lines, interconnection and microgrids, to fuel the growth of the sector.
The digitization of electricity networks
The growth of the digital technology sector is driven by the deployment of advanced metering infrastructure and the development of new analytics tools to promote energy efficiency and network optimization. Worldwide, nearly 622 million meters were deployed in 2015. At the same time Japan surpassed China to become the largest smart metering market. The deployment of smart meters will continue, according to the ITA, to grow by 8% over the next three years.
The ITA believes that “American developers of analytics tools and applications for Smart Grids are widely recognized as world leaders.” The smart meter market is “largely dominated by a handful of multinational companies, some of which have significant manufacturing capacity in the United States.”
The ITA Identifies a Series of High-Growth Markets for “Digitizing Power Grids: Australia, Canada, China (“the world’s leading Smart Grid investor”), with the UK and other European markets north and west and the Asia-Pacific region, “catching up fast”. Saudi Arabia, Turkey and Mexico figure prominently, “because of the positive signs of developing projects involving US partners”.
France well positioned in the Smart Grids market
As for US exporters, the ITA ranks the 34 target countries in three families, depending on the size, dynamism and maturity level of the markets.
France is in the first family (short-term maturity). Within this family, the country shares with China and Japan the particularity of having “a strong growth of investments in Smart Grids, major deployments in progress and an advanced metering infrastructure”. Another group of “major trading partners”, including Canada, Mexico and the United Kingdom, is also identified.
France ranks 10th in the world, out of of 34 target countries in the Smart Grids market (T & D equipment, digital technologies and storage). The ITA ranks it fifth in the Smart Grids digital technology sub-market, behind Canada, Japan and the United Kingdom, but ahead of Spain (9th) and Germany (12th) and India (15th).
ITEMS International for Think Smartgrids
Source: 2016 Top Markets Report Smart Grid. A Market Assessment Tool for U.S. Exporters