As smart meter installations wane in the United States, China has become the new leader in smart grid spending.
China spent US $4.3 billion on smart grid investments in 2013 as the U.S. market contracted 33 percent to $3.6 billion, according to new figures from Bloomberg New Energy Finance (BNEF). It is the first time that China has topped North American spending in smart grid investment.
Spending on grid modernization was up globally last year to nearly $15 billion, but that is only slightly higher than 2012. China may take the top spot, but there are other areas of activity, especially in Europe.
Advanced metering infrastructure, often referred to as smart meters, are still driving investment in next-generation grid technologies, but other categories of spending will dominate in the future.
China is installing more than 60 million smart meters, which makes up the bulk of its spending, but there are some other countries to watch. The UK will install about 47 million smart gas and electric meters between now and 2020.
It has taken a while to work out some of the details in the UK, such as who will own the meter in the deregulated UK energy market, and who will build the communications network. With many of the issues now being settled, large retailers such as British Gas have started to roll out meters.
In China, the landscape is far simpler. The State Grid Corporation of China controls most of the electrical grid in the country, so when it decides to move forward with metering it can do so more quickly than in a fragmented, deregulated market.
There are other markets to watch in Asia and Europe when it comes to metering. France is expected to install 35 million meters by 2017. And Japan, which already has one of the most reliable grids in the world, will install millions of smart meters as it looks to squeeze even more efficiency from its grid in the face of generation challenges after the Fukushima disaster in 2011.
But it’s not all rosy news for two-way digital smart meters. In North America, the market has slowed to a halt now that funding from the American Recovery and Reinvestment Act for smart grid projects has all been spent. Other large markets, such as Brazil and Germany, have dialed back smart meter targets in recent years.
Smart meters, however, are just one node in the smart grid. Many in the electricity industry would argue that building a real smart grid involves distributed intelligence and sensing across the entire grid, from generation down to the smart meters at the very end of the distribution network.
One of the most active areas in smart grid is distribution automation, which brings sensors and automation to the distribution network. Global spending on distribution automation rose by $1 billion to $5.4 billion in 2013, according to BNEF.
Distribution automation technologies can allow for more distributed generation such as rooftop solar photovoltaics, can reduce outage and restoration times, and can fine tune voltage to save energy.
“The fundamental drivers of the smart grid—greater grid reliability, further integration of renewable energy, and improved demand-side management—are stronger than ever,” Colin McKerracher, senior energy-smart technologies analyst at Bloomberg New Energy Finance, said in a statement.
With tens of millions of smart meters and sensors going into the grid, the next step is managing the sharp increase in data. GTM Research expects the United States to spend more than $8 billion on smart grid analytics between 2012 and 2020.
“Asian and European markets will drive growth through 2020,” said McKerracher, “while in North America the focus will continue to shift from hardware to software as utilities look to squeeze additional value out of the vast amounts of grid data now available.”