Smart Grid: A Challenging $65 Billion Industry in Five Years

Carl Weinschenk

The numbers, when it comes to the overall smart grid category, are big. This week, for instance, ABI Research released a report that said the sector will reach $65 billion annually by 2017.

That's a lot of money, even to Mitt Romney. And 2017 only is five years off. The press release paints a very clear picture of why expectations are so high:

Slide Show

Smart Grid: 101

A closer look at smart grid's potential and obstacles.

Much of the electricity infrastructure in operation today is antiquated, highly inefficient, and cannot reliably manage the loads of today and tomorrow without significant upgrades taking place. With climate change high on the political agenda and utilities keen to increase operational efficiencies, there is an obvious and pressing need for a complete overhaul of all aspects of the grid in order to make it smarter. To this end, work has begun on ensuring that the smart grid will soon become a reality with large-scale smart metering deployments, which are the most visible example of these efforts.

Believe it or not, that's just the tip of the iceberg. The press release and study point out that there is a great opportunity beyond metering. The core of the utility infrastructure including, according to the release, substations, capacitor banks and transformers for improved performance is a hot prospect among utilities, no pun intended.

It's a good time for smart grid reports. The Global Smart Grid Federation released one that outlines the progress of smart grid developments worldwide. A report on the study in renew grid says that Australia, Canada, Europe, Great Britain, Ireland, South Korea and the U.S. are covered. The upshot are that the benefits are clear, but challenges remain. Indeed, the promise of tremendous revenue can lead people to not see the potential problems. The report says that timing may be one:

Still, there are challenges to smart grid development. Technological developments are outpacing standards development and regulatory frameworks, creating the risk that those new technologies may not meet evolving standards or regulation. Conversely, any regulations or standards risk losing relevancy if outpaced by technological development.

Windpower Engineering, in a short story about another new report - this one is from Pike Research - points to some of the issues that may be slowing smart grid. The story does it in the form of questions to be answered. Regardless of how it's phrased, the idea is clear: The path to profits - especially profits of this magnitude - won't be an easy one. Security, for instance, is a concern for many.

The IT and telecommunications industries can make a tremendous amount of money working with utilities. It is a huge and complex industry, however, that will evolve over time. The challenges will be steep. But if the goal is $65 billion - and one that will cut our dependence on foreign oil and improve the environment in the bargain - it is a road that is well worth traversing.

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