Cisco Predicts $20B Annual Smart Grid Business

May 19, 2009

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Networking equipment giant Cisco has outlined its plans for a highly secure smart-grid infrastructure. The networking equipment giant’s solutions for the electricity grid will address everything from data centers and substations to neighborhood-area networks to businesses and homes.

Cisco’s move is a sign that the electricity distribution system is poised for a digital upgrade, reports CNET News. Other high-tech companies, including IBM, Intel, and several start-ups, are ramping up smart-grid efforts to capitalize on expected investments from utilities and federal governments, says the high-tech news site. Cisco estimates that the smart-grid communications infrastructure will reach $20 billion a year over the next five years.

Cisco started to develop a strategy to enter the smart-grid arena last fall, with some utilities already testing how well its routers and switches can help to more efficiently manage the flow of electricity and prevent outages in grid distribution equipment, according to CNET News. Cisco also released its EnergyWise software earlier this year for managing energy use in office buildings.

Marie Hattar, vice president of marketing in Cisco’s Network Systems Solutions group, said in the article that Cisco’s smart-grid program covers goods already part of its product portfolio, such as data center equipment, but in other cases, such as home networks and smart-meter security, Cisco is developing new products.

Hattar also said that a modernized electricity grid will be separate from the Internet — although Cisco advocates the use of Internet Protocol (IP) in conjunction with existing industry protocols and standards — which she said should lessen security vulnerabilities. Not all smart-meter companies use IP to communicate information and the utility and IT industries are still defining standards, reports CNET.

Hattar expects this network will be 10 or 100 times larger than the Internet because everyone has electricity access, and potentially every device in every home and business will participate in this network. Click here for a Q&A interview with Hattar.

Some of the challenges associated with smart-grid technology include conservative IT spending by utilities and state regulations that are structured around power plant investments rather than efficiency-related IT, reports CNET.

Cisco is involved in the $200 million Miami-Dade smart grid project.

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