The current world market for Smart Grid software and data management applications is $1.4 billion in 2010, and it will grow to $2.9 billion in 2015 with a compound annual growth rate (CAGR) of 15.6%, according to The Smart Grid Utility Data Market by market research publisher SBI Energy.
A significant portion of this growth is going to occur in 2011 and 2012, as more American Recovery and Reinvestment Act of 2009 (ARRA) funded projects in the U.S. are finally given approval.
The U.S. will be the largest geographic market in 2010, at $385 million, and will continue to be the largest market for the foreseeable future. SBI Energy sees the U.S. percentage of the global SG data and applications market climb from 27.4% in 2010 to 36.4% in 2012, before dropping back down to 34.4% by 2015 as more European and Asian countries begin to deploy more smart meters and implement grid automation strategies. The U.S. market will climb to $1.0 billion by 2015, growing with a CAGR of 20.9% for the period.
The U.S. Smart Grid application software segment will be worth $233 million in 2010, with distribution management systems being the largest category in the segment. Globally, SG applications will be worth $890 million in 2010, and grow to 1,793 million by 2015, SBI Energy estimates. However, the U.S. as a regional market will outperform global sales in the segment, reaching a market value of $548 million in 2015 and posting a CAGR of 18.7% for the period.
Energy management systems and distribution management systems will be worth an estimated $170 million in 2010 in the U.S., growing to $290 million in 2015. SBI Energy expects the majority of the Smart Grid market for management systems will continue to be within the U.S. and Europe. Together DMS and EMS are the largest product categories for SG applications and will cover 73% of the U.S. applications software segment in 2010 and 81% worldwide in 2010. However, it is difficult to fully separate the management systems segment of the Smart Grid applications market from the data analysis segment as many of the largest suppliers tend to provide both types of software as an integrated package.
While there are sound financial benefits to implementing a fully capable Smart Grid, there is also a huge financial cost as well. The number of new hardware and software systems that must be implemented across all levels of the grid is staggering, with cost estimates ranging from a few hundred billion dollars to over one trillion dollars just to fully upgrade the U.S. electrical grid.
“In the short term, utilities need to justify these costs to regulators and investors and also need to raise the capital to implement Smart Grid programs,” says Norman Deschamps, SBI Energy analyst and author of the industry study. “While the (ARRA) stimulus bill of 2009 went a long way towards kick-starting Smart Grid implementations, that money is only the tip of the iceberg for what an entire Smart Grid will cost.”