Smart Grid

February 28, 2013

Global Smart Grid Investments Reached $14B in 2012

Driven by the increasing adoption and availability of distributed renewable energy in the electricity generation mix, and by the need to update legacy grid infrastructure, global investment in "smart grid" technologies rose 7 percent in 2012, totaling $13.9 billion worldwide, according to new research findings.

The study, conducted by the Washington, DC-based Worldwatch, established that despite a slight decline in investments, the United States maintained its leadership position in smart grids, followed closely by China. 

Specifically, author Reese Rogers found that:

  • The United States topped the charts with a $4.3 billion outlay in 2012, although that was 19 percent below the nation’s 2011 figure of $5.1 billion
  • China invested $3.2 billion, an increase of 14 percent over 2011
  • Smart grid directives in the European Union drove a 27-percent gain in European spending, to $1.4 billion, up from $1.1 billion in 2011
  • Latin America’s smart grid spend remained relatively small, totaling $400 million in 2012

Worldwatch attributed the decline in U.S. investments in 2012 partly to the expiration of federal funding programs initiated under the American Recovery and Reinvestment Act in 2009. At the start of 2012, utilities had installed 37 million smart meters, covering 33 percent of American households.

Current plans by utilities should result in 65 million units installed, covering 57 percent of American households by 2015.

But America may be toppled from its pinnacle sooner rather than later. China's rising investment in smart grid technologies stems from its plans to update its poorly designed and inefficient transmission system, and China is poised to surpass the United States in smart grid investment in 2013. The State Grid Corporation of China has a three-phase plan to invest $601 billion in transmission infrastructure, with $101 billion slated for smart grid technology, through 2020.

Other countries in Asia are also investing in smart grid technologies and deployments. Japan is already home to one of the most efficient electricity grids in the world, with distribution losses averaging 4.9 percent over the period 2000 to 2010. As of February 2012, South Korea had deployed smart meters to fewer than a million households, or roughly 4 percent.

The United Kingdom plans to begin nationwide installation of smart meters in 2014, with the intention to install these meters in all households by 2019. In the European Union, Electricity Directive 2009/752/EC mandates member states to deploy smart metering systems in 80 percent of households by 2020, where cost-benefit analyses of smart meters are positive.

Progress varies from country to country, but as of 2011 an average of 10 percent of European households had smart meters installed.

Smart grid investment in Latin America remains generally low. Brazil is an exception, investing $240 million in stimulus funds in 2010.

At the end of 2012, Brazil formalized a regulatory framework for smart grid deployment.

What’s more, "Smart meters are just one of the many technologies involved in smart grid infrastructure," pointed out Rogers, a MAP Sustainable Energy Fellow in Worldwatch's Climate and Energy Program.

Grid-scale energy storage technologies are another important aspect of evolving grid networks, providing an alternate or complementary solution for the integration of variable renewable energy into the grid. They’re gaining traction as larger-scale projects are beginning or are planned for the near future.

The next few years will see numerous smart grid deployment projects and advances in energy storage markets, the success of which will surely influence the respective paths of each technology's development.

Overall, there were 714 grid-scale energy storage projects worldwide in 2012 in varying stages of operation or development – roughly a 19-percent increase in the number of projects from the previous year.

Edited by Braden Becker