Smart Grid

October 03, 2013

Frost & Sullivan: Massive Investment Not Enough to Fully Realize Smart Grid

The rise of the smart grid has proven both profitable and controversial largely since its inception, and some new word recently released from Frost & Sullivan (News - Alert) suggests that, despite investment that's already strong and growing, it may not be enough to bring the smart grid up to its fullest potential.

The investment in smart grid equipment, including metering equipment and the like, has been substantial by any standard, with 2011 accounting for $27 billion by itself. By 2017, however, that number will skyrocket to $125 billion, which takes the investment from “substantial” to “staggering.” But this metaphorical and objective enormous hike won't be enough to truly enable the smart grid, according to Frost & Sullivan's senior consultant for energy and environment Jonathan Robinson.

Robinson elaborates on this point, saying, “The simple fact is that the scale of potential investment is so great that energy utilities are being forced to assess and prioritize which projects to give the green light to and which to delay.” By way of explanation, Robinson goes on to offer a familiar lament: “There is actually limited bandwidth within the energy utility companies to handle all the potential innovations that are taking place.” The smart grid was designed to address a number of issues, like an aging overall grid and disparities in usage based on location and time. But the growth of renewable energy—solar, wind and so on, which is actually starting to see drops in price and thus increased attractiveness to users—as well as improvements in distributed generation are already shaking up the status quo, and that in turn is leaving utilities at odds. Throwing in grid upgrade projects—many of which were long overdue—makes for companies on the multiple horns of a dilemma.

Essentially, the power companies are asking, “Which way do we go?” Lots of new options are making for lots of new choices, and those choices have to be made based on careful analysis, which takes time and investment. Frost & Sullivan is also pointing to issues between energy companies and information and communication technology sector firms, who often don't cooperate well, as one moves quite a bit faster than the other.

Indeed, there's also the issue of opposition to the smart grid on the part of the energy companies' own customer base, who often resents the potential for intrusiveness, the lack of privacy, and even some users' concerns over possible negative health effects that can be associated with a smart grid system. In the rush to install such technologies, energy companies aren't doing quite so well with addressing the users' concerns, and that's resulting in negative feedback, which in turn is also likely driving some delay. An upgrade plan that involves dragging customers kicking and screaming into the future isn't a recipe for long-term success, so that's another point that may have pose some trouble.

The energy market is a rapidly changing place. New advancements in energy, new philosophies and new ways of doing things all combine to make a picture that's seldom the same from one day to the next. Improving power delivery and reducing costs are important to everyone, but the best method by which that's accomplished may not always be clear. Big investment is a great start, but there are other issues that need addressed to make the smart grid a bright idea.