Quick Take: A new report from research firm Newton-Evans suggests that smart grid budgets may be ticking up. Across all the different segments, fewer than 10% of utilities reported that their smart grid spending will be going down.
Newton-Evans is known for conservative estimates based on solid evidence, so the fact that they see optimism is a good sign. Take a look at the brief summary below. If your utility is not increasing (or at least maintaining) its smart grid spending, it may be out of step with current needs and realities. - By Jesse Berst
Ongoing global tracking study finds increased 2013 CAPEX and O&M pudgets planned for several smart grid-related automation and infrastructure categories
The Newton-Evans Research Company today announced the publication of its fifth study in the multi-year tracking research program looking into electric power utility CAPEX budgets related to smart grid investments and infrastructure spending plans.
Findings from the second and early third quarter 2013 Newton-Evans global tracking study of electric power transmission and distribution investment remain positive, comparable with the four earlier tracking studies conducted in 2008, 2009, 2010 and 2011. Each of six "smart grid" component areas, plus transmission and distribution infrastructure development, has been reported by utilities located in 30 countries to more likely be either "increased" or "unchanged" rather than "decreased" from the last study. The highest percentages of officials reporting CAPEX increases were in the areas of transmission infrastructure and protection and control, followed by distribution infrastructure and control systems. See Figure 1.
Comparison of Planned 2013-2014 CAPEX Investment for Smart Grid Programs.
O&M budgets reflect a somewhat upbeat story as well. Several categories of O&M spending were more likely to see an increase from the OPEX budgets of two years ago. Distribution infrastructure and Distribution Automation both have gained some budget increases. Overall, international utility officials were more likely to indicate increases in both CAPEX and OPEX spending allocations for the majority of grid modernization topics.
In summary, smart grid initiatives were cited as being more important factors stimulating increased CAPEX investments than was either regulatory mandates or government stimulus programs. In fact, government stimulus programs are now viewed as much less of a factor on CAPEX investment and O&M budget increases than had been reported in the four earlier studies (2008 through 2011).
Likewise, upbeat attitudes for the coming year prevail, with estimated future increases in CAPEX budgets continually, with a strong decrease in reporting of "unfavorable" economic outlook citations, coming in at less than half of the rate of the 2011 study. See Figures 2 & 3.
Figure 2. Rationale for Expected Increases
Figure 3. Rationale for Expected Decreases
The new 126-page mid-2013 edition includes information about relative market trends and market size estimates for major smart grid building blocks, including transmission and distribution network control systems, protection and control systems, substation automation and integration, distribution automation and advanced metering infrastructure. This year's study also includes budget trending information for transmission and distribution grid modernization infrastructure. New in this year's study are the budget trends for cybersecurity at the operational level and for the entire utility enterprise.
Global CAPEX and O&M Expenditure Outlook for Electric Power T&D Investments: 2013-2014 Funding Outlook for Smart Grid Development is the fifth report in the Newton-Evans' Research Company's smart grid investment tracking series, begun in late 2008.
Report subscriptions are priced at $495.00 and reports can be ordered online at http://www.newton-evans.com/reports/ or by calling (410-465-7316).
Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.
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