Smart Grid Market Size: Tracking Down the Truth

Newton-Evans’ tracking studies of CAPEX budgets are closely related to the current outlook for Smart Grid-related expenditures. In these studies, we have made serious attempts to avoid double counting potential revenues from all of the components of information systems spending and the emerging Smart Grid sector of utility investment.

While the utility enterprise-wide IT portions of the accompanying charts include all major components of IT (hardware, software, services and staffing) the “pure” Smart Grid components tend to be primarily hardware in our view. Significant overlap with both administrative and operational IT supporting infrastructure is a factor for most Smart Grid programs under way at this time.

Between traditional IT and the evolving Smart Grid components, nearly $25 billion will likely be spent this year by the world’s electric utilities. Nearly one-third of all 2009 information technology investments within electric utilities will be Smart Grid related, in our view.

By 2013, as shown below, the total value of the various pie segments is expected to increase substantially, with Smart Grid spending possibly exceeding $12 billion.

Some industry sources may include the total value of T&D capital spending in their Smart Grid outlook, But that T&D equipment and services portion of the market is already approaching $100 billion globally, and will likely top $120 billion by 2013. Much of that market will continue to evolve whether or not a “Smart Grid” component is involved.  Clearly, all new procurements of infrastructure equipment will be made with an eye to including as much “intelligent content” as is available from the manufacturers and integrators.  We have tried to limit our definition to edge investment, the components of the 21st century digital transport and delivery systems.

Charles Newton is CEO of Newton-Evans Research Co.based in Ellicott City, Maryland.

Smart Grid Markets and Pricing resources on SGN

Smart Grid Roadmap: The Missing Ingredient