Smart grid M&A market may be moving overseas
By: SGN Staff
Quick Take: The North American market has seen the bulk of smart grid startups and acquisitions to date. Companies such as Siemens, ABB and Eaton have been beating the bushes, looking for companies that can fill in product gaps. But a new report from the Northeast Group suggests the action may be moving overseas. It identifies more than 400 vendors around the world vying for a market that will reach $66 billion by 2023.
Most of the big industrials - ABB, Alstom, Eaton, GE, Schneider, Siemens - have major operations in most big countries. But watch for them to snap up companies from mid-size countries as a way to build out their go-to-market capabilities, where local partners are so essential. - Jesse Berst
More than 400 vendors in 35 emerging market countries are competing for what is expected to be a $66 billion-plus smart grid market opportunity in 10 years, according to a new study from Northeast Group. And as the smart grid markets in North America and Europe mature, the major players are hunting for local vendor partners in those emerging markets.
The study, Emerging Markets Smart Grid: Vendor Analysis, says that of those 400 vendors, 160 are located in Central and Eastern Europe, Eurasia, Latin America, the Middle East and North Africa, South Africa and Southeast Asia - and they're well established in the smart grid market with more than 25% of them already involved in "significant" smart grid projects.
As Northeast Group put it: "The smart metering market alone is expected to cumulatively reach $66.3 in emerging markets by 2023. It is not surprising that emerging market-based companies are rising to meet this demand. Local vendors are often best positioned to understand the unique characteristics of specific smart grid markets, which can vary greatly from region to region.
And major international vendors appreciate the significance of those capabilities. Northeast Group says that of the top smart metering, distribution automation, IT, home energy management and professional services vendors, almost all have a strong presence in emerging markets. Those major vendors have an average of three to five emerging market partners, which can help them understand local markets and get away from potential tariff obstacles.
The study also concluded mergers and acquisitions in developed smart grid markets are expected to slow after a "flurry of activity" in the past couple of years, leading to an increase in M&A in emerging smart grid markets.
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Jesse Berst is the founder and chief analyst of Smart Grid News.com, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.