It can be tough to crack China’s greentech markets and China’s domestic smart grid plans — estimated to be a $100 billion opportunity over the coming five years — are no exception. Amidst the Chinese incumbents planning to supply state-controlled utilities with huge transmission lines, instrumented distribution grids and smart meter networks, where can non-Chinese investors and innovators compete?
In my weekly update at GigaOm Pro (subscription required), I delve into some of the areas where they might find an opening. First, it’s important to remember that most of China’s projected grid modernization spending will go into massive high-voltage transmission lines. That’s a field controlled by giants like ABB (s ABB), Alstom (s ALO) and Siemens (s SI), as well as Chinese companies such as Zhuzhou CSR, XJ Electric, Nari-Tech and Pinggao Electric. There’s limited opportunity for new entrants, although transmission line sensor or superconductor technologies may find openings.
In the meantime, U.S. and European energy and IT giants such as IBM (s IBM), General Electric (s GE), Cisco (s CSCO), Accenture and HP are aiming at providing China’s smart grid with its IT and networking intelligence. One example is substation automation, a field that Taiwanese research firm Yuanta Securities estimated will become $27 billion over the next 10 years. Chinese manufacturers such as XJ Electric and Nari-Tech are increasingly using the internationally recognized IEC 61850 standards for substation gear, but gaps still exist, Yuanta noted. That could open opportunities for substation networking and integration services from the likes of Cisco and others.
Other opportunities may lie in distribution grid automation, renewable power integration and load control systems, which are still in the beginning stages in China. IBM’s work with Shanghai Electric Power Co. on reducing power outages, or GE’s work with two SGCC subsidiaries on distribution grid reliability and renewable power integration, might serve as models. Of course, while working in China, they’ll have to make sure they don’t give away any U.S. cybersecurity secrets.
As for smart meters, the China Electricity Council estimates that China’s smart meter market will grow from $2.4 billion this year to $3.1 billion in 2011. But any company planning to compete against domestic incumbents such as Wasion, Hi Sun Technology, Linyang Electronics and Holley Metering will have to build cheap — really cheap — meters. While U.S. smart meter deployments have averaged about $220 per meter, China’s biggest smart meter contract so far calls for companies to provide meters for about $32.60 apiece. Still, companies that can help those Chinese players roll out new technologies, such as SCGG’s preferred powerline carrier standard, could find openings.
To read the rest of my column on tips to crack China’s smart grid market check out GigaOM Pro (subscription required).
For more research on China and cleantech check out GigaOM Pro (subscription required):
- Carving a Path to Greentech in China
- Cleantech Overview, Q2 2010
- Finding a Niche in the Electric Vehicle Market
Image courtesy of futureatlas.com.