Summary:

Over the past year China has emerged as one of the largest smart grid markets in the world and according to a report out this week will grow from $22.3 billion in 2011 to $61.4 billion in 2015. What’s a key way in? Partnerships.

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Over the past year China has emerged as one of the largest smart grid markets in the world. As the researchers at Zpryme predict in a report out this week, China’s smart grid market — which includes investments in smart meters, software, hardware, sensors, networking, and transmission and distribution equipment — will grow from $22.3 billion in 2011 to $61.4 billion in 2015. That’s an almost 30 percent annual growth rate.

So how can U.S. companies, or even Valley startups, navigate this market? According to Zpryme, partnerships with Chinese firms, and industry and standards groups, will be a crucial door into the Chinese smart grid market. There’s really no other way.

That’s because the Chinese government and State Grid Corporation of China, China’s largest transmission company that is leading the smart grid charge, have a long-standing propensity to work with domestic companies. And the history of the growth of technology in China, in general, is covered in Chinese-born technology standards.

The largest portion of China’s smart grid market, according to Zpryme — and the best area to tackle first — is smart grid transmission and distribution technology, which is expected to be a $21.2 billion market by 2015. China is building out three major transmission lines in the country, each of which is expected to provide 20 GW of transmission capacity by 2020, and including the world’s first 1,000-kilovolt AC power line that will run between Shanxi and Hubei.

These transmission lines, and the subsequent distribution gear, will connect many Chinese to power for the first time and will also link China’s massive investments in clean power to the cities that will use the electricity. Amazingly, the report notes that 30 percent of the wind turbines in China are not yet connected to a transmission network.

Specifically for U.S. firms, providing the IT and networking for distribution automation will be a major opportunity, and the software and hardware segment of China’s smart grid market will turn into a $13 billion market in 2015.

Some U.S. and European IT vendors have made inroads already in China include GE, which this week announced a partnership with the State Grid Corporation of China, and the Chinese Academy of Science to develop standards for smart grid tech. Landis + Gyr also has a deal with State Grid. Spain’s Telvent is working with China South Grid Guizhou Electric Power Company, and IBM, ABB, and Siemens all have smart grid contracts in the country, too.

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Image courtesy of Mikex.

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