Smart "Power Web" Is a $65B Market: Report


There’s at least one good outcome of the current power grid being inefficient, wasteful and unintelligent: The market opportunity for a smarter power grid will create a $65 billion industry by 2013, according to a new report out from Lux Research.

Lux’s definition of the “power web” market includes smart-metering hardware and software, networking technologies, energy storage (including batteries for both the grid and electric vehicles), flywheels and supercapacitors, and alternative grid-connected power sources, including fuel cells; the definition excludes renewable generation systems like solar, wind and tidal power, or the electric vehicles themselves.

As utilities in the U.S. are set to add nearly 40 gigawatts of clean energy generation by 2030, spurred by state mandates, the grid will need an upgrade to withstand the change. A recent report from the North American Electric Reliability (NERC) said that a lack of investment in the proper transmission infrastructure to accompany the increase of green power will result in an unreliable power grid. The Brattle Group predicts that to build out the power grid, including transmission lines, will need a $2 trillion investment, and Al Gore is calling for an investment of $400 billion over 10 years to build a national smart grid.

The bulk of the $65 billion market identified by Lux will be made up of energy storage and alternative grid power. We’re thinking batteries, particularly the ones found in electric vehicles and plug-in hybrids, will consist of a significant part of that estimate (Lux is getting back to us on that). In comparison, the market for smart-metering hardware and software and for networking technologies — which commonly are thought of as “smart grid technology” — is relatively small; Lux predicts it will grow to $4.7 billion in 2013, up from $2.7 billion this year.


Don Walsh

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Albert Sanders

To: Steve D.’s comment 11-23, 12:50 pm

I think you are pessimistic. A large solar thermal tower (STT) plant in the American desert could produce power economically and deal with irregularities in the sun source.

The advantage of an STT is that it can ECONOMICALLY incorporate means for dealing with such irregularities. A field of mirrors (economically produced in mass production with motor drives and solid state controls) directs sunlight to a receiver at the top of a tower. The receiver raises steam of similar pressure and temperature as in a modern fossil-fuel generating plant. The steam travels a short distance down through a large, heavily insulated pipe to a heavily insulated holding vessel at the base of the tower. This vessel is the key to the process because it economically solves two problems: first, the daily periods after the sun goes down–because it is large enough to store steam for several night-time hours of operation and second, bad-weather periods of several days when there is no sun. This latter problem is solved by adding inexpensive natural-gas burners that turn the holding vessel into a boiler. (Purists may argue that this is not a genuine “green” solution. To them I quote “The perfect is the enemy of the good.”)

The combination holding vessel/boiler makes the whole scheme practical and economical. Compare it to the French nuclear plant in the Alps that I visited. The problem there was similar, but in an opposite way: matching the steady nuclear power output to a variable load. They solved it by more or less DOUBLING THE COST of the plant by building a hydroelectric stored-water plant. They built two dams–at a higher altitude and at a lower altitude. The nuclear plant produces electricity steadily. When the load is less than this output, the excess electricity is used to drive huge motors and pumps to move water from the lower lake to the upper one. When the load increases, water is directed downward as the pumps become turbines and the motors become generators.

Consider how much less the capital investment is for the STT I have described–just enlarging the holding-vessel/boiler and providing it with simple gas burners. Yet the result is economical, steady (utility-grade) electric power–AC, ready to be stepped up in voltage (for economical transmission) by standard transformers.

However, there is still one other piece of the puzzle to be fitted in. Since the STT works best in the southwestern American desert and the load centers are mainly in the East, a new, more economical transmission network must be created in place of our present inadequate network. Since superconductivity technology is not yet up to this, the next best is HVDC–high-voltage/direct current–which sharply reduces transmission losses. It is true there is additional capital cost for rectifiers and inverters (and better computerized controls to increase capacity and reduce losses by means of a “smart grid”). However, such an “Interstate Grid” paid for by Washington (based on the precedent of the Interstate Highway System) can be justified as the only practical way of eliminating the 700-billion-dollar (projected soon to be a trillion dollars) drain on our resources (for fossil-fuel imports) that is impoverishing us as a nation. I haven’t said so but of course the above assumes our universal use of presently-developing plug-in hybrid vehicles (not to mention the electrified rail lines so common in Europe).

The above program requires a lot of engineering development but involves no violation of physical laws.

Steve D.

This idea that electric power generation can be switched from fossil fuels to wind and solar at a reasonable cost in a realistic time frame is a dangerous pipe dream.

Physics dictates that this is simply not possible. I will leave aside the political, philosophical, and environmental lobby barriers and talk only about the physics. I say environmental lobby barriers because the so called “environmentalists” in the US have now focused their ire on “Big Wind” and “Big Solar” and are opposing projects to build wind farms and solar farms. They also are opposing the efforts to build nationwide electric transmission systems from wind farms and solar farms to populated areas.

So focusing only on the physics, wind is only a viable alternative to fossil fuels for electricity generation IF there exists a grid of windfarms which span a large enough geographical area that there is sufficient electricity being generated from the grid at all times to meet the base demand load. And, then peak production would have to correspond with peak demand load. For the wind to be “blowing somewhere all the time” this grid would have to be global. Without such a grid there is no way to get around using a non-variable electric generation source for base demand load.

Assuming that one could build such a grid (I don’t support that assumption), how do you get the electricity from places like Greenland (the wind blows quite energetically there pretty much all the time) to populated areas where the demand is? Traditional transmission systems lose too much energy to be feasible. So, you would have to use a superconducting transmission system. Good luck building that. The capital costs of a worldwide grid of windfarms with superconducting transmission lines (run through pipes buried in the ground) would be in the hundreds of trillions of dollars.

Solar thermal power generation is a bit more viable. The sun is less variable than wind during the day, then their is that pesky nighttime to deal with. However, solar thermal power generation is only economically viable in regions which are again geographically remote from the population centers which need the power. And again, you have to have a grid of such solar thermal farms which is global because you get zero electricity generation at night.

An alternative to building a global grid in either scenario is to store the electricity when the wind is blowing or the sun is shining and tap this store when they aren’t. Unfortunately, we do not currently possess storage technologies which can be scaled to terawatts at a reasonable cost.

Decentralized solutions like home sized PV or home sized wind power will not add enough power to make any real difference, even if the costs could be reduced enough to make them financially feasible. Currently this isn’t the case. Home sized solutions for wind and solar suffer from the same variability problems. Yes, a few home owners can use the grid as their storage mechanism, but if too many home owners were doing this the electric utility would have no way to buy the power when everyone was trying to sell it, because there is no way to store the power and if everyone was producing their own power there would be no buyers until the sun stopped shining and the wind stopped blowing. So, again you are back to a global grid which ensures that there are always producers and consumers because the variability has been smoothed out.

Even if every home in the US installed PV panels, the sun only provides 30 watts per square foot when it is shining and PV only converts a small percentage of that. So, even covering every rooftop in America would not produce nearly enough electricity and the costs would be truly astronomical.

Creating a viable green alternative to fossil fuels for both electricity production and transportation needs is a global problem which will require a global solution and will require technical breakthroughs which currently do not have a viable theoretical basis.

The solution would have to include a global transmission and storage grid if variable technologies like wind and/or solar are used so that it would be true that “the sun is shining or the wind is blowing somewhere all the time”. Getting the electricity from where the “sun is shining/wind is blowing all the time” to where it isn’t would require a superconductive transmission system. There currently is no viable technical solution to that problem.


I think we best be getting on with the promise of making America energy independent.Iran just asked OPEC to reduce production by yet another 1.5 million barrels per day.This past year and the record gas prices played a huge part in our economic meltdown and seriously damaged our society.We keep planning to spend BILLIONS on bailouts and stimulus plans.Bail us out of our dependence on foreign oil. Make electric plug in car technology more affordable. It cost the equivalent of 60 cents a gallon to drive an electric plug in car. The electric could be generated from wind or solar. Get with it! Utilize free sources such as wind and solar. Stop throwing away money on things that don’t work. Invest in America and it’s energy independence. Create cheap clean energy, create millions of badly needed green collar jobs. Put America back to work. It is a win-win situation. We have to become more poractive citizens, educate ourselves and demand our elected officials move this country forward into the era of energy independence. Jeff Wilson’s new book The Manhattan Project of 2009 Energy Independence NOW outlines a plan for America to wean itself off oil. We need a plan and we need it now!

Drew Stevenson

While I am glad to hear that there are plans in the works to upgrade substandard power grids, here’s my problem with it:

It seems that rates to supply power to our homes rises every year, if not more frequently; so when they start updating the grids, how much more are we gonna pay then?

Renewable energy technology is a viable alternative for the world, but even if all of the main power suppliers derived the electricity from “wind technology” or “solar panel systems”, they are still gonna charge us an arm and a leg to use the resulting electricity.

Now there is another option for the individual; “residential windpower generation” or “wind electricity”, not to mention “solar energy”.

If you could generate your own free electricity, and if someone could show you step by step how to build a wind generator or solar panel system to do so, wouldn’t you?

Learn How

Garry G

Thanks for the post…

It’s nice to see more attention towards the market opportunities associated with improving electric grids– old and new. The recent string of industry reports highlighting the demand and opportunity of a smart grid should (hopefully) fit nicely into near term investments around infrastructure. IBM Palmisano’s recent speech on building a ‘smart planet’ could hopefully be a call to arms for the enterprise software world who can scale solutions around software, senors and storage…

Garry G
The Energy

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