The smart grid buildout could be one of the largest creators of wealth in the decade, smart grid analyst Jesse Berst has said. The installation of more than 250 million smart meters — electricity meters that provide real-time information about energy consumption and enable two-way communication between a utility and a consumer — will contribute a multibillion-dollar chunk over the next five years, growing to a $3.9 billion global market by 2015, Pike Research finds in a new report out Monday.
This 250 million meter rollout is a jump from just 46 million smart meters in 2008, according to an executive summary of the research from Pike. With major utilities expected to replace 45 percent of their installed meter base within five years (a departure from the usual 15- to 20-year meter replacement cycle), Pike writes, “This represents an unprecedented — and time-limited — opportunity for meter and communications suppliers.”
Maybe so, but while the size of the smart meter rollout is nothing to sneeze at, the devices actually make up a relatively small portion of the total smart grid revenue opportunity. That’s what Pike Research managing director Clint Wheelock (who also provides analysis for GigaOM Pro, our subscription-based research service) explained in a recent smart grid webinar for Pro subscribers, calling the focus on smart meters a “red herring” compared with the larger revenue potential for sectors like transmission infrastructure and distribution automation.
Some major players in a position to seize a piece of the smart meter pie in coming years have already started to emerge, however. And as the $3.4 billion in stimulus funds for smart grid projects announced last week gets doled out to utilities and cities in the next couple months, tech vendors involved in those projects — such as meter makers Itron (s ITRI) and Elster, and utility software providers like IBM (s IBM) and Siemens — will see the government funds flowing down in the form of contracts.
The worldwide smart meter market will see a compound annual growth rate of 19 percent through 2015, but despite the international push for this technology, suppliers will have to contend with trends on a regional and national basis, Pike forecasts. “[R]egional waves of growth, peaks and valleys will likely have disproportionate impacts on industry players,” Pike explains in the executive summary for the new report.
While Europe is now the top region for smart meter adoption, North America will become the leading market next year, reaching 55 percent penetration of electric meters by 2015, compared with just 18 percent penetration for smart meters on the larger world market in that time frame, Wheelock notes in a release about Monday’s report.