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IBM’s Chinese Smart Grid Ambitions

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When Forbes reported in November that IBM was launching a major utility and energy research lab in China and planned up to nine big smart grid projects in the country, it came as little surprise to many. After all, China is going to be spending much more than the U.S. or Europe on building out its grid to meet its massive population’s growing energy needs — a fact that’s drawn other grid giants like General Electric (s GE), ABB and Siemens (s SI) into the country as well. IBM has already said that it expects to generate $400 million in smart grid revenues in China over the next four years. What’s it planning to do to earn the money?

On Thursday, IBM drew back the curtain a bit on its Energy & Utilities Solutions Lab, including details of various pilot projects underway with China’s massive government-owned utility, State Grid Corporation of China and other partners. Those projects range from managing the flow of power from nuclear plants and massive wind farms to transmission and distribution grids — similar to the work IBM does for utilities in the U.S. and in Europe — to some smart grid realms where IBM has made less of a splash, such as managing energy efficiency down at the consumer level, including electric vehicles.

“We’ve expanded from smart grid, to look at the energy value chain, from the supply source all the way down to the consumer source,” is how Bradley Gammons, IBM’s vice president of energy and utilities sales and distribution, put it to us in a phone interview from Beijing. In particular Gammons said that IBM has been looking more closely at the consumer and the role the consumer will play as a dispatchable demand response resource as they adopt electric vehicles. China is expected to see half the world’s installations of electric vehicle chargers over the coming years, according to Pike Research.

Smart grid industry watchers will no doubt be keeping an eye on which Chinese smart grid companies IBM chooses to partners with. The Chinese government requires that its wind power projects have at least 70 percent made-in-China components, and observers have noted that State Grid and other massive government-owned utilities will be making similar pushes to help domestic companies get a piece of the smart grid pie.

Gammons noted that State Grid has already announced technology standards for manufacturers who want to build some of the 170 million smart meters it wants to deploy over the coming years. While U.S. smart meter makers including Itron (s ITRI) and Echelon (s ELON) are eying that market, major Chinese meter makers such as Jiangsu Linyang Electronics, Ningbo Sanxing Technology and Wasion Group will no doubt be contenders as well.

On the other hand, some industry observers have noted that giants like IBM, GE, Siemens, Cisco (s CSCO) and Hewlett Packard (s HP) may have a leg up on the Chinese competition when it comes to cutting-edge smart grid technologies — particularly in the “system of systems” integration projects that IBM specializes in.

One thing’s for sure —whatever China does in smart grid, it’s going to do in a big way, whether it’s with the help of the likes of IBM and GE, or with its own home-grown industry. A quick comparison between U.S. and Chinese government spending on renewable power and grid buildout helps illustrate the point. While the United States is expected to invest some $36 billion in renewable energy in the next 10 years, China is projected to spend $208 billion, according to the International Energy Agency.

As for smart grid, the Department of Energy has directed some $4.5 billion toward smart grid projects to take place over the coming years, while in China, government spending on smart grid-related technologies was to reach $7.3 billion this year, according to ZPryme Research & Consulting.

Image courtesy of horizontal.integration’s photostream Flickr Creative Commons.