Utilities are going to have to manage nine times the data they do today if they want to adapt to the smart grid. It’s a fact that will drive telecommunications and information technology investment in the grid from $12.8 billion today to $32.4 billion by 2020.
That data is from Lux Research’s latest report (PDF) on the smart grid, and it underscores what the industry’s known for a long time. In less than a decade there will be millions of smart meters delivering daily and hourly updates, distribution sensors and controls demanding split-second decisions, and back-office analytics to churn all that data into dollars and cents. And utilities are just starting to invest in this technology.
“Everything in the smart grid is tied to the flow of data,” Steve Minnihan, the report’s lead author, said Wednesday. “Some will outpace data growth, some will lag.”
For example, while smart meters have been the first wave of smart grid implementation, not all utilities have been making the best use of the data that those smart meters provide. A case in point is Pacific Gas & Electric, which ran into early implementation problems with its multi-billion dollar smart meter rollout. An independent study found the utility could have done better if it had used the data those meters were providing to help resolve customer billing problems and other issues.
Turning the flood of smart meter data into actionable information will take another wave of integration and investment, Minnihan noted. Almost all utility back-office billing IT is done in batch processing style today, which means tech partners will be asked to manage much of the processing of smart grid data for as long as it takes utilities to upgrade their own systems.
Distribution grid monitors and controls will be the next big wave of smart grid implementation, Minnihan said, but the data they create will require a very different set of underlying technologies to manage. Simply put, while grid sensors and controls may generate a lot less data than smart meters, “their data carries a far greater value,” he explained.
Lux’s emphasis on opportunities for telecommunications and IT systems and services for the smart grid is matched by other analysts. Pike Research has predicted that smart grid data management, for example, will grow to a $4.2 billion market globally by 2016, while utility IT consulting and management services will reach a $4.8 billion market and smart grid networks will be a $4.9 billion business by 2016.
Among other key findings from Lux’s report was the rising might of China as a smart meter market. Right now the world’s estimated 80 million smart meters are about evenly divided between Europe (with a slight lead) and the U.S. and Canada. But while North America has about 150 million meters waiting to be upgraded, China has 185 million, Minnihan said — and that’s just the start of a market that has yet to serve most of its 1.2 billion citizens with electricity.
In an interesting departure from common wisdom on the subject, Minnihan said that China will probably end up spending about as much as European and U.S. utilities are per smart meter, about $150 to $200, rather than the sub-$50 per-meter prices some industry analysts are targeting for the Chinese market.
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For more research on demand response and the smart grid check out GigaOM Pro (subscription required):
- Demand Response as the Back Door Smart Grid?
- An Open Source Smart Grid Primer
- Smart algorithms, the future of the energy industry