Smart grid gives impetus to invest in better power transmission

The large demand for renewable energy and smart grid technology could draw as much as $606 billion worldwide toward upgrading electricity transmission infrastructure between 2010 and 2020, according to a new report from Pike Research.

The market consultancy predicted that annual spending on transmission systems will increase steadily from $48.4 billion in 2010 to $57.9 billion in 2017, with the United States making the bulk of investments followed by China and India.

Electric power transmission refers to the bulk transfer of electricity from large power plants to substations located near population centers.

Clint Wheelock, managing director for Pike Research, said the adoption of renewable energy standards worldwide is mainly driving power grid improvement. This is because enhancing reliability and capacity is crucial to accommodate the intermittent nature of renewable energy sources.

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“In some countries, burgeoning populations and thriving economies are creating increases in electricity demand. [But] even where demand is relatively flat, renewable energy and the smart grid have created the need for increased transmission capacity,” he added.

A separate Pike study forecasts that worldwide smart grid investments will increase from $10.5 billion in 2009 to $35.8 billion in 2013, partly because of activities in power transmission system improvement.

Mr. Wheelock said that in North America and Europe, cross-border transmission projects undertaken to relieve power shortages and ensure competitive electricity prices have created a large demand for smart grid technologies. Demand has risen for phasor units, wide area monitoring and transmission automation systems, high voltage direct current and high-temperature superconductors, among others.

On another aspect, public policy has been a strong influence over investment decisions in the transmission sector, the report says.

In the United States, the Energy Policy Act of 2005 mandated the Federal Energy Regulatory Commission to provide incentives to transmission projects. President Barack Obama also announced a $3.4 billion funding to smart grids, which will be matched by $4.7 billion in private investments.

With 20 years of support spanning four presidential administrations, Pike believes that the policy trend on transmission development will likely continue in the United States.

Meanwhile, some of the largest and fastest-growing countries such as China, India and Brazil are building national transmission systems for the first time.

“The current surge in smart grid activity has been primarily driven by government initiatives, and naturally this adrenaline boost will wear off in the next few years,” said senior analyst Bob Gohn.

“We forecast that the smart grid market will decline at an average rate of 6 percent per year after 2013, but it will still be a huge business compared to what we have seen in the past,” he added.

 

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