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Smart-grid services to hit $4.3 billion by 2015

Utilities keen to adopt smart grids, but will outsource their management to IT professionals, Pike Research predicts.

Utilities around the world may be eager to embrace smart grids, but they don't necessarily want to have to deal with them themselves.

Pike Research released a report today suggesting that utilities have turned to experts to install and deploy smart grids, the two-way digital communications systems for distributing and managing electricity based on real-time use by consumers. It seems likely they'll use an external service provider to manage and maintain their systems as well.

Currently the world is on track to spend a total of $470 million in 2010 on smart-grid management services. Pike predicts that will grow to $821 million in 2011.

Smart-grid management services will become a boom industry and generate $4.3 billion in global revenue by 2015, according to the report.

Pike attributes the new-found popularity of smart grids mainly to economic incentive; smart grids can lower operating costs for utilities, as well as provide more efficient electricity distribution. But the increase in smart grids being used is also due to changes in political policies and populist sentiment encouraging the integration of renewable resources, according to Pike. Smart grids make it much easier for utilities to integrate electricity generated from renewable resources like wind and solar, which can fluctuate at nature's whim in how much electricity they produce in a given time period.

The report predicts service providers will benefit from this growth because many of them already have proven track records in providing services for information technology and operations technology.

The report echoes the slew of announcements in recent years from heavy players in the tech world who've decided to develop smart-grid systems and services.

Earlier this week, IBM CEO Sam Palmisano, speaking at the GridWise Global Forum in Washington D.C., said that while there are issues of security and privacy surrounding smart grids, they're inevitably the preferred method of electricity distribution.

Cisco Systems, IBM, and Intel are all investing in smart-grid technology and services.

IBM is already a provider of smart-grid services to State Grid Corp. of China, that nation's leading power grid operator. Cisco announced in 2009 it would begin making smart-grid equipment like routers, grid substations, and home meters as well as developing accompanying management software for buildings. Intel has led the charge to get the IEEE Standards Association to adopt standards for smart-grid technologies and communications.

Marie Hattar, vice president of marketing for Cisco's Network Systems Solutions group, even went so went so far as to tell CNET in 2009 she believes smart grids will be more encompassing than the Internet.