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Report: By 2015, $45 billion spent on smart grids

ABI Research attributes market interest to outdated grids in industrialized nations needing replacement and changing energy sources.

ABI Research

Governments and private interests worldwide are expected to increase investments in smart-grid technology, spending a total of more than $45 billion by 2015, says a new ABI Research report released Thursday.

Smart grids are electrical grid systems with two-way communication tools attached on both the utility and user ends to facilitate better energy efficiency practices. The integrated computerized systems enable real-time monitoring of electricity generation, distribution, and use. They can do things like warn utilities of peak demand geographically so accommodations can be made, or advise consumers of off-peak hours for running non-essential appliances. They can even notify connected "smart" appliances in the home to turn on or off.

ABI's worldwide figure includes an estimated $41 billion on smart-grid transmission and distribution infrastructure, as well as $4.8 billion on smart meters for homes.

The reason for the intense global interest in smart grids is a matter of good timing as well as the availability of the new technology and a desire to curb energy use, according to the ABI report "Smart Grid Applications: Smart Meters, Demand Response, and Distributed Generation."

"Most of the electric utility infrastructure deployed in the industrialized world was built between 60 and 80 years ago. Much of this infrastructure is outdated, and with the continuing increase in demand for power year after year, the grid cannot safely and reliably manage the loads of today and tomorrow without significant upgrades," Larry Fisher, research director of NextGen, the ABI Research division that wrote the report.

To put it plainly: most electrical grids are long overdue for an upgrade anyway.

But it's not just issues of reliability and burden forcing electrical grids into updates. Electricity generation and storage needs are changing as governments push to include more electricity produced from renewable energy sources. The majority of electrical grids were originally built to transmit electricity generated from fossil fuel plants. They're not really equipped to handle the intermittent nature of renewable energy electricity generation like that of wind or solar, which require nuanced integration and, in some cases, electricity storage, according to the ABI Research report.

Consumer electricity use has changed as well in the last 60 to 80 years. Electrical grids need to be updated to accommodate the predicted increase in the use of plug-in electric vehicles, according to ABI research.

Pike Research has also predicted big investment in smart grids, albeit from a slightly different angle.

It's recent estimate encompassed any smart grid-related technology including cybersecurity software for a total cumulative expenditure of $200 billion spent worldwide between 2008 and 2015 (a time span two years longer than the ABI estimate period). Pike Research estimated that $21 million will be spent on cybersecurity for smart grids between 2010 and 2015.