Smart Grid Market Size, Share & Industry Analysis, By End-user (Utility, Industrial, Residential, and Commercial), By Component (Software, Hardware, and Services), and Regional Forecast, 2021-2028

The global smart grid market size was valued at USD 29.45 billion in 2020, and is projected to grow from USD 35.07 billion in 2021 to USD 140.53 billion in 2028, exhibiting a CAGR of 21.9% during the forecast period. The global impact of COVID-19 has been unprecedented and staggering, with the market witnessing a slow demand response across all regions amid the pandemic. Based on our regional analysis, the global market exhibited a lower growth of about 11.8 % in 2020 as compared to the average year-on-year growth during 2017-2019. The sudden rise in CAGR is attributable to this market’s demand and growth rate, returning to pre-pandemic levels once the pandemic is over.

The grid is an advanced electricity supply network that utilizes digital communications technology to detect in real time, react to local changes in usage and enable the self-healing of the network automatically in case of disturbance of the power. It’s an intelligent overlay to the existing electrical grid network with advanced feedback alternatives such as active network management (ANM) systems and demand response management systems (DRMS), among others. The network is highly interconnected and uses meters, sensors, digital controls, and analytic tools to monitor, automate, and control the flow of energy. It further provides an efficient and reliable power supply through different advanced applications and technologies, thus offering new opportunities for the economy and the environment. The governments of emerging economies recognize such technology as the strategic infrastructural investment that can aid their long-term economic prosperity and help them achieve the carbon emission targets. 

Reduced Funding amid COVID-19 to Hamper Market Growth

Attributed to COVID-19, various industries and countries were left in economic turmoil. Many projects have been considerably disrupted owing to the shutdown of industrial facilities chains, disturbance in supply chain analysis, and the unavailability of ample funds across customers. Furthermore, various organizations have also imposed severe actions, including social distancing guidelines, state & national level lockdowns, and constrained global interactions to limit the spread of the virus, thereby adversely impacting the financial health of organizations.

Consequently, the global smart grid market growth has also been stumbled by the outcomes of COVID-19. Additionally, manufacturers of innovative hardware components are facing several issues related to order closures on time due to global lockdown. Also, delays in obtaining raw materials and other parts from suppliers, majorly located in China and other Southeast Asian countries have emerged as the key factor impacting industry pace. However, the implementation of new projects across several regions to meet their low-carbon targets is expected to counterbalance the growth during the pandemic. For instance, in June 2021, Poland’s power grid operator PSE was planning to invest USD 1.23 billion by 2030 across the company’s network in the northern part of the country to distribute electricity from planned Baltic offshore wind farms to clients. 

LATEST TRENDS

Rise in Number of Electric Vehicles to Enhance Market Growth

Plug-in electric vehicles (PEVs) are now being rolled out to consumers across various nations to support the transition toward low carbon transportation. A smart grid system is designed to have the infrastructure needed to enable the efficient use of these PEVs. Increase in production of electric vehicles offer growth opportunity for the market as several countries including India, China, Europe, and the U.S., and others are already deploying electric vehicles and encouraging production for the same. For instance, in July 2021, U.S. utility public service electric and gas company (PSE&G) has partnered with Landis+Gyr for the supply and installation of advanced meters and related infrastructure and technologies in New Jersey. PSE&G will be investing USD 1 billion to help customers improve their energy efficiency, USD 700 million in smart meters, and electric vehicles initiatives.

Upcoming Smart City Projects to Boost Market Growth

The new upcoming smart cities projects in developing regions provide growth opportunities for these types of grid. For instance, in June 2021, the World Bank’s Board of Executive Directors approved a USD 212 million financing package, including a USD 177 million International Bank of Reconstruction and Development (IBRD) loan, for a new project in Ukraine. The project will positively enhance the Ukrainian power system to help synchronize it with the European electricity grid and decarbonize the power sector.

DRIVING FACTORS

Excellent Inherent Operational Efficiency, Improved Grid Reliability, and Efficient Outage to Propel Market Growth

These grids provide technologies that improve fault detection and enable the self-healing of the network automatically. With continuous detection of disturbances, the advanced system offers real-time assistance to energy management systems, which increases situational awareness regarding smart grid distribution management. For example, in May 2021, Networked Energy Services Corporation (NES), one of the global smart grid solution providers with the industry’s leading Energy Applications Platform (EAPTM), announced the strengthening of its security solutions with threat detection and response, with planned deployments for over 1 million smart meters by mid-2021 for its new grid watch solution.

Supportive Governments Policies and Regulations to Boost Market Expansion

Several government initiatives and regulations are expected to drive the growth of the market. Different administrations are progressively investing in these technologies as it is expected to help them achieve their carbon emission reduction targets and enable long-term economic prosperity. Moreover, certain countries already have net energy metering protocols and equipment, and others are still exploring the technology and its mechanism, which is expected to provide lucrative opportunities for the market. For instance, in 2020, the Finance Minister of India announced that the government aims to replace all the conventional electricity meters with smart electricity meters in three years. These government initiatives undertaken by the governments of countries across the globe are boosting the market growth.

RESTRAINING FACTORS

High Initial Costs for Deployment of Smart Grid Technology to Limit Market Growth

The high investment cost associated with these grid systems is expected to restrict the market growth. These technologies require large investments initially to set up the transmission network between the customers and the advanced grid. High maintenance and operational costs after the deployment are also a big concern for the utility providers. Emerging countries with limited infrastructure, such as India, Mexico, and Brazil, also need large investments for updating the infrastructure. In addition, due to the low accessibility to electricity, especially in the underdeveloped nations and the poor regulations to expand and modernize the grid infrastructure by the government is limiting the market growth.

SEGMENTATION

By End-user Analysis

Utility Segment to Account for Significant Smart Grid Market Share Owing to Increased Deployment of Grid Technologies During the Forecast Period

Based on end-user, the industry is categorized into utility, industrial, residential, and commercial. The utility sector is expected to witness a substantial rise owing to the increase in the deployment of grid technologies across the globe. Also, the governments of underdeveloped and emerging countries recognize these technologies as strategic infrastructural investments, which will help in achieving the carbon emission targets. In addition, the growing population, industrialization, rising concern over the environment due to fossil power stations push the government to plan regulatory standards regarding carbon emission.

Furthermore, the industrial sector is expected to grow significantly on account of the government's favorable policies and fiscal incentives. In addition, a rise in the number of electric vehicles positively enhances the growth of this sector. The residential sector is estimated to grow due to the increase in awareness regarding the benefits of these technologies, including reduced energy consumption and money-saving across various end-users. The commercial sector grows on account of the growing demand for uninterrupted, efficient, and reliable electricity sources.

By Components Analysis

Introduction of Asset Management Solution to Augment Software Segment Outlook

Based on component, the market is classified into software, hardware, and services. The software segment is expected to hold a significant portion of the global market owing to the increase in the efforts to modernize the electricity grid and reduce the T&D losses. In addition, the increase in investments in advance metering infrastructure (AMI) by the government is expected to propel the market growth for this segment. For instance, in the U.S., the government passed the Energy Independence and Security Act of 2007 for the development and deployment of smart grid technologies.

Furthermore, the hardware segment is expected to grow owing to the initiatives taken by the governments of various countries across the globe for the installation of smart electricity meters in their countries. For example, in December 2020, the Australian Energy Market Commission planned to install electricity meters in the country and launched an independent review into the rules governing electricity meters to discover new opportunities for boosting up the deployment. The services segment provides applications, including installation and integration of various modules of utility smart grid operations. Hence, enterprises opt for these services to make the integration and deployment process smooth and reduce costs.

REGIONAL INSIGHTS

The market has been analyzed geographically across five major regions, Asia Pacific, North America, Latin America, Europe, and the Middle East & Africa. North America is projected to hold the leading share globally and was valued at USD 9.75 billion in 2020. The region is expected to see a high demand for smart grid technologies due to huge investments in new grid projects and smart city projects. For example, in July 2021, the GridWise Alliance announced significant investments in the U.S.’s transmission and distribution systems. The project will include USD 5 billion in funds in technologies, including controls, sensors, and storage to advance grid flexibility and USD 8.5 billion in technologies, such as advanced metering infrastructure and energy management systems, to enhance the grid integration.

Asia Pacific holds a substantial position in the market, owing to the wide adaptation of these technologies and a strong focus on the growth of renewable energy. For instance, in February 2020, the Government of India announced the installation of 1 million smart meters across the country under the Smart Meter National Programme (SMNP). Major growth of the region comes from the countries such as China, India, Japan, Australia, and South Korea, with China as the most prospective leader in such deployment. In addition, the growing smart cities development programs in the region are expected to boost the market growth.

Europe is expected to grow due to the encouraging government initiatives concerning clean power generation in the region. Also, the increasing demand for energy efficiency in the power supply is likely to propel the regional outlook. The growing investments in distribution automation and the increasing complexity in the power distribution infrastructure are expected to enhance the market outlook. For instance, in May 2020, the smart metering implementation program launched by the U.K. government has led to a total of 26.6 million electricity meters operated by large energy suppliers in domestic properties across the Great Britain area.

The Middle East & Africa is expected to grow on account of the high adoption of solutions to minimize outages and revenue losses and deliver enhanced control with low disruptions. With the new projects to accommodate various conventional & non-conventional energy resources, the region is projected to witness steady growth in the coming years. Additionally, Latin America is also anticipated to grow significantly owing to major demand coming from Brazil and Mexico to support the increasing industrialization in the region. For example, in February 2021, Brazilian energy distribution company Amazonas Energia has selected Landis+Gyr to accomplish an advanced metering infrastructure project in the state of Amazonas, Brazil. Landis+Gyr will provide the utility with its SGP+M Mesh IP intelligent centralized metering solution to provide services to around 100,000 customers.

KEY INDUSTRY PLAYERS

Siemens is Expanding its Grid infrastructure to fortify its Market Position

Redesigning the electricity grid is necessary to meet the growing energy demands. Several government regulations and policies across developing countries positively enhance the expansion of grid infrastructure. In addition, to increase transmission capacity, a qualitative grid expansion is essential to deliver efficient and intelligent operations as compared to the existing infrastructure. As the growing investment in renewable energy capacity needs to be matched with the equivalent investment in grid capacity expansion, the industry participants emphasize expanding their grid infrastructure to enhance customer reach.

Siemens, a technology company focused on industry, infrastructure, transport, and healthcare, and is one of the largest industrial manufacturing companies in Europe. In April 2021, Siemens, a German multinational conglomerate, announced first high-voltage direct current (HVDC) link featuring voltage-sourced converter (VSC) technology in India. The 2,000 megawatts (MW) electricity transmission system consists of two links comprising Thrissur in Kerala and Pugalur in Tamil Nadu, supporting Power Grid Corporation of India Ltd.

LIST OF KEY COMPANIES PROFILED:

• ABB (Switzerland)


• Siemens (Germany)


• Schneider Electric (France)


• S&C Electric Company (U.S.)


• Eaton (Ireland)


• GE (U.S.)


• IBM (U.S.)


• Wipro Limited (India)


• Honeywell (U.S.)


• Cisco (U.S.)


• Aclara (U.S.)


• Landis+Gyr (Switzerland)


• Oracle (U.S.)


• Itron (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• July 2021 – AES Ohio selected Landis+Gyr as its technology partner for a grid modernization program for enhancing the efficiency of the electricity distribution network and customer services. AES Ohio will utilize Landis+Gyr cloud services for network management services, system operating software, and installation support.


• June 2021 – Schneider Electric announced its partnership to help people and communities impacted by weather and climate disasters by mobilizing microgrids. The company has deployed over 45 kW of mobile solar and above 170 kWh of mobile battery storage to support more than disaster response and recovery missions which have provided emergency power access to U.S. citizens.

REPORT COVERAGE

The market research report offers an in-depth analysis of the industry. It further provides details on the adoption of these technologies across several regions. Information on the growth of the market trends, drivers, opportunities, threats, and restraints of the market can further help stakeholders to gain valuable insights into the market. The report offers a detailed competitive landscape by presenting information on key players, along with their strategies, in the market.

Report Scope & Segmentation