Asia is to lead the way in smart grid spending for 2013, but how will it be deployed?

Utilities worldwide spent a total of $13.9 billion on smart-grid technologies in 2012, representing a 7% increase on spending in 2011, according to new research from Bloomberg New Energy Finance (BNEF).

The market-research outfit expects spending to increase at a compound annual growth rate (CAGR) of 10.4% over the next five years to reach $25.2 billion in 2018.

The forecast represents a downward adjustment on previous expectations, which BNEF blames on delays to the rollout of existing smart-metering and smart-grid programmes in a number of regions.

“Growth in the smart grid industry remains strong,” said Albert Cheung, practice head for energy smart technologies at BNEF.

“Utilities, policy-makers and regulators are increasingly aware of the economic, environmental and reliability benefits of smart-grid technologies. These enable consumers to make better-informed choices about how they use energy. They also improve the reliability of the grid and allow it to integrate larger amounts of intermittent and distributed renewable power.”

BNEF reckons that about $7.1 billion – about half the total – went towards smart metering and related infrastructure and services; distribution automation was the second-biggest category, followed by integrated demonstration projects in areas such as demand response, home energy management and smart electric vehicle charging.

The US remains the largest regional market for smart-grid technologies and services, according to the research, with US utilities spending $4.3 billion in 2013, down from $5.1 billion in 2011.

China, however, is fast closing the gap, spending $3.2 billion in 2012, up from $2.8 billion in 2011, with much of the increase due to a major smart-metering procurement by the national State Grid company.

With stimulus-funded projects drawing to a close in the US, and Chinese investments still growing, BNEF expects China to overtake the US in 2013 to become the world’s largest smart-grid market.

In Asia as a whole, smart-grid investments grew to $5.6 billion in 2012 as new digital energy initiatives got underway in Japan, India, Korea and various Southeast Asian countries. Investments in Europe amounted to just $1.4 billion last year, although this was $300 million more than in 2011.

BNEF says that progress on the European smart-metering directive “remains mixed” at the member state level, but it expects investments to pick up rapidly after 2014, as countries including the UK and France begin major deployments.

Although Latin America is still a nascent market for smart-grid technology, attracting investments of just €400 million in 2012, there has recently been significant regulatory progress in Brazil and BNEF expects national grid modernisation and metering programmes to gain pace elsewhere.