A few years ago the smart grid represented an opportunity for electronics companies to tap into a rapidly growing market. Thanks to new energy standards, increased public concern for energy savings; volatile gas and oil prices; potential government subsidies and advanced electronics technologies, the grid and its offshoots looked ripe for the picking. Has the smart grid met these expectations for the industry?
Progress has certainly been made on the grid: GTM Research forecasts the cumulative value of the smart grid market will surpass $400 billion by 2020, growing with an average compound annual growth rate of more than 8 percent. For electronics component makers and distributors, the hardware and infrastructure upgrades necessary for the smart grid means increased demand for processors, sensors, controllers, cable, connectors and a myriad of networking and communications products. But rather than targeting the grid, the channel is approaching smart products as part of a larger market opportunity: the Internet of Things (IoT).
A casual survey of leading electronics distributors indicates that few distributors have dedicated sales and service organizations to the smart grid. Instead, the grid is part of an overall sales effort targeted at selling component s into both established and developing markets.
“We do not have specific resources dedicated to this market as we sell into all vertical markets,” said Mark Simon, vice president of sales for Allied Electronics, via e-mail. “But, when an opportunity arises and we determine there is a synergy between a customer within this market and Allied, we dedicate a sales person to build a holistic relationship between the customer, Allied, and suppliers that fit the bill.”
As a catalog distributor, Allied targets small-volume customers and engineers designing products for the smart grid, among other markets. “Allied follows business and technology trends and their markets to determine when our business and product portfolio models are a good fit,” said Simon. “It is then a concerted effort between our product management department, sales force, and marketing team to work with customers and help them with our product solutions.”
Several other distributors, including broadlines and catalogs, indicated they did not have direct visibility into the smart grid but instead covered the market in much the same way as Allied. “This is business-as-usual for Allied Electronics and we use the same approach toward the smart grid market,” Simon said.
So the smart grid has become part of a larger trend encompassed by the IoT. For the residential and industrial building markets, the ability to remotely control heat and cooling, lighting, security and other functions is a significant advantage. Expectations are that the smart grid will expand well beyond individual buildings:
“… the beginnings of something much larger is taking place – using the Internet of Things to make our cities dynamic and responsive to energy demands and sudden energy spikes,” according to FutureStructure magazine. “When consumer-level products can interact meaningfully with city-level concerns, the entire system can optimize energy use in a way that wasn’t previously feasible. Energy efficiency presently tends to trail novelty in gauging the appeal of Internet of Things devices. But once consumers start witnessing significantly lower energy bills, novelty quickly morphs into practicality.”
Electronic component manufacturers such as Atmel, Murata, and Bosch are already aligned strategically in the marketplace to leverage growing opportunities in the IoT, EPS reported late last year. Atmel recently announced that it is expanding its sensor hub solutions by partnering with the industry’s leading sensor and sensor fusion software manufacturers. Murata Americas and Ayla Networks announced a partnership whereby Murata will produce and market intelligent Wi-Fi modules containing the Ayla Embedded Agent software, which will be available as a design kit.
Sensor manufacturer Bosch has set up a new company, Bosch Connected Devices and Solutions GmbH to focus on IoT and services. The new company will supply “electronic products and software expertise designed to make devices and objects intelligent and web-enabled across a broad range of applications.” Initial focus areas will be sensor-based applications for “smart homes,” as well as traffic, transportation, and logistics applications.
Market research firm Frost & Sullivan has linked opportunity in the smart grid to another trend, Big Data. The convergence of next-generation IT solutions such as the Internet of Things, cloud computing, big data and data analytics will open up new business opportunities for both building technology and IT companies, the research firm said. More importantly, these platforms are expected to become the pillars of smart building evolution in terms of technology, business value and customer satisfaction.
"The ongoing convergence of operating technology and IT indicates that key technology advancements will gather pace in the fields of data analytics, cloud services and IoT," said Frost & Sullivan Energy and Environmental Research Analyst Anirudh Bhaskaran in a press release. "Big data, especially, will emerge as a more valuable delivery model owing to affordable upfront costs and lower resource usage."
In addition, big data provides an open platform that enables the integration of data from different systems. The technology's scalability is another crucial benefit that will underpin its value in the smart building space.
The integration of IT and building technologies to satisfy the technical demand for big data and analytics applications will lead to new partnerships between data analytic and building technology providers in the near future, Frost & Sullivan said. Tier I building technology participants, in particular, will welcome strategic alliances with data analytic vendors.
"Local government focus on technology, policy, economy and infrastructure will lend further momentum to smart building initiatives and, gradually, lead to their evolution into smart cities in the next 10 to 15 years," added Bhaskaran. "The BRIC countries –Brazil, Russia, India and China – are likely to invest strongly in smart buildings and smart cities due to expanding population, economic growth and rapid urbanization."
Along with IoT connectivity comes the need for security – another market opportunity for the industry. According to another research firm, TechNavio, the global smart grid cyber security market will grow at a CAGR of 9.7 percent over the period 2013-2018. Smart grid cyber security involves the protection of smart grid technology from various cyber threats.
The security of the smart grid network is a major issue faced by power utilities because there is a frequent exchange of sensitive information via communication networks such as the internet, intranets, corporate networks, and extranets, TechNavio reports. Power utilities need various controlling techniques to moderate the adverse effects of unauthorized access of smart grid data. Hackers, for instance, can take control of smart grid applications and servers and access confidential information. Therefore, the smart grid requires security measures not only to handle systems and equipment but also to secure the exchange of information between systems.
Providers of both hardware and software solutions, analysts say can capitalize on the expanding market.
Smart grid cyber security involves the protection of smart grid technology from various cyber threats. The security of the smart grid network is a major issue faced by power utilities because there is a frequent exchange of sensitive information via communication networks such as the internet, intranets, corporate networks, and extranets. Power utilities need various controlling techniques to moderate the adverse effects of unauthorized access of smart grid data. Hackers, for instance, can take control of smart grid applications and servers and access confidential information. Therefore, the smart grid requires security measures not only to handle systems and equipment but also to secure the exchange of information between systems. TechNavio's analysts forecast the Global Smart Grid Cyber Security market to grow at a CAGR of 9.7 percent over the period 2013-2018.