The smart grid market will grow from today’s $4.5 billion to $15.8 billion by 2015, according to a study by Lux Research.

Countries around the globe plan to add intelligence to their power grids, as investors, corporations and policymakers enthusiastically agree about the benefits of smart grid technologies. Still few can predict how it will evolve.

“The smart grid offers huge opportunities for investors, companies and utilities. But many of those opportunities are fast-moving targets,” said Jacob E. Grose, a senior analyst at Lux Research and author of the report, The Smartest Opportunities in the $16 Billion Smart Grid. “The most successful players will be those who can navigate a shifting landscape of market segments, and partner with companies able to capitalize on opportunities before their competition.”

Among  key observations in the Lux Research report:

• The measurement and communication segment has the early momentum. Expected to top $5 billion by 2015, smart meters and supporting networking infrastructure technologies are seeing the earliest growth, as governments and utilities recognize that better management of electrons first requires better management of information across the grid.
• The analysis and services segment is poised for explosive growth. Led by demand response applications, analysis and services revenues could make up the largest piece of the smart grid pie by 2015. Currently below $1.4 billion today, companies in this sector will likely see revenues grow at a 30% CAGR, leading to revenue totaling over $6.7 billion by 2015.
• Corporations that mobilize quickly will dominate via economies of scale. Few smart grid companies are differentiated by the technologies they’re fielding. Thus, one of the few remaining competitive advantages open to market participants is how well their technology scales. Competitors unable to establish early commercial relationships with utilities will likely get squeezed out of the market before long.

About this report

The Lux Research report, “The Smartest Opportunities in the $16 Billion Smart Grid”, breaks the smart grid down into three segments – measurement and communication, analysis and services, and local management. Then, using the Lux Innovation Grid framework, it ranks 25 smart grid companies according to how they score in technical value, business execution, and maturity. After defining the smart grid’s main categories and eleven subsegments the report forecasts the market size for each using a rigorous bottom-up analysis – based on interviews with 25 leading smart grid companies – and a top-down approach, which includes external factors such as governmental grants. The report is part of the Lux Alternative Power and Energy Storage Intelligence service. 

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