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Global smart grid investment reached $14.9 billion last year, up from the $14.2 billion recorded in 2012, according to Bloomberg New Energy Finance (BNEF). Notably, China finished 2013 as the world's largest smart grid market, exceeding the U.S. in dollar investment for the first time as the North American market continued to slow.

BNEF says smart metering accounted for just under half of total smart grid spending worldwide, with distribution automation and other integrated demonstration projects rounding out the total.

China, BNEF reports, spent $4.3 billion on the smart grid in 2013, with a large part of that going toward the installation of 62 million meters. China now has slightly less than 250 million smart meters installed and has indicated that it will push out the end-date for completing its metering program from 2015 to 2017. BNEF notes that the country now has more than twice as many smart meters installed as the total number of households in the U.S.

Meanwhile, U.S. smart grid spending is slowing down, BNEF says. The North American market shrunk significantly in 2013, falling 33% to $3.6 billion as the last of the stimulus-funded projects wound down.

BNEF adds that there were promising signs last year regarding smart metering in several key European markets, including a large metering contract in the U.K., new tender in France and completion of the long-awaited cost-benefit analysis in Germany. The organization notes that Japan's utilities are in the tendering and procurement stages of their deployments, and Brazil's smart metering rollout is being delayed by certification and financing challenges.

In addition, BNEF says distribution automation continued to grow last year. Global spending on distribution automation increased to $5.4 billion from $4.4 billion in 2012, driven by interest in renewables integration and grid reliability in China, the U.S. and Europe.

BNEF sees the following developments in 2014 and beyond:

- Asia still has years of growth ahead. Despite China's recently announced slowdown in meter installations, the country's five-to-ten-year meter replacement cycle means that as the current major wave of installations finishes in 2017, the first wave of replacements is expected to commence. 2014-15 will bring also an increase in distribution automation spending in China, while smart grid activity in Japan, Korea, India and Southeast Asia will also ramp up.

- The U.S. is entering a second major smart grid phase: information integration. With its growing penetration rates for smart meters and distribution automation, the next phase for the U.S. smart grid is using the new data from the grid to improve areas such as outage management, customer segmentation and theft detection.

- Europe is the smart grid's sleeping giant. Although Europe has installed only 55 million smart meters, installations are expected to rise sharply to 180 million by 2020. Spain will remain the most active market in 2014, but large-scale deployments in the U.K., Germany and France will begin to ramp up in late 2015.

"Global investment in the smart grid increased relatively modestly last year after five years of rapid growth," comments Colin McKerracher, senior energy-smart technologies analyst at BNEF. "But the fundamental drivers of the smart grid - greater grid reliability, further integration of renewable energy and improved demand side management - are stronger than ever.

"Asian and European markets will drive growth through 2020, while in North America, the focus will continue to shift from hardware to software as utilities look to squeeze additional value out of the vast amounts of grid data now available," he adds.


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