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In the future, the global distribution automation (DA) market is expected to be driven by smart grid investments in emerging countries such as China, Brazil and India. However, current growth in the DA market is taking place largely in North America, according to a report from Zpryme.

Worldwide, the DA market is projected to reach $5.7 billion this year, with North America (44%) and Asia Pacific (25%) accounting for about 70% of the market share. By 2020, the global DA market is projected to reach $33.9 billion, growing at a compound annual growth rate (CAGR) of 25%.

In response to demands for higher reliability and power quality; improved efficiency through reducing technical losses; lower operating costs; demand response capabilities; and increasing the use of distributed energy resources (DER), distribution operations are becoming more and more automated.

For example, DA can help with the problem of transmission and distribution losses. Worldwide electricity losses account for almost 9% of total electricity supplied. According to U.S. Energy Information Administration statistics, electricity distribution losses in the U.S. in 2010 alone were about 261 TWh. Reducing distribution losses in the U.S. by just 1% would save about 2.6 TWh of electricity, according to the report.

Opportunities by geography

Large emerging markets such as Brazil, China and India still provide great opportunity for growth. Infrastructure investments in these markets are driven by grid expansion, demographic growth and rapid urbanization.

For example, Siemens recently announced a turnkey supervisory control and data acquisition technology order with India's Maharashtra State Electricity Distribution Co. As part of the $24.5 million deal, the company will install distribution substation automation systems with integrated IT systems, as well as provide maintenance and other services for five years after the systems are commissioned.

For its part, China has developed and implemented an aggressive plan for the national smart grid. Implementation for DA systems is underway in 27 cities across the country. By 2020, the State Grid Corporation of China plans to comprehensively deploy distribution automation and controls in all prefecture-level cities within its territories.

The Latin and South American market is projected to grow from $0.4 billion to $3.3 billion, with a CAGR of 30%. This region will account for 7% of the market this year, but this figure is projected to reach 10% by 2020.

The European market is projected to grow from $0.9 billion to $5.3 billion, with a CAGR of 26%. By 2020, the region will account for 16% of the global market.

The Asia Pacific region will see big growth - $1.4 billion to $12.4 billion with a CAGR of 31%. The region will account for 25% of the global market this year, but is expected to grow to 37% by 2020.

Evolution of DA

The definition and scope of DA is evolving as new technologies and utility needs emerge. In 1998, the IEEE broadly defined DA as "a set of technologies that enable an electric utility to remotely monitor, coordinate and operate distribution components in a real-time mode from remote locations."

In a recent white paper for the National Institute for Standards and Technology, the IEEE updated its definition of DA to "any automation which is used in the planning, engineering, construction, operation and maintenance of the distribution power system, including interactions with the transmission system, interconnected distributed energy resources (DER) and automated interfaces with end users."

In the newer definition, the scope of DA has grown from mainly remote monitoring and automatic reconfiguration to encompass several key characteristics of the smart grid - specifically, improving operating efficiency, optimizing asset utilization, and accommodating renewable and distributed generation.

Traditional DA capacities include automation of switching functions with limited reconfiguration capabilities and other individual functions, such as volt/VAR control. The new vision for DA now includes automation of all controllable equipment and advanced reconfiguration for optimizing performance capabilities. In a sense, the new generation of DA technologies will allow distribution systems to rely on minimal manual intervention.

The business case for DA

While DA technologies are commercially available for wide-scale utility deployment, implementation is a complex process that involves multiple utility departments, long-term decision-making and high investment costs. Making the business case for DA is complicated by the fact that some of its benefits - such as improved customer satisfaction and safety - are not easily quantifiable.

Like any smart grid investment, the value derived from DA deployment vary according to utilities' context. The key in making a business case is identifying applications that provide the best return on investment in ways that can be measured. In the U.S., uncertainties due to deregulation and restructuring of the power industry have been blamed for the slow implementation of DA.

Utilities that have performance-based rates may consider fault location, isolation and service restoration for its ability to improve certain reliability metrics measured by regulators. While utilities that are able to pass the cost of line losses to the customers or distributor of power without retail licenses, the benefit of line-loss reduction add little value without changes from the regulator, according to the report.

In the near term, utilities are expected to continue to invest in technologies that enable them to more effectively manage the grid. In more mature markets, the growth will be driven by needs to modernize aging infrastructure and the need for increasing reliability.

The global trends in urbanization and energy efficiency are more prominent in emerging markets, where many countries are encouraging investment in energy grids. In these markets, intelligent hardware will make up a larger share of the investment in the short term.

As with any investment, the availability of financing will be a barrier for mid-size and small utilities. Companies offering scalable solutions will be more attractive to utilities with limited access to capital, which may choose to deploy smart grid systems targeted at critical needs.

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