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The market for smart grid technologies that help integrate renewable energy sources will grow steadily over the next six years - from $3.8 billion this year to just under $13 billion in 2018, according to a new report from Pike Research.

However, the report notes that the time horizons for the widespread commercialization of these technologies vary widely. Demand response, for example, has been offered in some forms by utilities and grid operators for many decades, while clear business models for advanced energy storage have yet to be demonstrated.

While larger investments are flowing toward renewables integration at the transmission level of power service, most of these technologies - such as high-voltage direct-current lines - do not qualify as part of the smart grid, Pike Research says, adding that today, distribution-level smart grid technologies, such as microgrids, clearly lead this market.

“For all the talk of the challenges of bringing increasing amounts of distributed, renewable energy sources onto the power grid, in reality, there is no consensus on the exact effects of renewables integration on grid operations,” says Peter Asmus, senior research analyst at Pike Research.

“What we do know is that the fundamental architecture of today’s electricity grid - based on the idea of a top-down system predicated on unidirectional energy flows - is becoming obsolete, and is unsuited for the increasing diversity and variability of power generation,” Asmus adds.

Despite the hype about the role advanced energy storage will play in accommodating renewables, the report notes that only bulk storage technologies will generate significant revenue (an estimated $105 million) this year. Microgrids, the leading technology platform, will capture more than $3 billion. Remote microgrids will represent approximately 92% of this total, and Pike Research says this is a reflection of the challenges of integrating distributed solar and wind power in regions of the world that lack a reliable utility power grid.

By 2018, microgrids will continue to lead the way, with revenue totaling almost $10 billion. Remote systems will still make up the lion’s share of that revenue at $7 billion - 74% of the total microgrid market. Revenue from virtual power plants will grow moderately to $544 million by 2018, while demand response will show major growth and exceed $762 million in annual revenue, the report predicts.

Two transmission technologies - static volt-ampere reactive compensators and synchrophasors - will show relatively slow growth. Pike Research notes that synchrophasors are particularly dependent upon government funding, as well as cautions that these two technologies should not be viewed as barometers for smart grid investments in transmission-level infrastructure for integrating renewables. However, the low growth rates - and investment figures - do highlight that investors are focusing much more on distribution network solutions than on transmission-level solutions, the report adds.

For more information about Pike Research’s report, click here.

Hybrid Energy Innovations 2015
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