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Following three years of decline, the combined market for distribution automation hardware and smart meters in North America will resume its expansion in 2015, with revenue rising to $3.2 billion, up 3% from $3.1 billion in 2014, according to a new report from IMS Research, now part of IHS. By 2017, the market will expand to $3.6 billion.

The company says the shale gas boom in the U.S. is playing a key role in the development of the nation's smart electricity grid and will affect almost every part of utility infrastructure decision-making in the coming decade - and drive a resurgence in the market for smart grid equipment starting in 2015.

"Natural gas is optimal for use in smaller distributed-generation operations, which can form the basis of microgrids," explains Donald Henschel, senior analyst, metering and energy management, for IHS. "The rising attractiveness of flexible, adaptive microgrids will help the smart grid grow to overcome the serious challenges faced by this region's utility sector, and will drive growth in sales of required equipment in the coming years."

Smart meter shipments hit a high point in 2010 thanks to the surge of money made available by the American Recovery and Reinvestment Act (ARRA) of 2009 - better known as the stimulus. The U.S. smart meter market then entered a major decline in 2012, with shipments plunging by 16%.

According to IHS, the contraction is expected to moderate in 2015, and growth will return in 2016.

Smart meters represented the first wave of publicly visible investment in the smart grid in much of North America. These devices lowered costs associated with billing, especially for rural electric cooperative utilities, which were often early adopters. Now, there is growing potential for these meters to play more active roles in the operation of the grid, serving as data collection points for advanced grid applications, such as conservation voltage reduction (CVR).

The distribution automation market consists of 25 equipment types, including the full range of intelligent electronic devices (IEDs), voltage regulators, capacitor banks and switches, reclosers, and other switchgear. These devices play a critical role in the smart grid, and their sales revenue is expected to rise through the period from 2010 to 2017.

According to IHS, the shale gas boom is not the only factor that will contribute to renewed growth in the U.S. smart grid market. Other influences include:

  • the increased availability of dedicated sensors - which, together with smart meters, are expected to spur the next wave of smart grid schemes;
  • the requirement for greater security in the electricity grid;
  • strong demand from rural electric cooperatives, which are emerging as technology and business innovators in North America;
  • a profound inflection point in the growth of the microgrid market, spurred by requirements for improved reliability and reduced operational cost; and
  • a range of new challenges for electric utilities that could be addressed by smart grid technology, including severe weather, electric-vehicle charging and increased stress on aging grid equipment.

Hybrid Energy Innovations 2015
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