Billions of dollars are being invested in smart grid infrastructure, including smart meters and distribution automation systems. Recognition is growing, however, that the true value of this investment can only be realized by a parallel investment in a new generation of utility information technology (IT) systems that can help collect, manage, and analyze the vast amounts of data generated by smart grid technologies.
Energy companies must become as focused on data and information management as other industries, such as finance, telecommunications, and retailing, have become over the last two decades. This recognition is leading to a new focus on, and increased investment in, software and IT services for the smart grid. According to a new report from Pike Research, the global smart grid software market will be worth $1.3 billion by the end of 2012 and will reach $2.9 billion by 2017, growing at a compound annual growth rate (CAGR) of 15.2%. The total software and related IT services market is forecast to reach $4.3 billion by the end of 2012 and grow to over $8.6 billion by 2017, with a CAGR of 15.5%.
“IT is becoming an important part of the transformation of network operations as utilities exploit new data sources in order to improve network efficiency,” says research director Eric Woods. “Siloes of operations are being broken down, and new capabilities are emerging based on large-scale information management, real-time data analysis, and the move to closed-loop systems for managing, monitoring, and controlling the smart grid.”
This dynamic market is marked by a mix of established IT vendors (many of them new entrants in the utility sector), equipment providers, and startup technology providers. It also reflects an uncertain jostling for position between IT and operational technology (OT) vendors. IT giants such as IBM, Hewlett-Packard, and Oracle are expanding further into areas of operations management, while grid infrastructure suppliers such as ABB, Siemens, and Schneider Electric are beefing up their IT capability. This is not so much a head-on clash as a gradual reshaping of the landscape, in which partnerships and collaboration will be as important, if not more important, than direct competition.