Building the Clean Energy Super Highway The Development of the Global Smart Grid and the Next Innovation Infrastructure A presentation for the Fletcher School of Law & Diplomacy April 25, 2011 Drew Bennett, Fletcher 08 Bennett.as@gmail.com 1
A Look at the Next Infrastructure Revolution We want to know: what the big deal is. Is the grid really that dumb? And isn t the dumb grid good enough? what a smart grid is. How do we define it? What technologies & services are involved? What s driving investment? what it means for global trade & investment. Where are smart grids being built? What are the investment profiles? What does it mean for international trade? what the big picture looks like. What does this mean for global technology industries and why should we care? 2
The big deal Our dumb grid: Is the grid really that dumb? blackouts peaks and valleys line loss theft 19th century infrastructure Electric grid outages cost the equivalent of $500 per person per year in the U.S. 6 to 10% of electric production is lost before it even reaches the home. 30% of U.S. grid hardware is beyond is beyond replacement age. 3
What this is all about Costs of a dumb grid: Isn t the dumb grid good enough? debilitated network antiquated markets disconnected consumers 19th century business model 10% of all electricity generation assets, and 25% of distribution infrastructure are required to provide electricity for less than 5% of the hours in a year The amount of grid energy wasted per year could cool every home in the U.S. over the same period. 4
What this is all about 2000 to 2030: World Electricity Demand to Double Net Electricity Generation, 1990 2035 12.00 China 10.00 OECD (non US) Annual Kwh (trillions) 8.00 6.00 4.00 2.00 0.00 1990 2000 2007 2015 2025 2035 Year Source: Energy Information Administration United States Non OECD: India and Other Asia Middle East and Africa Europe and Eurasia Central and South America 5
What this is all about President Eisenhower made an investment that revolutionized the way we travel, an investment that made our lives easier and our economy grow. Now, it s time to make the same kind of investment in the way our energy travels: to build a clean energy superhighway. Potential benefits: reliability efficiency carbon reduction expanded generation electric vehicle integration engaged and efficient consumers innovation infrastructure Providing basic and comparative energy consumption data by mail has been proven to drive consumer energy savings of 4 to 15% 6
Defining the Smart Grid Sector A modernized, efficient electric network that includes two way communication systems and enables the integration of technologies that will further improve the efficiency, reliability, and security of the electric grid. The smart grid sector includes electric utility industry products and services required for the modernization of distribution and transmission systems and information and communication technologies and services that support a fully networked grid and enable two way communications and electric flows. 7
Smart Grid Products and Services Utility investment in smart grid = Grid Modernization + Integrated Information & Communication Technology Transmission & Distribution Infrastructure Meters Distribution Eqp. Transformers Converters Switching Gear Ctrl Instruments Advanced Control Systems Substation Automation Distribution Management Advanced Sensors Wide Area Management Advanced Outage Mgmt Generation and Storage Distributed Generation Energy Storage Tech Microgrids Advanced Metering Infrastructure Smart Meters Phasor Measurement Units Demand Response Local Area Network Meter Data Mgmt Consumer Interface Energy Mgmt Platforms Home Area Networking Intelligent Controls (Smart Thermostats) Hardware and Devices End Use Smart Appliances Intelligent Building Systems Electric Vehicles Local Storage Tech 8
Key Drivers For Smart Grid Investments Advanced and Emerging Economies will Lead the Development of the Smart Grid Primary Drivers Electricity Demand Economic Development Integration of New Energy Sources Energy Efficiency Objectives Grid Stability Objectives Standards Development Common Policy Decisions Government Investment Direct Support for Utilities Public/Private Demonstration Projects Regulatory Structure Incentives for Utility Investment in Smart Grid Incentives for Renewables Energy Efficiency Targets Energy Reserve Requirements Incentives to Interconnect Access to financing 9
What it means for global trade & investment Total Investment Required for World Energy Infrastructure, 2001 to 2030 = $16 Trillion Coal 2% Oil 19% Gas 19% Electric 60% Trans & Dist = $5.18 Trillion (54%) Generation = $4.42 Trillion (46%) Source: International Atomic Energy Agency 10
U.S. Smart Grid Investment Public and private investment is driving growth in the U.S. smart grid industry Recovery Act investments will exceed $8 billion: PROJECTS OBLIGATIONS ($ ml.) # OF RECIPIENTS Smart Grid Investment Grant Program 3482.8 99 Smart Grid Regional & Energy Storage Demonstration Projects 684.8 42 Workforce Development Program 100.0 52 Interconnection Transmission Planning 80.0 6 State Assistance for Recovery Act Related Electricity Policies 48.6 49 Enhancing State Energy Assurance 43.5 50 Enhancing Local Government Energy Assurance 8.0 43 Interoperability Standards and Framework 12.0 NIST Administrative and Program Investment 27.8 DoE Private Sector Matching Funds 3482.8 Plus anticipated private sector spending: Source: Department of Energy ICT Sector Spending on Intelligent Grid Technologies North America by 2013: $17.5 Billion Predicted U.S. electric utility spending on smart meters next 5 years: $13 Billion Source: International Data Corporation Source: Congressional Research Service 11
State of Trade Grid Modernization Equipment Exports Are Healthy and Growing $250 Growth of Electric Grid Equipment Trade (2000 2009) $200 World Imports [Billions] $150 $100 $50 $0 00 01 02 03 04 05 06 07 08 09 Source: International Trade Commission and Department of Commerce data 12
The Rising Global Smart Grid Market Global revenues for smart grid integrated ICT are expected to triple in 5 years Relative Growth of Select Smart Grid Products and Services Industry Segment (Estimated 5 yr Growth) 3.00 Smart Appliance (>500%) 2.50 Smart Meters (200%) 2.00 Industry research estimates that $200 billion will be invested globally in the smart grid network between 2008 and 2015. 1.50 1.00 0.50 0.00 2010 2015 Source: combined industry and MAS analyst estimates. Advanced Metering Infrastructure (200%) Communications (150%) Integrated IT (150%) Home Area Networking (75%) Source: Pike Research Cisco expects $15 billion to $20 billion in annual global opportunities to join electrical infrastructure with information technology over the next seven years. Source: Bloomberg Business Week 13
U.S. Smart Grid Industry Competitiveness The U.S. market for smart grid integrated ICT was worth approximately $5.6 billion in 2010. Key ICT segments for the smart grid: Semiconductors/core IT Telecom/Internet/wireless Infrastructure Software applications/platforms/services Consumer electronics Smart Appliances E commerce and Digital Consumer Interfaces Government Investment USD, Millions Source: Zpryme Research $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Cross over giants: Cisco IBM Intel Qualcomm Google Microsoft New Opportunities: Itron Echelon Elster Landis Gyr Honeywell GE LG Smart starts: Silver Spring Smart Sync Current Control 4Home Opower Better Place Telecom play? Wired or wireless? Utility, telco or Cable? Local or cloud? New home network? Regulatory framework? 14
Global Market Developments Short Term: Aus., Can., Europe, Japan, Korea (Integrated ICT); Brazil, China, India, Middle East (Grid Modernization) Medium Term: APEC, Brazil, EU, India, Middle East, South Africa (Grid Modernization + Integrated ICT) Long Term : CAFTA DR, North Africa, South Asia 15
The Big Picture What does this mean for global technology industries and why should we care? It s a revolution or maybe just an evolution but definitely a shift. 16