Smart Grid Apps: Six Trends That Will Shape Grid Evolution

1Executive Summary

As the deployment of utility smart grid infrastructure gains scale and maturity, the industry’s focus is beginning to shift from standards, technology selection and architecture to the true purpose of the smart grid movement: applications that will improve the efficiency, reliability and versatility of the electric grid. Infrastructure upgrades will most certainly continue for years to come, and there remain many technology battles to be fought, standards to be developed, systems to be transformed and heavy iron to be forklifted. But the next great contest in the emerging smart grid industry will rely less upon engineering and more upon business plans that can provide meaningful and demonstrable value to customers and utilities.

The applications that prevail in this new arena will define the smart grid experience for industrial, commercial and residential customers. They will also delineate the benefits that smart grid upgrades will provide for the utilities themselves. Along the way, new business opportunities that arise from smart grid applications will become available for the providers of software, systems, devices and services; with those opportunities, providers will be to demonstrate the value of their offerings to improve energy efficiency, reduce costs and enhance customer awareness and control of their energy consumption.

In this report, we analyze six key smart grid application trends that will help shape the industry landscape in the years to come. The list is not designed to be comprehensive, nor should the omission of other applications be interpreted as a vote of no confidence. Rather, these six application areas represent the manifestation of grid intelligence in several different domains: the smart utility, the smart energy home, the smart enterprise and smart transportation.

Certain applications, such as demand response (DR) and home energy management (HEM), will be familiar to readers as the smart energy home poster children. They have been talked about for years as the tools that will justify huge smart grid infrastructure investments. In this analysis, a few aspects of these justifications are accurate. However, as always, nothing ever quite turns out as expected, and there are wrinkles in the story that indicate a somewhat different outcome for DR and HEM than conventional wisdom would suggest.

Other applications, including distribution automation (DA) and smart grid data analytics, are well known to utility industry insiders but may be less understood by the broader smart grid community. In these cases, our analysis is designed to highlight key opportunities as well as implementation challenges, and to identify and quantify the benefits that DA and data analytics may represent for the smart utility domain.

The final pair of applications, carbon management and electric vehicle (EV) charging, represent areas that have been hyped in recent years as booming technology sectors. However, discussions regarding their connection and importance to the smart grid have been rare. We believe these two application areas are critical convergence zones that stretch beyond the utility grid and have far-reaching implications for the evolving smart enterprise and smart transportation domains. A diverse mix of industry players, including mainstream IT software and systems vendors, building automation and controls companies, auto manufacturers and many others, will play vital roles and hold significant business opportunities in these smart grid application areas.

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