Proving the Business Case for the Internet of Things

Utilities turning to smart grid as a service, says Navigant

Steve Rogerson
February 2, 2017
The global annual smart grid as a service market is expected to reach $6 billion in 2025, according to Navigant Research, which found that competition and the need for speedy time to market were driving more utilities to adopt smart grid as a service capabilities.
The report examined the global smart grid as a service (SGaaS) market, focusing on data services, cloud-based software and fully managed services, while providing forecasts for managed distribution and substation automation, microgrids, distributed energy resources (DER) management, advanced metering infrastructure (AMI), demand response, home energy management (HEM) and analytics.
Historically, utilities have preferred to acquire their own physical assets and the software required to manage these assets, store all related data in-house, and use their own staff to perform associated business processes. Today, however, utilities are increasingly turning to service-based delivery to help them take a more flexible approach to business processes, mitigating technology risks and reducing costs while staying ahead of the competition.
According to the report, the global SGaaS market is expected to grow from $1.3bn in 2016 to $6bn in 2025.
“The monopoly business model allowed utilities to wait for technologies to mature before purchasing them, but with the increasing threat of competition, the potential profits from the energy cloud will not wait and first mover advantage will soon be the order of the day,” said Stuart Ravens, principal research analyst with Navigant Research. “A new, innovative future will require flexibility – such as the ability to scale up and down data centre capacity or rapidly deploy software for product development or testing – which lends itself to cloud-based procurement.”
The need for speedy time-to-market is anathema to many utilities, where historically there was an incentive to be second or third movers. According to the report, competition is becoming a more and more important driver for SGaaS.
The report analysed the global SGaaS market, with a focus on three segments – data services, cloud-based software and fully managed services. The study covers a number of smart grid functional areas and provides forecasts for managed distribution and substation automation, microgrids, DER management, AMI, demand response, HEM, and analytics. Additional commentary is provided on virtual power plants and commercial building energy management. The report also examines the key technologies related to SGaaS, as well as the competitive landscape.
The smart meters market is estimated to grow from an expected $11.1bn in 2014 to $18.2bn by 2019, at a CAGR of 10.2 per cent from 2014 to 2019, according to a report from Markets & Markets.