China's smart grid market worth could reach US$61bn by 2015
China's smart grid market is predicted to rise from US$22.3bn in 2011 to US$61.4bn in 2015, says Zpryme, with global blue-chip players such as IBM, HP and Siemens positioning themselves to capitalise on the future market.
With China being the world’s largest consumer of energy followed by the US, the race is on to meet future demand due to the projected growth of its economy.
Zpryme has just released its latest smart grid report (China: Rise of the Smart Grid), which estimates that, with electricity generation set to grow at 8.5pc per year over the next five years in China, it must build a transmission infrastructure capable of delivering more than 6trn kilowatts of electricity to more than a billion customers and energy-intensive factories.
And smart grids will be the way China will meet this rapidly growing electricity demand.
Overhaul of China’s existing grid
Daniel Jung of Zpryme says China’s smart-grid efforts will require a massive overhaul of its existing electricity grid, to expand it and connect power-generating facilities in China’s western region with its heavily populated east coast region by 2020.
He points to how the Chinese government has plans to construct three major transmission lines, each of which is expected to reach 20 gigawatts of transmission by 2020, under its West-East Electricity Transfer Project.
Reuters reported in August on how this project will feature the construction of some of the highest voltage, largest transmission lines in the world, including the world’s first 1,000 kilovolt alternating current line that runs for 640 kilometres between Shanxi and Hubei.
Renewable energy goals
The Zpyrme research reflects how the smart grid developments in China will help it achieve two major goals:
- Increasing renewable energy power generation enough to meet 15pc of energy demand by 2020.
- Reducing the carbon intensity of China’s economy by 40-45pc by 2020 (from a 2005 baseline).
China’s renewable energy push to help increase capacity is predicted to focus on three main areas – wind farms, hydroelectric dams and solar power plants, which will send their power generation to cities on the east coast.
Right now, however, 30pc of wind turbines in China are not connected to a transmission network.
China's smart grid market could have the potntial to rise from US$22.3bn in 2011 to US$61.4bn in 2015
SGSS and transmission goals
State Grid Corporation of China (SGCC) is currently the country’s largest transmission firm, serving more than 1bn customers. The other major player is China Southern Power Grid Company (CSG).
The smart grid is also expected to play a key role in China’s efforts to build infrastructure to support electric vehicles (EV), says Ishac.
In 2009, SGCC said it would develop an EV charging network, creating 75 public charging stations and 6,209 AC charging spots. Shanghai, Beijing, Tianjin and other cities will serve as pilots for the rollout.
IBM, GE, Siemens and Accenture involved
With more than US$600bn expected to be invested in electricity infrastructure and smart grid technology over the next 10 years, Jung says blue-chip global companies are already capitalising on the China smart-grid market.
Zyprme anticipates the software and hardware segment of the smart-grid market in China to grow from US$40bn in 2010 to US$13bn by 2015.
Industry giants that have already got a stake include:
- GE, which is going to collaborate with The State Grid Corp. of China and the Chinese Academy of Science on standardising smart-grid technology. GE also partnered with Yangzhou Beichen Electric Company in early 2010 to build smart-grid equipment and set up a smart-grid demonstration centre.
- IBM has partnered with the industrial city of Shenyang to improve city management systems and to set up a research institute to progress eco-city technology. In November 2010, IBM also released new grid management technology, which will be piloted with Shanghai Power.
- HP acquired the network equipment manufacturer 3Com for US$2.7bn in 2010.
- Accenture launched the Accenture Intelligent Data Enterprise in March 2010 – Accenture has since formed an alliance with East China Grid Co and is involved in 10 pilot projects.
- While Cisco has been slower to capitalise on the smart grid market in China, it recently ‘revamped’ its East Asia business to create a Greater China division.
- ABB has been supplying transistors, power lines and other transmission equipment to SGCC and CSG over the past four years.
- Siemens completed the Yunnan-Guangdong transmission line in June 2010 – the first HVDC link in the world. Then, in November, Siemens said it would sign an agreement to build EV charging infrastructure.
Source: China: Rise of the Smart Grid [January 2011] by Zpryme's Smart Grid Insights practice