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Smart grid market may have hit its peak, study found

By Donna Donnawitz
March 29, 2012
The rapid succession of new investments in smart grid infrastructure has led to a potential peak in the industry, as extremely strong growth has been followed by a general lack of new purchases to begin 2012, according to a recent Pike research study.

Pike Research analysts found investments in smart meter systems rose substantially in 2011, with approximately 73 million new meters being deployed during the year. China dominated this market, making roughly 71 percent of all smart meter investments. The country is aggressively expanding its utility infrastructure and is therefore making major advances in a short time.

North America also witnessed significant growth during the past year, with utility companies in Canada announcing plans to install a total of more than 5 million smart meters during the next few years, the study found. The United States is also making smart grid strides, as utility companies within the nation placed orders for almost 2 million meters.

While this expansion is considerable, the fourth quarter of 2011 began a slowdown that could spell trouble for the sector. Sales slowed considerably during the period and are expected to remain relatively calm through 2012, according to Pike Research. Essentially, spending on smart meters has hit a peak and is now likely to begin receding somewhat moving forward because the investment cycle has begun heading toward its conclusion.

Pike Research senior analyst Neil Strother explained this dynamic.

"There’s a combination of good news and caution in these latest numbers," said Strother. "For the full year, shipments of smart meters were strong, and that’s the good news for the industry. However, there is also a cloud in this picture as the volume of new deployment announcements was relatively weak, indicating that perhaps for the first time we’ve arrived at a market peak."

Pike Research found that while the smart meter market may have peaked, there is still significant interest in the technology. The difference is that many major utility companies have made their investments and smaller providers are beginning to catch on to the smart grid's potential.

In many ways, Pike Research's findings mesh well with what many experts have expected for the smart grid industry. There is a general consensus throughout the sector that many initial investments in smart grid have been completed, and the coming year will see more organizations actually building new grids and spending on construction materials and similar supporting infrastructure, such as cabling and network tools.

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