Smart grid technology is poised to take the power infrastructure market by storm in the coming decade. The industry in the US is expected to grow from $5.6 billion in 2010 to $9.6 billion by 2015. The US government made an initial $3.6 billion investment in 2009, and now many smart grid firms are showing signs of growth. Big companies like IBM and Lockheed Martin are scrambling to take advantage of this emerging market.
The appeal of the smart grid is its potential to greatly improve the efficiency and stability of the nation’s power infrastructure. For example, the smart grid can “self-heal,” so if a power station goes down in one region the system may be able to adapt and divert resources as needed. Another principle advantage of the smart grid is increased transparency between the customer and the utility, ideally allowing utilities to better manage peak loads and communicate with customers.
Let’s look at the progress. How has the industry fared within the past year?

Smart grid news over the past 12 months
Recorded Future’s sentiment analysis tool can provide immediate feedback on the health of an industry. In this case, we can see plenty of positive sentiment for the smart grid market, and we can also pick out favorable analyst quotations. Three analysts of note that discuss the US smart grid market:
- Paul Korzeniowski of EnergyBiz: “says the number of smart meters deployed in the United States is nearing critical mass and may in fact be leading to a fast approaching transition point in the industry”
- Lawrence Makovich: “the widespread expectation in the United States and around the world today [is that] the smart grid is the next big thing… the reality, he writes, is more sobering. Instead of a disruptive technology poised to transform the power sector, he argues, we should expect a more evolutionary change toward a “smarter” grid, with more modest results.
- Massoud Amin: “there have been an increasing amount of outages per year in the US, and a smart grid could reduce the costs of outages by about $49 billion per year.
As seen above, forecasts for the US smart grid market appear to be generally positive. Analysts like Lawrence Makovich seem more cynical than others about the smart grid’s transformative powers, but even he is cautiously optimistic.
International Outlook
The international market for smart grid technology in the future appears to be even more explosive than in the United States.

Future international market for smart grid technology
China is expected to be a major player in this area, investing around $100 billion into upgrading its power infrastructure . It also appears to have taken the lead in government spending on smart grid projects at $7.3 billion while several other nations in the region are expected to spend $28.8 billion on smart grid projects by 2017.
Security: The Achilles Heal
Although most analysts agree on the general short-term health of the industry, there are some signals that raise concern. Electric Light & Power indicates that the momentum of smart grid development declined in the first half of 2011, and the “weakest link in smart grid’s development has been the lack of attention to automating and modernizing the transmission and distribution network”, according to the smart grid blog Memoori.
However, the biggest risk and potentially limiting factor for progress toward widespread smart grid adoption is security. The smart grid market is serious business with potentially disastrous consequences if it is not implemented correctly. Rolf Adam of Cisco sums up the situation: “From an IT environment security perspective, it’s a nightmare”.
Evidence suggests that he isn’t the only one concerned as fear of an infrastructure attack is on the rise among business executives. In a survey conducted by McAfee, 40 percent of executives surveyed said that their company was not prepared for an attack.

The security of the smart grid is increasingly being brought into question
Over the past year, the security of the smart grid has increasingly been brought into question. The primary concern is that an attacker might be able to exploit vulnerabilities in the hyper-connected grid to cause mass blackouts. VentureBeat highlights why so many industry experts are concerned, “ increasing automation and communications within the electricity grid potentially has a dark side; increased vulnerability to attack.” Ironically, as the grid gets smarter it becomes less secure.
Is anything being done to combat this future threat? What is the biggest future security threat for the smart grid?

Long-term security threats facing the smart grid
The good news is that governments are aware of the problem and resources are being mobilized to combat it. A report by Pike Research, “anticipates that government and regulatory compliance will drive substantial investment in smart grid cyber security”. The group also expects the smart grid cyber security market to reach $3.7 billion by 2015.
Will billions of dollars in cyber security investment solve the problem? Perhaps not. It appears that the biggest problem facing the power grid is non-technical in nature. According to one former government official, “Ninety to 95 percent of the people working on the smart grid are not concerned about security and only see it as a last box they have to check”.
If no one cares about security, it is reasonable to conclude that the system will not be secure, and the New York Times recently highlighted this same point when it said that, “utilities are very reluctant to share information about security vulnerabilities due to liability issues”. It appears that utilities are not encouraging a culture of security around the smart grid. As a result, this could have disastrous consequences for the long-term future of the smart grid.
Conclusion
The smart grid market is a potentially lucrative space, and both the US and international markets are expected to grow substantially over the next decade. Yet, the security concerns are significant enough that they can be expected to slow down progress.
Are you following the smart grid market? Interested in the future of Advanced Metering Infrastructure (AMI) or Meter Data Management (MDM)? Take a look below and see what future projects these companies are working on.
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