Memoori research - The Smart Grid Business 2012 to 2017
The definitive resource for Smart Grid Research, combining clearly defined Market Sizing Statistics with Financial Analysis of Merger, Acquisition and Investment.
The report establishes the facts and draws conclusions as to what is shaping the future of the Smart Grid industry;
In the last 3 years we estimate that the world investment in Smart Grid has doubled from $16.2 billion in 2010 to $36.5 in 2012. However, it is rather unbalanced because the current share taken by smart meters is running at around 40% of the market, whilst its potential market value over the full 20 year program will be no more than 9%.
The structure of the business is currently skewed heavily towards the major international suppliers where 26 companies shared sales of $81.9 billion in 2012 giving an average revenue of $3.125 billion but only accounting for 1% of the population of suppliers.
Supply side Business Models and Routes to Market will change to exploit the opportunities of Smart Grid as applied to the Industrial and Commercial market, the interface with Smart Buildings and the Electrical Utility market.
Communications is the one of the 4 main sectors that now makes up a Pure Smart Grid business. There is a lack of expertise and understanding of communications technology within the utility industry to develop it. It will therefore require expertise and investment from the wider communications industry to rapidly transform this aspect of the business.
In the space of 6 years mergers and acquisitions have grown from $134 million in 2007 to $10.6 billion in 2011 and a near doubling in the value of deals at $19.5 billion in 2012. Both the growth and now scale of M&A activity show the supply side is gearing up to meet the requirements of new technology and forecast demand for pure smart grid products and systems worth approx. $2,000 billion over the next 20 years.
In the last 3 years M&A activity has been driven by strategic buys, particularly by the major global electrical transmission and distribution supplier companies. In 2010 strategic buys accounted for 73% of the deals, in 2011 they increased their share marginally to 75%. In 2012 they declined to 60% as acquisitions from companies external to electrical transmission and distribution industry, particularly IT and communications companies made some large and impressive acquisitions to gain a strong foothold in the Smart Grid business.
Total new VC investment for 2012 was $779 million based on 41 transactions, which is a fall of 37% on 2011. So along with Clean Tech VC investment it declined, but we believe that it has now bottomed out.
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