Published 4Q Brad Casemore Industry Analyst. Bob Gohn Senior Analyst. Distribution Automation

Transcription

1 EXECUTIVE SUMMARY: Distribution Automation Distribution Switchgear, Volt/VAR Systems, Fault Detection/Isolation, and Feeder Protection/Control: Market Analysis and Forecasts Published 4Q 2010 NOTE: This document is a free excerpt of a larger research report. If you are interested in purchasing the full report, please contact Pike Research at sales@pikeresearch.com Brad Casemore Industry Analyst 0 Bob Gohn Senior Analyst

2 Section 1 EXECUTIVE SUMMARY While popular discussion of the smart grid frequently involves consumer-facing technologies such as smart meters, advanced metering infrastructure (AMI), and demand response, the distribution tiers of utility systems are often overlooked. Nonetheless, utilities have not lost sight of the importance of their distribution systems. Indeed, utilities have been automating their distribution tiers since the 1960s, and the term distribution automation is said to have originated in the 1970s. From a business standpoint, many in the industry have long understood that distribution automation (DA) can yield significant cost savings through measurable improvements to operational efficiency, reliability, service quality, and energy conservation. DA, after all, is a key component of the smart grid, playing an integral role in imbuing the grid with the very intelligence it needs to be smart. Considered within the context of the smart grid s big picture, DA is all about maintaining an optimal flow of electricity from the utility to consumers, ensuring that the service is delivered as efficiently, reliably, and cost-effectively as possible. This is something that is clearly in everybody s interest. The definition of DA has evolved with the technology that enables and supports it. In 1998, the IEEE defined it as follows: A set of technologies that enables an electric utility to remotely monitor, coordinate, and operate distribution components in a real time mode from remote locations. In 2005, the Electric Power Research Institute (EPRI) broadly defined the concept of advanced distribution automation (ADA) as denoting a fully controllable and flexible distribution system that will facilitate the exchange of electrical energy and information between participants and system components. In 2010, Bob Uluski of EPRI offered this definition of DA: A set of intelligent sensors, processors, and communication technologies that enables an electric utility to remotely monitor and coordinate its distribution assets, and operate these assets in an optimal manner with or without manual intervention. While that is a laudable goal, most utilities in North America and around the world are not there yet. But they are on the way, which is one of the main reasons the market for DA technologies will be so robust over the next several years. In fact, Pike Research forecasts significant growth in the worldwide DA market through The growth trajectory began in 2010, but it will move into even higher gear in 2011 and Growth will moderate in 2013 and 2014 before turning slightly negative in

3 Pike Research estimates that the global DA market reached about $1.55 billion in 2009, a 30% increase from In 2010, the market will grow 75% to reach $2.71 billion. It will soar in 2011, growing 111% to reach approximately $5.74 billion, and surge 53% to about $8.8 billion in From there, growth will moderate through 2013, with the market reaching a total value of about $9.7 billion on 10% growth that year. Pike Research estimates the market will hit approximately $10.43 billion in 2014 on growth of about 8% before market contraction occurs in In terms of compound annual growth rates (CAGRs), the worldwide DA market will experience a CAGR of 33.8% from 2009 to From 2010 to 2015, the CAGR will be 26.7%, while the CAGR during the years exhibiting the strongest growth from 2010 through 2014 will be approximately 40%. From 2009 to 2014, the global DA market will experience a sizzling CAGR of 46.5%. Chart 1.1 Distribution Automation Revenue, World Markets: $12,000 $10,000 ($ Millions) $8,000 $6,000 $4,000 $2,000 $ (Source: Pike Research) Key DA applications driving DA market growth will be distribution switchgear upgrades; Volt/VAR optimization (VVO); fault detection, isolation, and restoration (FDIR); and feeder protection systems and control. Switchgear and Volt/VAR will lead the charge, helped by a strong business case in many jurisdictions, high-profile reference deployments at numerous notable utilities, and proven products and technologies. Further innovations in DA technologies could result in stronger value propositions in the years ahead. Indeed, utilities increasing demands for interoperable products and technologies based on industry standards are recasting vendors innovation strategies. With customer lock-in based on proprietary technologies no longer tenable, major vendors are scrambling to respond with innovation and integration based on standards such as IEC They are also working together more extensively than before, establishing alliances and partnerships that bring end-to-end solutions, including whole products and services, to utility customers. 2

4 Meanwhile, network infrastructure, integral to the promise of the smart grid and DA, is ready to meet the challenge. The consensus from utilities and vendors alike is that the latest generation of communications networks based on fiber, RF technologies, or licensed 4G (such as WiMAX) from wireless operators is more than capable of accommodating the present and future needs of automated distribution systems. A key theme voiced by those throughout the industry is that technology is not a meaningful barrier to deployment of DA on the smart grid. For the most part, the digital technologies are up to the task, proven in other industries and commercial deployments worldwide. Instead, the biggest potential threat to both DA and the smart grid is likely to be represented by regulatory regimes and structures that are misaligned with smart grid objectives. Those issues, however, should abate as communications and dialogue improve between regulators, utilities, technology vendors, consultants, and other stakeholders. 3

5 Section 8 TABLE OF CONTENTS Section Executive Summary... 1 Section Market Issues Introduction and Background The Business Case for Distribution Automation Business Drivers Market Opportunities Volt/VAR Optimization Fault Detection, Isolation, and Restoration Feeder Protection and Control Digital Switchgear Distribution Transformers Reclosers Sectionalizers Disconnect Switches Fused Cutout Switches Other Field Equipment Relevant to DA Applications Capacitor Banks Voltage Regulators Fault Indicators and Sensors SCADA for Distribution Automation Market Challenges and Threats Standards and Interoperability Regulatory Issues Section Technology Issues Introduction Standards and Interoperability IEC Legacy Technologies Communications Networks Security Reliability Metrics Section Key Industry Players Key Players Utilities American Electric Power Duke Energy Florida Power & Light Hydro One Hydro-Québec Idaho Power National Grid Oklahoma Gas & Electric Company Progress Energy

6 Southern Company Tucson Electric Power Switchgear Vendors ABB Group Cooper Power Systems G&W Electric GE Energy Lucy Switchgear NOJA Power Switchgear S&C Electric Schneider Electric Siemens Energy Management, Control, and Optimization (Including SCADA and Volt/VAR) Current Group DC Systems Open Systems International Inc NovaTech PCS UtiliData Radius Schweitzer Engineering Laboratories Telvent Communications and Networking Cisco Systems Landis+Gyr Sensus Silver Spring Networks Tantalus Trilliant Consultants and Integrators Accenture EnerNex Corp IBM Section Market Forecasts Worldwide Distribution Automation Market Distribution Automation Revenue by Region Worldwide Distribution Automation Market by Technology Distribution Switchgear Volt/VAR Systems Fault Detection, Isolation, and Recovery Feeder Protection and Control Section Company Directory Section Acronym and Abbreviation List Section Table of Contents Section Table of Charts and Figures Section Scope of Study Sources and Methodology Notes

7 Section 9 TABLE OF CHARTS AND FIGURES Chart 1.1 Distribution Automation Revenue, World Markets: Chart 5.1 Distribution Automation Revenue, World Markets: Chart 5.2 Distribution Automation Revenue by Region, World Markets: Chart 5.3 Distribution Automation Revenue by Technology, World Markets: Chart 5.4 Distribution Switchgear Revenue, World Markets: Chart 5.5 Volt/VAR Revenue, World Markets: Chart 5.6 Fault Detection/Isolation Revenue, World Markets: Chart 5.7 Feeder Protection/Control Revenue, World Markets:

8 Section 10 SCOPE OF STUDY Pike Research has prepared this report to provide market intelligence to participants in the distribution automation (DA) market, including technology vendors, system integrators, electric utilities, regulators, and investors, as well as others with a direct or indirect interest in the space. The report has been designed to identify and evaluate major opportunities and challenges confronting those involved in distribution automation and to provide a market forecast for the industry. The report features analysis of demand drivers and market barriers, as well as a review of technical developments, industry standards, and regulatory considerations. It also provides contextually relevant profiles of key industry players in the DA marketplace. The report s purpose is not to provide an exhaustive technical assessment of the technologies and markets covered, but to offer a strategic examination of the DA market from a business perspective. Pike Research strives to identify and examine new market segments to aid readers in the development of their business models. All major global regions are included. The forecast period extends through SOURCES AND METHODOLOGY Pike Research s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Pike Research s analysis is primary research gained from phone and in-person interviews with industry leaders, including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Pike Research s analysts and the firm s staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analyst s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Pike Research s reports. Great care is taken in making sure that all analysis is well supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Pike Research is an independent market research firm whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. The firm is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets. 66

9 NOTES CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value) (1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2010 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding. 67

10 Published 4Q Pike Research LLC 1320 Pearl Street, Suite 300 Boulder, CO USA Tel: This publication is provided by Pike Research LLC ( Pike ). This publication may be used only as expressly permitted by license from Pike and may not otherwise be reproduced, recorded, photocopied, distributed, displayed, modified, extracted, accessed or used without the express written permission of Pike. Notwithstanding the foregoing, Pike makes no claim to any Government data and other data obtained from public sources found in this publication (whether or not the owners of such data are noted in this publication). If you do not have a license from Pike covering this publication, please refrain from accessing or using this publication. Please contact Pike to obtain a license to this publication. 68