US and China Collaboration on Smart Grids-Significant Benefits for the Industry

Collaboration of the US and China can take the smart grid industry even further.
Published: Mon 24 Feb 2014

For the first time ever, China has outspent the US on smart grid installations. China spent US$4.3 billion on smart grids in 2013, most of which went on 62 million smart meters, while US smart grid spending dropped by about 33% to US$3.6 billion. This is according to a report released by research company Bloomberg New Energy Finance.

China has now installed 250 million smart meters with the aim of helping customers to reduce demand and cut emissions from the country’s carbon-intensive power grid. China has said that it will push out the end-date for completing its metering program from 2015 to 2017. China now has more than twice as many smart meters installed as the total number of households in the US.

The US is entering a second major smart grid phase: information integration. With its growing penetration rates for smart meters and distribution automation, the next phase for the US smart grid is using the new data coming in off the grid to improve areas like outage management, customer segmentation and theft detection.

Although global investment in the smart grid saw a relatively modest growth in 2013 after five years of rapid growth, the smart grid’s key drivers such as grid reliability, integration of renewable energy, and improved demand-side management are stronger than ever before.

US and China cooperation

The US and China plan to cooperate on building smart grids. These plans, which are expected to come in to effect as early as next year, hold a lot of promise as far as benefitting the smart grid is concerned.

We have listed the following opportunities that the smart grid industry can look forward to as a result of the collaboration:

  • Smart grid technology firms, both overseas and local, can only benefit as both countries search for new and more sophisticated technologies

  • The cooperation provides an opportunity for the world's two largest energy consumers to improve regional and global air quality through cleaner and more energy efficient development. By adopting new smart grid technology, energy efficiency levels and renewable generation will continue to grow.

  • This bilateral cooperation can build on years of U.S. NGO, foundation, and national laboratory work in the energy sector in China—organizations such as Natural Resource Defense Council, Energy Foundation, EDF, and Lawrence Berkeley National Laboratory. Notably, U.S. corporations are already on the move in China on smart grid. For example, business solutions and IT services providers such as GE, IBM, and Cisco have all reached out to China to offer their technical expertise on distribution issues, for unlike the U.S., Chinese planners and electric utilities are focusing on ultra-high voltage power generation and transmission.

  • Between the United States and China, current priorities for developing a modernized grid differ, with the United States focuses more on the "smart" and China on the "strong" grid. Moreover, the United States is faced with the challenge of upgrading an ageing, highly decentralized grid system and China is in the process of creating a new centralized power grid. Despite these differences there are opportunities for collaboration for both countries as they learn from eachother.

  • While China is focused on highly centralized projects to build high power lines, the country has already begun a phase of pilot projects in Chinese cities that are experimenting with micro grids, not unlike the pilots in the United States in Boulder, New York, and Miami. Additionally, public utility companies in both countries will have to drastically change the way they work, particularly on how they interact with customers. Therefore, exchanges and joint learning among power and utility companies and regulators in both countries could help both sides learn faster.
  • Such local-to-local partnerships could promote information exchange and cooperation that could not only promote joint learning on smart grid, but also help to create opportunities for more sub-national low-carbon development in other clean or energy efficient technologies.

Both countries have a tremendous amount to offer in the development of the smart grid. Collaboration between the two can only enhance the industry’s development.

Further Reading:

Bloomberg New Energy Finance-China out-spends the US for first time in $15BN smart grid market

Wilson Center-Wising Up:0020Smart Grid as New Opening for US China Energy Cooperation