The overall goal of this report is to identify and prioritize the business opportunities for providers of smart grid technologies that will arise over the next 5 years as products utilizing these technologies increase their market penetration. In support of this goal, specific objectives of the report include:

• Identifying the smart grid technologies with the greatest commercial potential over the next 5 years (2009 to 2014).
• Estimating the market for these technologies in 2007 to 2008.
• Analyzing the technical, economic and other demand drivers for these products, and other prerequisites of success in these markets.
• Projecting the potential U.S. markets for these technologies through 2014.
• Analyzing macro-level political and economic forces that are helping to shape the market for smart grid technologies.

The century-old U.S. electrical grid has been called the largest interconnected machine on earth. It consists of more than 9,200 electric generating units with more than 1,000,000 MW of generating capacity connected to more than 300,000 miles of transmission lines. Several years ago, the U.S. National Academy of Engineering voted the national electrification made possible by this grid as the “most significant engineering achievement of the 20th Century.”

However, the grid is showing its age. There have been massive blackouts in recent years, including the 2003 Northeast blackout, the worst in the nation’s history. Although it was accidental, the 2003 blackout was a reminder of the grid’s vulnerability to terrorist attack.

Even leaving aside such massive outages, according to the Department of Energy, 41% more outages affected 50,000 or more consumers in the second half of the 1990s than in the first half of the decade. The “average” outage affected 15% more consumers from 1996 to 2000 than from 1991 to 1995 (409,854 versus 355,204).

In addition to growing concerns about the U.S. electric grid’s robustness and reliability, the grid was designed and built with one basic objective in mind, i.e., keeping the lights on. Meanwhile, other concerns have become increasingly important in the political and public dialogue about the status and future of the electrical grid, particularly:

• Energy efficiency
• Environmental impacts
• Consumer choice

Governments and utilities in the U.S. and elsewhere are investing in new technologies in order to build a 21st century grid that:

• Runs more efficiently
• Generates higher-quality power
• Resists attack
• Is self-healing
• Enables consumers to manage their energy use better and reduce costs
• Integrates decentralized generation (e.g., renewable energy) and storage (such as fuel cell) technologies