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February 19, 2013

In Emerging Markets, Home-Grown Smart Grid Firms Face Off with 'Old Guard'



Across 35 emerging markets, more than 400 vendors are scrambling for a slice of the smart grid pie, which is predicted to reach a cumulative $66 billion by 2023, according to a research report released this week.

The number of home-grown companies active in smart grid projects now exceeds the number of major global vendors – indicating that there are more seats at the table. Indeed, over 160 local vendors already are based in Central and Eastern Europe, Eurasia, Latin America, Middle East and North Africa, South Africa and Southeast Asia. Of these, over 25 percent are currently active in significant smart grid projects. The study, “Emerging Markets Smart Grid: Vendor Analysis,” conducted by the Washington, DC-based Northeast Group, highlights this trend, as well as the increasing level of collaboration among international and local vendors.

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On average, leading international vendors currently have from three to five emerging market partners, which help them in a number of ways – from gaining local market insight to avoiding potential tariff barriers.

"The smart metering market, alone, is expected to cumulatively reach $66.3 billion in emerging markets by 2023," stated Northeast Group. "It is not surprising that emerging market-based companies are rising to meet this demand. Local vendors are often best positioned to understand the unique characteristics of specific smart grid markets, which can vary greatly from region to region. These vendors are proving to be invaluable partners for international vendors and several of them are also capable of carrying out large-scale projects on their own."


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International smart grid vendors have taken note of the market opportunity in emerging markets. Of the leading smart metering, distribution automation, IT, home energy management and professional services vendors, nearly all already have a significant presence in emerging markets, with over 10 percent  already having established offices in all 35 countries covered by the study.

"As smart grid markets in North America and Western Europe mature, the leading vendors are looking for growth opportunities in emerging markets. International vendors have already deployed nearly 3.5 million smart meters in emerging markets, with plans for millions more. The rise of emerging market-based local vendors is more likely to lead to increased partnerships rather than a significant loss in market share for the leading international vendors in most market," said the analysts.

These market dynamics could also lead to an increase in mergers and acquisitions. M&A activity is forecast to level off in the more developed smart grid markets after a flurry of activity over the past couple of years. Leading smart grid vendors with sufficient capital could look to acquire emerging market-based vendors, which often own technologies and capabilities well-suited to local markets. There already have been approximately a dozen significant acquisitions of emerging market-based smart grid vendors in recent years.

Northeast Group's study found that vendors in the smart grid market vary in terms of size – ranging from less than 10 employees to well over 1,000 – and segment, covering smart metering, distribution automation, IT, home energy management and professional services. The study provides a detailed analysis of the leading 40 emerging market-based vendors already active in smart grid projects, as well as an assessment of over 120 additional vendors based on company capacity, business partnerships and product development.




Edited by Allison Boccamazzo
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