![](papers/GSEDA_note_SmartGrid.gif)
DOWNLOAD PDF
"Smart
Grids Bring Opportunities for EDA and Embedded Software Companies" |
Smart Grids Bring Opportunities for EDA and Embedded Software
Companies
- As world economies struggle with the effects of the
current macro-economic recession, many countries have
announced stimulus spending plans especially for infrastructure
projects. Long overdue investment is finally happening
in aging infrastructure facilities like dams, roads and
bridges. Investment in the Smart Grid has drawn a lot
of attention recently. While content creation i.e. methods
of generating electricity held the most attention over
the previous decade – witness thegrowth of alternative
energy sources such as solar power, wind and water, and
debates over coal fired generation and nuclear generation-
storage, transmission and distribution are now the focus.
Given the billions of dollars that are expected to flow
into projects related to the smart grid, it is no surprise
that hi tech companies are all lining up for a piece of
the pie. Looking down the supply chain, it would then
stand to reason that the EDA industry and the embedded
software industry can hope to gain a small share of the
dollars flowing from this initiative.
What is the Smart Grid?
The smart grid can be described as a generation, transmission
and distribution mechanism that allows for two-way information
flows. While there is no doubt that aging infrastructure
needs to be replaced and will likely consume the bulk
of the first stage of spending, the emerging vision is
of a well-monitored network that can allow producers and
consumers of electricity to be connected in real time
through the use of smart meters and other smart appliances.
Additionally, real time information about grid performance
will allow utilities to monitor, adjust and respond to
changes in demand and supply. On this infrastructure foundation,
there is an expectation that third parties can begin to
develop energy management software, security software
and other new and innovative applications. In the grand
scheme of things, there are those who believe that the
smart grid will perhaps become the next information superhighway.
Where do the opportunities lie for EDA and Embedded
software companies?
Today, Cisco, IBM, Google, Intel and a couple of embedded
device manufacturers such as Echelon, are at the front
of those staking claim to government spending that is
expected to flow into electricity transmission and distribution.
It is expected that investments will be made in data monitoring
systems, smart meters that will be installed at customer
sites (residential and commercial) and other sensors that
may be deployed throughout the grid for data collection
and analysis and security monitoring. Data monitoring
centers might well be SCADA systems under a new name but
at the end of the day, they involve server deployments,
middleware, software and real time data monitoring, network
management software and other IT applications.
There are opportunities for EDA and embedded software
vendors to participate in the market though likely it
will be through existing partnerships that are in place
with device manufacturers and semiconductor vendors. Perhaps
one way to size the possible opportunity that the design
engineering community could potentially participate in,
is to look at the IT markets today. Consider the graphic
below showing the total size of the IT spending market
drawn from Gartner and IDC press releases and my estimates.
The $3 Trillion US includes telecom equipment spending
and IT services (not sized separately here).
Source: Gartner and IDC news
releases 2008-9 and Gary Smith EDA estimates May 2009
While there is definitely opportunity for all vendors
in the supply chain to participate in the market, calculating
the actual opportunity will depend upon the implementation
paths being followed. For vendors that offer software,
hardware and services, the market potential is obviously
greater than for those that specialize in specific areas
of IT hardware or design software. It is worth noting
that while the US government is currently committing an
estimated $4.5Billion for smart grid efforts, there will
be additional spending coming from the corporate utilities
sector and from other government agencies around the world
that are also looking to invest in smart grid technology.
Additionally consider that government spending usually
takes awhile to work its way through the pipeline. So
the opportunity here must be considered as a TAM that
will be available over time.
And A Word About Standards
It is also interesting to note that the IEEE is planning
to kick off a standards committee meeting in June charged
with designing standards for various parts of the smart
grid effort. All this is well and good. Standards offer
a level playing field for all participants, or at least
hope for a more level one. Just last week, 16 standards
for the smart grid have been announced for interoperability
among competing standards. Interoperability, always a
favorite topic in EDA, has just been given a whole new
sandbox to play in.
In conclusion, the utility industry is undergoing a large
amount of investment in IT networking and other software
technologies. Opportunities are available to EDA and embedded
software vendors through partnerships with device manufacturers
and other hardware and service partners.
Daya Nadamuni
|