Earlier this week, a New York Times blog entry, China’s Smart Grid Investments Growing, quoted a recent study by Zpryme, a market-research and consulting firm, on the current state of global smart-grid investment.
The raw numbers show strong U.S. efforts, $7.1 billion in investments compared to China’s $7.3 billion for 2010 – with both numbers being almost 10 times higher than any other nation. This development certainly represents a positive effort by the U.S., particularly in comparison to minimal investment in other cleantech sectors. Mark Ishac, Managing Director of Zpryme, echoed these views in an e-mail to Americans for Energy Leadership:
“The difference [disparity between funding amount] between both economies is negligible, which illustrates positive ‘green power’ progress in the U.S. Per capita, Asia’s fastest growing economy has substantially more people to ‘connect’ to their national smart grid with similar funding.”
While applauding these U.S. investments, the progress of the Chinese market must be gaining significant attention in the conversation as well. American companies have certainly been taking notice of the opportunity. GE recently began plans to construct a smart-grid demonstration center in Yangzhou, China, and Cisco, Accenture, ABB, Hewlett-Packard, and Oracle have expressed interest in entering a Chinese market that IBM values at $400 million over the next four years.
According to the Zpryme report:
“As overall Chinese economic and consumer outlook improves and the pressure to join the smart grid movement intensifies one certainty is clear, look for a stronghold of companies to make strategic business alliances with China in 2010.”
As China moves forward aggressively, the U.S. will certainly need to maintain this level of investment to keep up its own smart-grid development. With this boost in funding possibly being largely attributable to temporary stimulus funding, the possibility of inadequate funding should not be overlooked.
But the business opportunities in China bring up another important point: that of the collaborative potential in cleantech development, as Peggy Liu, Chairperson of the Joint US China Cooperation on Clean Energy emphasized in a recent talk at Stanford. The development in Chinese infrastructure represents an opportunity for US companies as well – thus China’s tremendous investment and development in clean energy holds the potential to more than just Chinese companies. As Liu explained, the American and Chinese markets can contribute to each other by exploiting their respective comparative advantages.
But for the United States to keep up, the flow of American investments must stay strong. Without it, Chinese companies will move ahead alone and the smart-grid market opportunities in this Zpryme report will go by the wayside.
