The application of next-generation demand-side-management (DSM) technologies, such as the smart grid, is playing an increasingly important role in the modernization of the utilities sector and engaging consumers more effectively, international law firm Baker Botts says.

As global governments, regulators, and utilities firms seek to increase energy efficiencies, decrease emissions, and integrate renewables, the smart grid delivers an electricity supply network that uses digital communications technology to detect and react to local changes in demand. It enables customers to make more informed decisions about their energy consumption by adjusting both when they use electricity and how much they use, using smart meters. Smart-meter technology is the cornerstone of the smart grid, which will modernize the electricity system to be stronger, smarter, and more efficient over the next decade.

A recent report cites revenue generation in the global smart-grid market will grow by 27 percent from $19.8 million in 2016 to reach $65.4 million by 2021. The rising technology adoption will be driven by mandatory regulations and policies to reduce carbon emissions and the need to ensure grid reliability on a global scale at the same time. North America is expected to hold the largest market share in the smart-grid market between 2016 and 2021, but will record a slowdown by 2021. The slowdown will be a result of completion of a majority of projects funded under the American Recovery and Reinvestment Act of 2009. Smaller co-operative utilities, however, are expected to inject funds for smart-grid deployments in the United States. McKinsey predicts DSM could translate into as much as $59 million in societal benefit by 2019.

“The electric-power sector has been facing a number challenges, primarily resulting from an aging infrastructure that could affect supply stability, reliability, and security,” Elaine M. Walsh, an energy partner in Baker Botts' Washington office, said. “Large U.S. utilities, such as Xcel Energy, Pacific Gas and Electric, and American Electric Power, are now using smart-grid initiatives to increase demand response, improve reliability, ensure grid resiliency, and minimize their environmental impact. It will be important for utilities and other industry participants to set clear and consistent plans for the electricity grid, in line with regulatory policies, that allow for innovative investment in this technology to demonstrate its benefits.”