Smart power technologies involve every aspect of electrical power generation, with a focus on environmentally sensitive and sustainable technologies. Smart power technologies enable the generation of more energy from the same amount of resources. One of the main reasons the power smart sector has an incredibly bright future is the fact that it creates a completely new type of flexibility to energy storage and generation. In this article, I want to show why the power smart sector will become a big market in the future, the challenges it faces, its prospects, and then choose my four top picks in the industry.
The power smart sector incorporates contributions from both IT and network teams to play a key role in the energy grid. A multitude of sensors and control technology need to be combined in novel ways. Standard internet, WiFi, and wireless telecom technologies will allow home owners and commercial businesses to control energy usage remotely. The phenomenon may transform the entire economics of the energy industry.
An interesting feature about the power smart sector is that the entire economics of the energy industry may be transformed from central supply to distribution on a much more dispersed system. Instead of being a one-way process, energy can be produced at residential quarters and sent back to the grid. Focused small players may find a great opportunity in the power smart sector.
For many, the sector involves just Internet of Things and wireless communications, but it is much more than this. When internet, wireless capability, and censors are deployed in energy supply networks, consumers can monitor energy consumption in real time. This increases the ability of networks to manage renewable energy sources such as wind and solar. The availability of a whole range of technologies in the power sector creates analytical possibilities. The network can help control when to feed in and when to source out energy if consumers mix in new battery technology and distributed energy sources.
Prospects
This ecosystem of technology and energy supply network is witnessing a major revolution, so it is no surprise that the overall market is expected to be huge. Figures vary according to the market research company one uses, but growth is expected to be big over the next five to 10 years, ranging between 8 to 18% increases annually. It is already several tens of billions U.S. dollars, and the global smart grid market is expected to exceed $400 billion in the next five years.
The power smart market is fragmented, as it consists numerous segments. Despite this, they are sizeable. Smart meters form a significant segment; it is expected to become an $18 billion market in the next four years. Another significant category is the smart grid data analytics market, which is expected to grow by 20% compound annual growth rate (CAGR) in the foreseeable future.
Renewable energy plays a key role in the power smart sector, as do batteries technology. It is no surprise then that governments will play a massive role, since nations require multiple energy sources. Last year, China beat U.S. in smart grip investments for the first time, with Germany, Spain, and Denmark all interested in a race for glory and dominance.
Analysts expect autonomous units would become more common place. In a survey, the top five disruptive technologies listed distributed energy generation, energy storage, internet of things, big data, and grid detection. This implies the market can expect small region or even singular building grids.
Another reason I think the power smart sector has an incredibly bright future is that its energy sources are consistently reducing costs. According to Solar Energy Industries Association and GTM Research, residential systems were 9.7% less expensive than a year ago. Commercial costs were 13.1% lower, and fixed utility projects were down by 7.6%, Companies like First Solar and SunPower are winning projects on the basis of the cost of their electricity. If costs continue to plummet, the power smart sector will overcome challenges posed by competitors.
Challenges
The power grid
The greatest challenge for the power smart sector is the current energy infrastructure in America. The U.S. has operated with the same network of poles and wires for more than a hundred years. The grid isn’t able to cope with renewable energy mix, as energy flows through transmission wires to local utilities. Until the current energy infrastructure is transformed, the power smart industry will not fossil fuel as an energy source.
Inefficiency
Most solar panels convert less than half of the sunlight beaming down on them into electricity. In fact, the best panels on the market only convert about 35 percent of sunlight into energy. Although solar efficiency has improved thanks to new innovations, it still has a long way to go reaching its maximum potential.
Investments
The cost of installing solar power has decreased drastically in the past few years. However, a report released by Bloomberg New Energy Finance states investments in clean energy have fallen about 21 percent since 2011, with investments of only $254 billion in the United States in 2014. Experts predict that annual investments in clean energy have to increase to $500 billion by 2020 and $1 trillion by 2030 to mitigate severe global temperature change. Despite the challenges, a lot of companies see the power smart sector's potential for profits. The following are my top picks for the sector.
Cisco manufactures and sells Internet Protocol based networking products and other services related to the information and communication technology sector worldwide. The company produces storage solutions that provide connectivity to end users, workstations, IP phones, wireless access points, and servers.
Cisco serves businesses of various sizes, public institutions, telecommunication companies, and other individuals. The company recently unveiled its Smart Connected Building solutions to interconnect and enable building systems carry out heating and electrical functions over the IP network. The solution enables building operation managers to monitor energy systems while adding renewable technologies such as wind, solar, and fuel cells. Cisco introduced EnergyWise Power Management tools. It allows consumers to manage energy consumption of IP devices to save up to 30% in energy use and costs.
Founded in 1984, the company is expected to grow 9.40% in the next five years, having achieved a 6.71% growth since 2010. With a profit margin of 18.30% and an operating margin of 22.91%, Cisco is competitive in the foreseeable future.
Alcatel Lucent (ALU, Financial)
Alcatel Lucent was founded in 1898 and is headquartered in Boulogne-Billancourt, France. It provides Internet Protocol, cloud networking, and ultra broadband services worldwide. It also provides optical networking equipment to transport information over fiber optic connections over long distances, as well as for traffic aggregation of fixed and mobile multi-service networks.
The company is fully dedicated to helping consumers meet their environmental goals, providing solutions that have significant positive environments. It collaborated with Trilliant to deploy IP utility networks to strengthen safety and reduce green house gas emissions by 16.5%, yielding $1.9 trillion in savings, an estimate 16.5% higher than previously calculated.
The company achieved a 5.1% growth in the last five years and analysts estimate it will grow 12.50% in the next five years. At an operating profit of 4.21% and a total cash flow of $6.75 billion dollars, Alcatel Lucent is a company to be watched on a long-term basis.
For a company like First Solar, the opportunities in the power smart sector are massive. It manufactures and sells to different clients in the United States. It also offers solar energy systems as well as develops a proprietary battery management system to enable the control of distributed energy storage for customers.
Just a few years ago, the company was a fallen star in the power smart sector, but it has refocused on research and development efforts, leading to a recent announcement it has achieved an 18.6% efficient solar mode.
mPhase Technologies (XDSL, Financial)
This is a publicly traded company pioneering a power smart technology made possible by numerous breakthroughs in nanotechnology. Its product has applications with the drug delivery system, liquid and chemical sensors system, and filtration system.
The company is developing the mPhase NanoBattery for storing energy with an unlimited shelf life. It is focused on commercializing the product for military and commercial applications.In addition, the company has a patent portfolio consisting of 11 owned and jointly owned patents.
Founded in 1996, it is headquartered in Clifton, New Jersey, with additional offices in Norwalk, Connecticut and New York City. Recently, it announced it is targeting the college market for the mPower Jump, a product offering peace of mind to students. Its fourth product, the mPower Track Jump, is the latest in a line of highly portable jump starters market for 250 million U.S. passenger, car, and truck registrations.
As an OTC, small-cap stock, it is higher risk than the other companies. However, it has shown a lot of promise with its initiatives. Its strategy is leverage on breakthroughs in microfluidics, microelectromechanical systems, and nanotechnology. It is worth consideration by investors looking for a speculative power smart company.
Conclusion
While the power smart sector involves more than just the internet of things, it has the capacity of issuing commands to networks to produce flexibility in terms of what can be done. Of course, the power smart sector has storage challenges, but the industry has the capacity to change the entire economies of the energy sector, bringing considerable benefits to investors.
