With the development of renewable energies and electrification in general, electricity grids are a key issue for future economic growth, energy security and the fight against global warming. As the demand for electricity grows faster than the development/renewal of grid infrastructure, the need for optimisation and efficiency is crucial. Smart grids are therefore at the heart of this transition around the world, with the greatest potential for growth in the Asian-Pacific region (demographics, share of fossil fuels). This area will require annual investments in the order of $60 billion between now and 2030 according to the International Energy Agency (IEA).
STRONG GROWTH MOMENTUM IN ASIA- PACIFIC
Smart grids are energy networks that incorporate information and communication technologies. By collecting information on the state of the network, smart grids help to match production, distribution and consumption and improve its operation. Applying technology in smart grids offers three major advantages:
- Flexibility, by enabling better management of the balance between electricity production and consumption;
- Reliability, by improving network efficiency and security;
- Accessibility, by encouraging the integration of renewable energy sources throughout the network.
They also enable the development of new uses, such as self-consumption, electric vehicle charging and electricity storage.
The utilities sector plays a central role in the value chain of smart grid development. The “Smart Grid Index”1, based on seven dimensions (monitoring & control, data analytics, supply reliability, DER integration, green energy, security, customer satisfaction), measures the degree of development of the main companies in the sector around the world. While North America and Europe unsurprisingly come out on top, with 78.9 and 75.8 points respectively, the greatest potential for growth lies in the Asia-Pacific region (70.5). This is because it is in this region that DER integration programmes are lagging furthest behind. And it is in these programmes that most of the information technologies are being used to address the issues of interconnection, network modelling and analysis, and micro-grid design, which are essential to the development of new uses. Another hint to the growth potential in the Asia-Pacific region is that, according to the IEA, more than 50% of smart grid- related patents are registered there (Japan, China, South Korea, Taiwan).
Finally, the main countries in the region are benefiting from proactive public policies to support the development of smart grids, whether in China (one of the three pillars of an annual investment programme of around $80 billion in grids) or Japan ($75 billion earmarked for grid renovation and upgrading).
OUR EXPOSURE TO THE SMART GRID MARKET IN ASIA-PACIFIC
The ODDO BHF Green Planet fund is currently invested in two major players in the Asia-Pacific smart grid market:
- Delta Electronics, one of the world’s leading Taiwanese manufacturers of power electronics, provides complete solutions (transformers, sensors, management software) for power grids and microgrids. The group generates 72% of its sales in the Asia-Pacific region;
- Hitachi, a Japanese group providing solutions for energy management, automation and sustainable mobility, generates 62% of its sales in the Asia- Pacific region.
