Smart grid technologies are often portrayed as being vital to the efforts to increase renewable energy production, yet this aspect of the smart grid is the least developed.

Massive amounts of new transmission lines will be necessary to access the best large-scale wind and solar resources, however the biggest buzz is about smart grid technologies at the distribution level.

These tools include static VAR compensators and synchrophasors within the transmission grid; advanced energy storage at the transmission, distribution, and residential levels; dynamic pricing demand response; virtual power plants; microgrids; and smart wind and solar technologies.

Except for a limited number of geographies, the hype surrounding the smart grid’s vaunted ability to aggregate and optimize renewables is largely relegated to PowerPoint presentations, pilot programs, and long range planning.

The success record of smart grid renewables integration is a mixed bag, with European countries boldly plowing forward, while many U.S. utilities exhibit what has been described by a former California state regulator as “electrotrophobia” - the fear of change linked to greater reliance upon intermittent renewable energy resources.

Pike Research anticipates that this situation will change over the next several years, creating a significant expansion of the market opportunity for smart grid technologies that enable the integration of renewables.

Smart Grid Technologies

The smart grid technologies that are segmented and forecast in this report include the following:

 Static volt-ampere reactive (VAR) compensators (SVCs): Installed within the transmission grid, these devices help firm up the power grid by providing reactive power often required by grid operators due to the variability of wind and solar generation.

 Synchrophasors: Also installed within the transmission grid, synchrophasors provide a much more granular assessment of actual grid conditions. These devices provide data to grid operators that helps them better manage power quality and reliability challenges that are often created by an increased penetration of variable renewable generation.

 Advanced energy storage: Installed at the transmission, distribution, and residential levels of grid service, this category of smart grid technology is highly diverse and can provide a vast array of integration functions. The market forecasts of energy storage in this report focus on the following emerging technologies: advanced flow batteries, advanced lithium ion (Li-ion) batteries, sodium sulfur (NaS) batteries, and compressed air energy storage (CAES). Pike Research also provides forecasts of pumped hydro storage, a technology that has been utilized for decades.

 Dynamic pricing demand response (DR): The vast majority of DR in operation today is not being used to help integrate renewable energy into the grid. However, reliance upon automated DR (ADR) that responds to price signals and/or grid operator signals will grow over the market forecast horizon.

 Virtual power plants (VPPs): ADR resources can be integrated into VPPs. Today, though, VPPs tend to be aggregations designed to better integrate supply-side renewable resources into optimization networks. This report highlights forecasts for supply-side and mixed asset VPPs that are used explicitly for smart grid renewables integration.

 Microgrids: Last, but certainly not least, in terms of the market forecasts in this report are microgrids, the leading technology platform of choice today for smart grid renewables integration. This report looks at the role that five different microgrid segments are playing in regards to renewable integration. The remote microgrid segment is the most robust market in terms of overall revenue.

 Smart wind and solar technologies: This report also provides estimates of the growing pool of variable renewables that have the “smarts” to self-provide many of the ancillary services that a smart grid offers. As markets for smart grid renewables integration mature, Pike Research expects that these renewable generators themselves will play a vital role in enhancing grid power quality and reliability.

Revenue from smart grid renewables integration will reach almost $4 billion in 2012, the cleantech market intelligence firm forecasts, and climb to $13 billion by 2018. The sector’s compound annual growth rate (CAGR) over those six years will be nearly 23%.