THE SMART GRID IN EUROPE, 2012-2016: TECHNOLOGIES, MARKET FORECASTS AND UTILITY PROFILES GEERT-JAN VAN DER ZANDEN

| GTM RESEARCH
The strategies for engaging electricity markets in Europe are undergoing dramatic shifts; market liberalization and utility unbundling have promoted a wave of mergers and acquisitions, as well as a crop of new electric service providers across the continent. Within these new terms of engagement, the smart grid is emerging as a major focus for regulators and an opportunity for industry players, as Europe aims to optimize its renewables growth and nascent electric vehicle (EV) charging station deployment, as well as to achieve greater efficiency at the consumer level. By 2016, GTM Research forecasts 6.8 billion per year in smart grid investment in Europe. The market segments receiving the bulk of this investment will be Advanced Metering Infrastructure (AMI), Distribution Automation (DA), EVs and Utility Enterprise (IT systems). Currently, AMI is the most developed segment. GTM Research analyzes how utilities within each country are negotiating further deployment and triangulating between policy, in-house business cases and the consumer's role to enable industry growth.

LEVELS OF IMPLEMENTATION OF SMART METERING LEVELS OF IMPLEMENTATION OF SMART METERING IN EUROPEAN COUNTRIES IN EUROPEAN COUNTRIES
2020 AMI Total Market Forecast (# of meters, millions)
0-1 Regulatory Push 1 - 10 10 - 35
PORTUGAL

Regulatory Drive

FRANCE

First Movers
UK SPAIN

SWEDEN ITALY

FINLAND

IRELAND

Lagging
POLAND HUNGARY BULGARIA SLOVAKIA ROMANIA GREECE

NORWAY GERMANY

NETHERLANDS DENMARK

CZECH REP AUSTRIA ESTONIA

MALTA

BELGIUM SLOVENIA

-0

LATVIA

LITHUANIA

Dynamic Utilities
Utility Activity
PROACTIVE

REACTIVE

GTM Research's industry-leading analysis on the European smart grid market is a definitive resource for the global smart grid industry. The report offers strategic insight into the key drivers and barriers for growth in the region and examines the latest investment trends, providing a forecast of the market for AMI, DA, EV integration technologies and Utility Enterprise (IT systems). In addition, the report profiles the smart grid integration models and pilot projects of Europe's most active utilities, including EDF, ENEL, E.ON, GDF Suez, RWE, Iberdrola, Endesa, Centrica, Vattenfall, EDP Dong Energy and Fortum. The Smart Grid in Europe, , 2012-2016 also analyzes and compares smart grid positioning in Europe with that of utilities in the U.S., Japan and China.

TABLE OF CONTENTS
1. INTRODUCTION
1.1 Key Findings 3.3 IT Systems Integration 3.4 Integration of Distributed and Renewable Energy Sources 3.5 Electric Vehicles

2. DISTINCTIVE FEATURES OF THE SMART GRID IN EUROPE

2.1 Smart grid drivers 2.1.1 Environmental considerations, policies and stimulus funds 2.1.2 The need for energy security 2.1.3 Visions of a European Supergrid 2.1.4 Economic drivers 2.1.5 New technologies 2.2 Barriers to smart grid deployment 2.2.1 Policy and Regulation 2.2.2 Market uncertainty and distortions 2.2.3 Technology Barriers 2.2.4 Lack of Consumer Involvement 2.3 Smart grid: Utility and Societal Business Case 2.4 Comparison of EU to other smart grid markets 2.4.1 Regulatory drivers 2.4.2 Market dynamics: Changing business model? 2.4.3 Investment levels 2.4.4 Technology

4. MARKET FORECAST FOR THE EUROPEAN SMART GRID

4.1 Investment trends 4.1.1 Cleantech VC and M&A 4.1.2 Smart grid VC and M&A 4.2 Market segments forecasts 4.2.1 Advanced Metering Infrastructure 4.2.2 Distribution Automation 4.2.3 IT Systems Integration 4.2.4 DG/RES integration 4.2.5 EV integration

5. TOP EU ELECTRICITY UTILITIES, 2011

1. Electricit De France - France 2. Enel SpA - Italy 3. E.ON AG - Germany 4. GDF Suez SA - France 5. RWE AG - Germany 6. Iberdrola SA - Spain 7. Endesa SA Spain 8. Centrica - United Kingdom 9. Vattenfall AB - Sweden 10. Energias de Portugal SA (EDP) Portugal 11. DONG Energy - Denmark 12. FORTUM - Finland

3. TECHNOLOGY: LEADING SOLUTIONS

3.1 Advanced Metering Solutions 3.1.1 Meter rollouts and suppliers (already deployed) 3.1.2 Planned Rollouts in Spain, France and the U.K. 3.2 Distribution automation

LIST OF FIGURES
1 INTRODUCTION

European smart grid market forecast, 2012-2016 European hotspots for smart grid technology 2012-2016
2 DISTINCTIVE FEATURES OF THE SMART GRID IN EUROPE

Barriers to EV rollout RWE roadmap for EV integration Enel EV charging architecture

4 MARKET FORECAST FOR THE EUROPEAN SMART GRID

Smart grid drivers and barriers Drivers and Levels of implementation of smart metering in
European countries

Renewable energy in final energy consumption in Europe: 2008

status and 2020 target

Cleantech VC investments in Europe by category Smart grid VC funding, 2008-2011 Smart grid VC deals in Europe, 2010 Smart grid M&A deals in Europe, 2010 Legal, regulatory and implementation status of smart metering in
selected European markets

Future vision of the European HVDC interconnected Supergrid International comparison of reliability indices (2007) Electricity rates per KWh for households and industrial customers
in selected European markets

Declared AMI deployments and unit costs in Europe Cost components of AMI installation A : European meter deployment forecast, 2012-2016, B: AMI
investment forecast, 2012-2016

A now popular slide in many industry presentations: the smart grid

hype cycle

A : AMI Forecast Calculation, 2012-2016, B : AMI Forecast

Calculation, 2012-2016

Utility and societal business cases for full rollout of smart grid
technology in Europe (estimated annual)

Estimated impact of reduction in consumption on utility and

consumer cash flows

Average annual electricity bill in selected European markets Structure and key figures for European electricity generation,
transmission and distribution

Regional comparison of smart grid developments Cost and potential comparison of different GHG abatement
measures

Reduction of investment plans by E.ON, Enel, Vattenfall and

Iberdrola ( billions)

European hotspots for distribution automation, 2012-2016 Endpoints per secondary substation in Europe European DA forecast calculation, 2012-2016 European distribution automation market forecast, 2012-2016 IT Systems forecast for Europe, 2012-2016 European hotspots for DG/RES integration, 2012-2016 Examples of European EV sales forecasts European hotspots for EV integration, 2012-2016 EV Integration forecast calculation for Europe, 2012-2016 European EV integration forecast, 2012-2016
5 TOP EU ELECTRICITY UTILITIES, 2011

Field-level communication technologies for smart grids Timeline of EC smart grid R&D objectives and policy targets
3 TECHNOLOGY: LEADING SOLUTIONS

Key facts about Europes leading electricity utilities PREMIO project: Distributed Energy Resources Aggregation and
Management

European smart metering hotspots: Meters installed, confirmed

plans and 2020 forecast

Recent acquisitions and investments in the DA arena Focus areas of IT system investment in the European smart grid Contribution of renewables to European electricity production,
TWh and %

PREMIO R&D project overview Demonstration sites of the EUs Green eMotion project

Communication infrastructure for Enels Energy@Home project Enel Smart Grid Roadmap E.ONs Energy Butler architecture E-DeMa consortium partners PRIME Alliance members Vattenfalls Capital Investment Plans, 2011-2015

SAMPLE FIGURES WITH ANALYSIS

Smart SMART METERING HOTSPOTS: METERS INSTALLED, CONFIRMED PLANS AND 2020 FORECAST EUROPEAN Metering Hotspots:
METERS INSTALLED, CONFIRMED PLANS AND FORECAST 2020
IMPLEMENTED CONFIRMED PLANS FORECAST TOTAL 2020

The smart metering landscape in Europe is changing rapidly. An estimated 42.3 million smart meters are installed in the EU today, mainly as the result of
2,600 large rollouts in Italy, Sweden, Finland and Denmark.

With AMI rollouts planned in several of the larger

#
TOTAL AMI MARKET (000s)

1,760 4,650

680 member states, such as France, the U.K., and

1,920 1,800 27,000 5,840

Spain, this number is expected to rise rapidly over 720 the coming years and is expected to reach close 960 to 206 million by 2020. An overview of installed
10,400

and forecasted numbers of smart meters in each European market is given in this figure.

3,600

32,000 3,440 2,880

1,360

35,000

560

3,040

5,920

3,040 2,320 23,000 32,000 3,440

TIMELINE OF EC SMART GRID R&D OBJECTIVES AND POLICY TARGETS

METERING
Standardization for smart grid and meters

80% of EU households smart metered

All smart grid plans in Europe are synchronized to 2020, when an expected 80% of households should have smart meters installed. Smart meter rollouts have been delayed in some markets because of lack of interoperability standards or insufficient regulatory frameworks, as well as consumer concerns about privacy, such as in Germany and the Netherlands. Initial efforts to agree on interoperability standards did not succeed, but efforts are now being made to reach agreed-upon standards by the end of 2012. In 2013, carbon taxing will come into effect in Europe, further speeding up the need to integrate renewables. Another goal of the EC is to have a fully integrated internal energy market operating by 2014. A timeline of EC smart grid R&D objectives and policy targets is represented in this figure.

245

NETWORK TECHNOLOGIES

Demonstration program of critical power technologies Specication of secure offshore HVDC Feasibility of RES for grid stability R&D program and scale demonstrations to develop distribution automation network control and operation

Meshed HVDC network validated

Tools for pan-European grid monitoring and control

Start year to nish year

2010

2012

2014

2016

2018

2020

GRID ARCHITECTURE AND PLANNING

R&D + pilot tests: Development of modeling and planning tools for long term grid scenarios

Tool for architecture and long term grid scenario planning

R&D + pilot tests: validation of innovative pan-European grid Architecture R&D program on asset management and preventive maintenance

CUSTOMER ENGAGEMENT

Large scale demonstration involving customers: Demand response for energy efciency and reduction of peak consumption; smart meters and metering infrastructure Demonstrations operational Demonstrations validated Proposal for market designs R&D + pilot tests: efcient market design options based on simulation techniques Full Carbon taxing for utilities EU internal energy market

MARKET DESIGN

20-20-20 goals

SAMPLE PROFILES
ELECTRICIT DE FRANCE - FRANCE
Revenues (2010): 65.2 billion EBITDA: 16.6 billion Business areas Electricit de France (EDF), an integrated energy company, engages in the generation, transmission, distribution, supply, and trading of energies in France and internationally. It sells electricity to industry, local authorities, small businesses, and residential consumers. The company also offers district heating and thermal energy services to industry and local authorities. EDF owns 128 GW of power generation capacity and generates approximately 618.5 TWh of electricity worldwide. Of its sales of 65.2 billion, 36.2 billion are in France and 16.3 billion are in the U.K. and Italy. In terms of supply, Electricit De France (EDF) controls 22% of the European electricity market. It supplies close to 38 million customers worldwide, most of them in Europe.
GENERATION (2009) France U.K. Worldwide 453.6 TWh 72.1 TWh 618.5 TWh CUSTOMERS 27.7 million 5.6 million 37.9 million

The company generates electricity using mainly nuclear power (74.6 GW), conventional fossil-fired power (35 GW) and hydro power, but is growing its renewable power capacity rapidly through its subsidiary EDF Energies Nouvelles. Growth strategy EDFs growth strategy is based on three pillars:

Strengthening its market position in Europe Developing renewable energy Investing in nuclear revival
Renewable energy EDF owns 50% of EDF Energies Nouvelles (EDF EN), where it aims to reach 3.7 GW of installed capacity by the end of 2012, up from 2.65 GW at the end of 2009. EDF EN is planning to expand its photovoltaic capacity over this period from 219.7 MWc to 500MWc. The company is also active in biomass and geothermal energy. The strongest expansion is foreseen in wind energy generation: in Italy, EDF subsidiary Edison will add 800 MW of wind capacity to its existing 300 MW by 2014.

Utility profiles also include analysis on

Capital and R&D investments Smart grid initiatives Pilot projects Strategic outlook

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THE SMART GRID IN EUROPE, 2012-2016: TECHNOLOGIES, MARKET FORECASTS AND UTILITY PROFILES GEERT-JAN VAN DER ZANDEN | GTM RESEARCH
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