A smart grid delivers electricity from suppliers to consumers using two-way digital technology to control appliances at consumers’ homes to save energy, reduce cost and increase reliability and transparency. Many governments see it as a way of addressing energy independence, global warming and emergency resilience issues.

The United States Department of Energy estimates that modernization of US grids with smart grid capabilities would save between $US46 billion and $US117 billion over the next 20 years in that country alone. As a result, the Obama administration has committed $US7.1 billion to development of a smart grid.

But the US is far from being the only country making a big investment in smart grid technology. China is expected to invest $US7.3 billion in smart grid loans, grants and tax incentives this year. China’s State Grid Corp. has set a goal of building a smart grid by 2020. It is estimated China will need to spend as much as $10 billion a year through 2020 to achieve this.

General Electric has already announcement that it is partnering with the City of Yangzhou, China, (which has a population of 4 million) to build a smart grid “demonstration centre” with the goal of deploying technologies, including wireless-enabled smart meters, home energy management systems and smart appliances, within four years. IBM has signed an agreement with ENN Group, a Chinese energy provider, to form a joint venture focused on “intelligent energy” and expects to generate a minimum of $US400 million in smart grid revenues in China over the next four years.

The European Union has set a similar target to China. In September, the EU issued a directive that requires 80 percent of Member State households to be equipped with smart meters by 2020. The German company, Siemens AG, has stated that it expects to have smart grid work worth €6 billion over the next five years.

Finland has already committed to achieving the 80 percent target by the end of 2013. Other Scandanavian countries are expected to follow suit.

A group of South Korean companies, including LG, SK Telecom and KT, are building a pilot smart grid on the island of Jeju, south of Soeul. The South Korean companies have stated that they are aiming for 30 percent of the global smart grid industry.