Smart Grid Market Size, Share, Growth, Report 2025 to 2034

Smart Grid Market Size and Growth 2025 to 2034

The global smart grid market size was valued at USD 74.21 billion in 2024 and is expected to be worth around USD 237.16 billion by 2034, growing at a compound annual growth rate (CAGR) of 17.20% from 2025 to 2034.

The need for energy has grown as a result of urbanization, rising living standards, and technological developments. Cities account for 80 percent of greenhouse gas emissions and use between 75 and 80 percent of all energy. This is concerning for the preservation of the ecosystem worldwide as well as for the supply of renewable energy. Efficient energy use and dependence on renewable resources will also help reduce the carbon footprint of humanity. The power grid in its current form is unreliable, has high transmission losses and poor power quality, is prone to brownouts and blackouts, provides inadequate power, and prevents the integration of distributed energy sources. There is a lack of monitoring and real-time control in the traditional non-smart systems, which poses a challenge for smart grids to act as real-time solutions.

The electricity utility industry is going through massive changes. The power grid has been around for a long time and it shows. It is costly, ineffective, and untrustworthy. Smart grids are becoming more and more necessary worldwide, and power companies must prioritize cost-effectiveness, smarter storage, and cleaner energy. With the use of cutting-edge automation, control, IT, and Internet of Things technology, the smart grid concept aims to improve the power grid by allowing for real-time monitoring and management of the electrical flow from generation to consumption. Among the many technologies it encompasses are energy storage systems (ESS), AI and ML tools, and advanced metering infrastructure (AMI), also known as smart meters. Power generation is optimized, distribution efficiency is increased, and educated consumer choices are supported by these technologies.

Among the drivers propelling the smart grid market's expansion are growing environmental protection concerns and the growing use of smart grid technology to increase energy conservation and consumption efficiency. Furthermore, some of the key elements propelling the market expansion include encouraging government laws and policies regarding the use of smart meters as well as rising expenditures in digital power infrastructure. However, it is anticipated that the market's expansion will be hampered by a lack of standards and growing privacy and security concerns. In addition, the growing number of electric cars on the road and the impending smart city initiatives in developing nations are anticipated to present significant market expansion prospects in the years to come.

Report Highlights

• North America region has lead the market and accounted for 38.30% of the total revenue share in 2024.
• Europe has recorded revenue share of 25.40% in 2024.
• By component, the software segment has generated revenue share of 49.50% in 2024.
• By technology, the wired segment has garnered revenue share of 59% in 2024.

Smart Grid Market Growth Factors

• Growing Electricity Demand: The demand for electricity keeps on growing. Every day electrical devices are becoming more and more common, ranging from electric autos and kitchen appliances to air conditioners, electric heaters, and multimedia devices. Smart meters provide real-time data interchange, which helps grid operators and suppliers better handle this growing demand. According to the Electric Power Research Institute, the ability of smart grids to monitor and regulate patterns of energy consumption is essential for a society that has growing electrical needs because it lowers electricity costs and reduces greenhouse gas emissions.
• Need for Secure Power Supply: Utilities and other energy providers can use the real-time data stream to identify any issues that could impact the entire system. With the help of smart devices and other integrated technology, technical energy losses, power spikes, and blackouts can be quickly identified and handled. These smart devices can perform remote control actions, maintenance, and remediation that ensure the functioning of the power system properly. Modern metering systems optimize and improve current energy services. Smart grids give utilities a safety net against system overheating while optimizing cost and reliability.
• Improved Efficiency and Flexibility: The integration of renewable energy sources has enhanced energy flow, minimized losses, and boosted the efficiency of the smart grid. Immensely flexible and adaptive smart grids can readily handle the heightened supply and demand for electricity. To balance supply and demand and bring down the grid peaks, market players are employing energy storage integration, dynamic pricing, and demand response programs. Further leading to, consumers and companies saving money and reducing carbon emissions.

Smart Grid Market Trends

• Ensuring Supply and Demand: Smart grid technologies' ability to reliably balance energy supply and demand is one of their most notable benefits. Given the challenges associated with storing electricity and the potential consequences of not meeting demand, this feature is completely necessary. A critical balance between supply and demand plays an important role in maintaining the functional integrity of the entire power system. Smart grids, with their capabilities to detect power spikes, blackouts, technical energy losses, wastage, and fraud, are perfectly suited for this task.
• Adoption of Renewable Energy: Dependency on unpredictable weather patterns can hinder solar and other renewable energy sources from time to time, which can lead to intermittent production. Smart grids facilitate the shift to sustainable energy along with highly efficient solutions. Smart grids help comprehend the supply and demand for energy in a better way. In addition, offering comprehensive insights into energy consumption trends and providing effective resource management are some of the benefits of using smart grids. A smart grid can also be used for efficiently storing electricity, and use it when demand is high, or when the renewable energy sources are inadequate.
• Integration of IoT: Integrating IoT devices into energy grids enables real-time energy monitoring and control. IoT-based sensors help grid operators prevent energy theft and avoid losses to the energy sector. Enabling remote control through IoT allows utilities to restrict energy access, while consumers and businesses use it to control smart devices. IoT thus simplifies monitoring grid assets by collecting real-time data, which further enables preventive maintenance with data processing technologies. These IoT solutions and data from smart meters enable utilities and grid operators to optimize energy distribution and reduce energy waste.
• Growing Need for Microgrids: To service distant areas, microgrids offer confined power generation and distribution capacity. Using regional renewable energy sources like solar, hydro, and wind, they provide affordable and dependable electricity in rural areas. Utilities use microgrids to provide backup power during grid outages, which is critical for hospitals, data centers, and other mission-critical infrastructure. Some startups are also developing microgrid systems tailored for urban applications. This reduces the load on the main grid and ensures continuous power supply for mission-critical infrastructure.

Report Scope

Smart Grid Market Dynamics

Drivers

Increased Government Support

• Several governments are increasingly investing in smart grid technology to help them achieve their carbon reduction targets and enable long-term economic prosperity. Moreover, many countries already have net energy metering protocols and devices. Some countries are still exploring the technology and its mechanism, which is expected to provide lucrative opportunities for the smart grid market.

Growing Demand for EMS

• The increasing integration of highly varying or fluctuating DG systems, especially PVs, wind turbines, electric vehicles, and ESSs, poses a serious threat to the stability of power systems as balancing the power supply and demand ratio becomes complicated. Under such threats, EMS is being introduced to ensure efficient balancing of power supply and consumption demand and to reduce peak loads during unwanted loads. EMS is used by grid operators as a tool to monitor, control, and optimize power generation and transmission systems. The main functions of the EMS include real-time network analysis and emergency analysis, power flow investigation, power factor, and safety improvement. The EMS enables real-time capabilities that allow the plant operator to monitor, analyze, and control power generation functions in real-time. It also enables automatic control of power generation.

Restraints

High Cost of Implementing a Smart Grid

• Cost is one of the biggest constraints in developing and implementing the smart grid, especially in developing countries. Many financial resources are associated with the transmission and distribution system, metering, and other related technologies. A full financial feasibility report is required before implementation. This financial feasibility includes the country's ability to pay the development costs for the smart grid infrastructure.

Lack of Standards

• The lack of standards can greatly affect the course of further technology development and diffusion, as well as the growth and competitiveness of industries. Without standards, there is a risk that the various smart grid technologies that are the subject of these increasing investments will become prematurely obsolete or, worse, be implemented without adequate security measures. Lack of standards can also hinder future innovation and the realization of promising applications, such as smart devices that respond to price and demand signals.

Opportunities

Growing Research Numbers

• There are several ongoing research activities to further develop the smart grid and make it more reliable and sustainable for modern needs. These researches focus on various technologies. These include forecasting, power flow optimization, communication, microgrid integration, demand, and energy management systems, compliance with standards for interoperability, scalability, economic factors, data encryption, and most importantly automation of generation, transmission, and distribution.

Adoption of Blockchain Technology

• To achieve data security in a decentralized smart grid, researchers are currently studying the application of blockchain technology. Blockchain technology is becoming increasingly important as a method of decentralizing data. Blockchain can be described as a distributed ledger with an increasing number of securely linked records called blocks. Blockchain networks are peer-to-peer (P2P), with their decentralization providing increased efficiency and security across data. Blockchain may vary in its permissions, while for secure data transfer in smart grid applications, private blockchain is most desirable against cyberattacks.

Challenges

Security Issues

• Security is one of the challenging issues in the development of the smart grid. With increasing automation, the grid becomes more vulnerable to cyberattacks through remote monitoring and control. According to the Electric Power Research Institute, cybersecurity of the system is one of the biggest issues of the smart grid. Since security is considered one of the biggest obstacles to the implementation of smart grid technology, ongoing research is required to remove this obstacle.

Technological Complexity

• The design and manufacturing of smart grid components can be technologically complex and require significant investment in R&D. Keeping up with the rapid pace of technological advancements can be challenging for some companies.

Smart Grid Market Segmental Analysis

The smart grid market is segmented in to component, application, solution, technology, end user and region. Based on component, the market is classified into hardware, software and services, Based on application, the market is classified into generation, transmission, distribution, consumption. Based on solution, the market is classified into advanced metering infrastructure, smart grid distribution management, smart grid communications, smart grid network management, substation automation, smart grid security and thers; Based on end use, the market is classified into residential, utility & industrial and commercial. Based on technology, the market is classified into wired and wireless.

Component Analysis

Software: Advanced software solutions are becoming essential for managing grids, data analytics, and predictive maintenance because of the increasing complications associated with the grids as a result of the integration of multiple energy sources. Further, this software also assists companies in optimizing energy distribution, integrating renewable resources effectively, and improving consumer engagement through the utilization of real-time data knowledge and insight. In addition, the governments have also increased the spending on advanced metering infrastructure (AMI) which is likely to spur market growth. For instance, to develop and implement smart grid technology, the Energy Independence and Security Act was approved by the US government in 2007.

Smart Grid Market Revenue Share, By Component, 2024 (%)

Hardware: Smart meters, sensors, and controllers are required to facilitate real-time monitoring and energy management. The development of sophisticated hardware is necessary for helping in the integration of the smart grid with renewable energy sources. Various governments of different countries have also been leading the charge in the process of installing smart electricity meters. For instance, the Australian Energy Market Commission initiated an independent rule to review electricity meters in December 2020 to install smart electricity meters all over the country further encouraging the adoption of smart grids.

Services: For the operation of the smart grids the services sector allows applications including the installation and integration of various modules. Therefore, companies opt for these services to make the integration and deployment process smooth and reduce costs. Services include consulting, installation, support, and maintenance services which are critical for the successful deployment and operation of smart grids. The complexity of smart grid systems requires specialized expertise, which increases the demand for skilled professionals who can manage these complex networks.

End Use Analysis

Residential: Growing populations, especially in developing countries, are increasingly demanding energy. There is a higher demand for energy from residential customers to better control costs and consumption. Homeowners are becoming more aware of the benefits of energy saving and are adopting smart grid technologies to optimize electricity consumption, reduce bills, and contribute to environmental sustainability. Furthermore, smart homes that are equipped with Internet of Things devices that need effective energy management are becoming highly popular among the population. Home management systems and smart meters (HEMS) are examples of smart grid technologies that give owners real-time control and monitoring over their day-to-day energy usage.

Utilities and Industry: The use of grid technologies is increasing worldwide. Governments of underdeveloped and emerging countries are also recognizing these technologies as strategic infrastructure investments that will help achieve carbon emission targets. In addition, growing populations, industrialization, and increasing environmental concerns due to fossil fuel power plants are forcing the government to plan regulatory standards related to carbon emissions. The industrial sector is further anticipated to grow significantly because of many favorable policies and tax incentives passed by the government.

Commercial: The increasing need for genuine and efficient energy management in different businesses and public institutions is one of the reasons driving the commercial segment. Malls, hospitals, and offices are among the commercial facilities that are implementing smart grid technologies to reduce operating costs, thereby ensuring a consistent supply of electricity, and improving operational sustainability. The commercial sector is encouraged to use renewable energy sources due to the mounting regulatory pressure of reducing carbon emissions which has also positively affected market expansion. Further, there is a growing number of commercial buildings that are utilizing advanced metering infrastructure and energy management systems for controlling load in a better manner and predictive maintenance is leading to market growth.

Smart Grid Market Regional Analysis

The smart grid market is segmented into various regions, including North America, Europe, Asia-Pacific, and LAMEA. The North America has dominated the market in 2024.

What factors contribute to North America's dominance in the smart grid market?

The North America smart grid market size was valued at USD 28.42 billion in 2024 and is expected to reach around USD 90.83 billion by 2034. The growth of the smart grid market in North America is attributed to the adoption of electric vehicles and large investments by private and public as well as government entities in this region. The region has a strong regulatory framework that supports the development of smart grids, including incentives and policies that encourage the use of smart technologies. There is also a growing demand for improved grid reliability and efficiency, especially in the face of extreme weather events. Moreover, the high penetration of advanced metering infrastructure and the drive for energy independence are further stimulating the market in the region.

What are the driving factors of Europe smart grid market?

The Europe smart grid market size was estimated at USD 18.85 billion in 2024 and is projected to hit around USD 60.24 billion by 2034. Europe is expected to grow owing to the encouraging government initiatives towards clean power generation in the region. The UK, France, and Germany are among the countries in Europe that hold a significant market share. Also, the increasing demand for energy efficiency in power supply is likely to drive the regional outlook. The growing investments in distribution automation and the increasing complexity of power distribution infrastructure are expected to enhance the market outlook. For example, the smart metering implementation program launched by the UK government in May 2020 resulted in a total of 26.6 million electricity meters being operated by major energy suppliers in residential homes across the UK.

Why is Asia-Pacific witnessing strong growth in smart grid market?

The Asia-Pacific smart grid market size was valued at USD 23.08 billion in 2024 and is expected to be worth around USD 73.76 billion by 2034. Asia Pacific holds a significant market position due to the wide adoption of these technologies and a strong focus on renewable energy growth. For example, in February 2020, the Indian government announced the installation of 1 million smart meters across the country under the Smart Meter National Program (SMNP). The region's major growth is coming from countries like China, India, Japan, Australia, and South Korea, with China being the most promising frontrunner in adopting these technologies. In addition, the growing smart city development programs in the region are expected to boost market growth.

LAMEA is expected to witness significant growth in the smart grid market

The LAMEA smart grid market size was valued at USD 3.86 billion in 2024 and is expected to be worth around USD 12.33 billion by 2034. Latin America is also expected to witness significant growth due to the large demand from Brazil and Mexico to support the increasing industrialization in the region. For example, in February 2021, Brazilian energy utility Amazonas Energia selected Landis+Gyr to implement an advanced metering infrastructure project in the Brazilian state of Amazonas. Landis+Gyr will provide the utility with its SGP+M Mesh IP smart central metering solution to serve around 100,000 customers. In the Middle East and Africa, high adoption of solutions to minimize outages and revenue losses and provide enhanced control with low disruption is expected to drive market growth. With the new projects to utilize various conventional and non-conventional energy resources, the region is expected to witness steady growth in the coming years.

Smart Grid Market Top Companies

• Wipro Ltd
• IBM Corporations
• Schneider Electric SA
• Landis+Gyr Group AG
• Honeywell International Inc. 
• Open Systems International Inc
• Oracle Corporations
• Trilliant Holdings Inc. 
• Elster Group GmbH 
• General Electric Company
• S&C Electric Company
• ABB Ltd
• Fujitsu Limited
• Itron Inc
• Cisco Systems Inc
• Toshiba Corporation 
• Eaton Corporation
• Mitsubishi Electric Corporation
• Echelon Corporation 
• Siemens AG
• Aclara Technologies LLC

Most companies are actively conducting research and development, believing that this will enable them to develop the next generation of active electronic component products that can generate even more energy than previous generations. In October 2022, Eaton announced the launch of its new advanced energy storage system, the EnergyAware UPS. This cutting-edge system helps consumers save money and increase power reliability by intelligently storing and delivering energy during times of high demand. It's easy to integrate Eaton's current energy management technologies. In June 2021, Schneider Electric said they would work together to encourage microgrids to help people and communities affected by climate and weather disasters. The company has deployed more than 170 kWh of mobile battery storage and more than 45 kW of mobile solar power to support more than 100 disaster relief and recovery missions, providing emergency electricity to Americans. Siemens is a major European industrial manufacturing company that specializes in several industries, such as infrastructure, transportation, and healthcare.

CEO Statements

James Aein, CEO of ENERZA

• "Integrating advanced robotics and AI into the grid is crucial for enhancing grid reliability and efficiency."

P Raja Manickam, CEO of Tata Electronics OSAT

• "Grids are increasingly becoming smart grids, so there are huge opportunities for the electronics market in this space."

Recent Developments

Key players in the smart grid market are pivotal in delivering a variety of innovative construction solutions, such as prefabrication techniques, sustainable materials, and advanced digital technologies.

• In June 2024, Rome-based Areti and Vienna-based Wiener Netze entered into a partnership to renew and digitize their networks. The collaboration was announced during a visit by Viennese officials to Rome's Castro Pretorio substation and is expected to focus on advanced smart meters, flexibility market management, and other smart grid technologies.
• In April 2024, IBM announced novel storage capabilities that offer customers control and choice in data centers to optimize performance. The novel alternative to IT lifecycle management, known as IBM Storage Assurance, provides access to software and hardware from IBM FlashSystem modernizations to protect customers' investments.
• In February 2024, Cisco signed a deal to purchase nearly 60,000 MWh of solar energy per year from IGNIS, a Spanish leader in renewable energy. This contract from Cisco enabled IGNIS to build a first-of-its-kind solar facility in “Empty Spain” or “España Vaciada” in Teruel, a key focus and investment area for the Spanish government.
• In February 2024, Itron and Schneider Electric will collaborate to improve grid management and energy resources for utilities as businesses and homeowners actively deploy DER (distributed energy resources) such as battery storage, rooftop solar, microgrids, and electric vehicles at the grid edge.

These advancements mark a notable expansion in the smart grid market, driven by strategic acquisitions and innovative projects. The focus is on boosting sustainability, enhancing construction efficiency, and broadening product offerings to meet diverse building needs.

Market Segmentation

By Component

• Hardware
• Software
• Services

By Application

• Generation
• Transmission
• Distribution
• Consumption/End Use

By Solution

• Advanced Metering Infrastructure
• Smart Grid Distribution Management
• Smart Grid Communications
• Smart Grid Network Management
• Substation Automation
• Smart Grid Security
• Others

By Technology

• Wired
• Wireless

By End Use

• Residential
• Utility & Industrial
• Commercial

By Region 

• North America
• Europe
• APAC
• LAMEA