Smart grid innovations booming with Asia as emerging hub

Smart grid innovations reached their highest level in 2022, the IEA reveals in a new review of patent data .

While the smart grid innovations – as measured by the number of smart grid ‘international patent families’ (IPFs) as a share of the overall power IPFs – have been on the decline since a high in 2011, they increased dramatically in 2022, provisional data indicates.

In 2011 there were 2,000 unique smart grid inventions produced, representing 11% of power sector innovations. Following the period of decline to 7%, the relative share of smart grid innovations increased to 13% in 2022, the IEA study finds, suggesting alignment with the trajectory of its ‘Net zero by 2050’ scenario.

Over the same period there also has been a significant shift in the geographical distribution of the smart grid innovations with a halving of activity in North America from 39% in the period 2002-2006 to 16% in 2017-2021. In East Asia – mainly in Japan and China – there was a doubling from 27% to 55% over the same periods.

In contrast, in Europe activity has stayed relatively constant at around 19%.

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Smart grid technology trends

The IEA study, A Global Review of Patent Data for Smart Grid Technologies, aims to review trends in smart grid innovation globally through analysis of the IPFs, according to the classification of the European Patent Office and the US Patent and Trademark Office.

IPFs serve as a proxy for a distinct invention and correspond to a set of patent applications published in at least two countries.

Between 2000 and 2023 there were approximately 16,000 IPFs globally in the technology domains associated with smart grids, constituting 0.2% of total IPFs across all technologies.

Overall, from 2000 to 2023, IPFs corresponding to smart grid technologies represented about 5% of IPFs within the power sector, with the decline after 2011 attributed to a lack of stability in grid investment, especially in developing economies.

The smart grid classification also provides a breakdown into three primary groupings – systems supporting electrical power generation, transmission or distribution, end user applications and complementary innovations supporting digitalisation of the power sector.

From 2000 to 2005 smart grid innovation in these three primary groupings followed the same growth trajectory.

Subsequently from 2008 to 2014, smart grid innovation was strongest in end-user applications, generating more IPFs than the other two categories, but since then has declined, as has the complementary innovations category.

Conversely from 2020 to 2021, a peak is observed in the share of smart grid IPFs involving systems supporting electrical power generation, transmission or distribution, with the category representing 40% of the total smart grid IPFs registered in this period.

In particular, the two smart grid technologies that have been the top contributors to innovation in this category, with around 20% share each, are ‘Monitoring or controlling equipment for energy generation units’ and ‘Systems or methods supporting the power network operation or management’, and attributed to a higher share of general capital investment in power equipment in the more recent years.

Within these, the top technologies are systems supporting the interoperability of electric or hybrid vehicles and demand response systems.

Geographical trends

Another finding of the review is the geographical concentration of smart grid inventions and between 2000 and 2022 these were witnessed in dozens of cities around the world.

Overall, smart grid IPFs have been filed by inventors residing in 680 metropolitan areas or distinct cities (not within 100 km of a metropolitan area) around the world.

However, a concentrated innovation model is identified as more than 40% of smart grid innovation are happening in ten cities around the world.

The top six of these are Tokyo, Seoul, Beijing, Nagoya, Nuremberg and the San Francisco Bay Area, with Tokyo’s prevalence across the whole sector and within the Asia region explained as home to top digital innovation companies such as Toshiba, Fujitsu, Hitachi, Honda, Mitsubishi, NEC and Nishan Sony.

In Europe, Nuremberg in Germany, with more than 500 fractional IPFs between 2000 and 2022, is the hub of innovation as it hosts Siemens and the Huawei Nuremberg Research Centre.

In the US the San Francisco Bay Area, including Palo Alto, San Carlos and San Jose, is the centre of innovation as it is home to Tesla, PG&E, Schneider Electric and ChargePoint among others.

Despite the showing of European cities, the data also indicates the region as emerging as a hub for smart grid technology specialisation, whereas Japan, China and the US, despite their considerable innovation endeavours in smart grids, appear to lack a distinct specialisation in this particular field of innovation.