Smart Grid Market Outlook 2035: Surging to US$ 400.2 Bn with 17.1% CAGR to Power the Future of Energy

The global smart grid market, valued at US$ 70.5 Bn in 2024, is set for rapid expansion, projected to grow at a CAGR of 17.1% from 2025 to 2035. By the end of 2035, the industry is expected to reach an impressive US$ 400.2 Bn, underscoring its critical role in modernizing global electricity infrastructure, integrating renewables, and enhancing energy resilience.

Analysts’ Viewpoint: Smart Grids at the Center of Energy Transition

The momentum of the smart grid market reflects rising renewable energy integration, increasing electricity demand, and the need for grid modernization. Renewables such as solar and wind accounted for 13.4% of global electricity output (3935 TWh) in 2023, a figure set to rise in the coming years.

Utilities across the globe are investing heavily in automation, predictive maintenance, and advanced distribution management systems (ADMS). By reducing outages and optimizing asset utilization, smart grids lower operational costs while improving reliability. In parallel, smart meters and IoT-based sensors are helping utilities offer dynamic pricing, energy customization, and better consumer engagement.

North America leads the smart grid revolution, supported by U.S. investments in grid modernization, while Asia-Pacific is advancing rapidly, led by China, India, and Japan.

Global Smart Grid Market Overview

Unlike traditional one-way grids, smart grids enable two-way energy and information flows between producers and consumers. This architecture allows excess electricity, often generated by distributed energy resources (DERs) like solar panels or wind turbines, to be fed back into the grid.

Smart grids also introduce automation, digital communication, and real-time monitoring, allowing utilities to detect faults, optimize distribution, and conduct predictive maintenance. The benefits extend beyond reliability to include improved grid resilience, enhanced energy security, and consumer empowerment through transparent data.

Key Market Drivers

1. Growing Integration of Renewable Energy Sources

The intermittency of renewables like solar and wind creates challenges for stable grid operations. Smart grids are crucial in balancing fluctuating inputs with real-time demand through automated demand response and predictive analytics.

According to the U.S. EIA, renewables made up 22% of U.S. electricity generation in 2023, expected to reach 25% by 2025.

Annual global renewable investments surpassed US$ 600 Bn in 2023 (IEA), led by China, India, and the EU.

India’s Green Energy Corridor project aims to integrate 20 GW of renewable capacity using intelligent smart grid infrastructure.

As renewable penetration rises, the role of smart grids in stabilizing and synchronizing distributed resources becomes indispensable.

2. Rising Electricity Demand and Grid Modernization Needs

Global electricity consumption grew 2.2% in 2023 and is expected to rise by 50% by 2040. Rapid urbanization, industrial electrification, and electric vehicle (EV) adoption are straining outdated grid systems.

Smart grids provide solutions through:

Self-healing networks to reduce outages.

Automated monitoring to improve transmission efficiency.

Predictive maintenance to prevent costly breakdowns.

In the U.S., power outages cost businesses over US$ 150 Bn annually, a problem smart grids can mitigate. Similarly, China is investing US$ 100 Bn (2021–2025) in ultra-high-voltage (UHV) and smart transmission projects, while Brazil and India are upgrading distribution networks to accommodate demand growth.

Distribution: The Largest Application Segment

Distribution networks are the backbone of consumer electricity supply, making them the largest revenue segment in the smart grid ecosystem. Investments are being directed toward:

Smart meters: India has rolled out 8 million under the Smart Meter National Program, targeting 250 million by 2030.

ADMS & fault detection systems: China aims to automate 90% of urban distribution networks by 2030.

DER integration: Rooftop solar, EV charging, and microgrids are accelerating demand for advanced distribution solutions.

Regional Insights

North America (Leading Market)
Driven by massive U.S. investments in grid upgrades, favorable regulation, and DOE’s US$ 4.5 Bn Smart Grid Investment Grant Program, which has deployed 15+ million smart meters. Utilities like PG&E and Duke Energy are leaders in large-scale implementation.

Asia-Pacific
A fast-growing region led by China, Japan, and India.
- China’s State Grid Corporation invested US$ 77 Bn in 2023 in smart networks.
- Japan’s TEPCO has installed 30+ million smart meters, aiming for full nationwide deployment by 2025.
- India is scaling its Smart Meter National Program alongside EV charging infrastructure expansion.

Europe & Latin America
Enel is pioneering smart distribution in Italy, Spain, and Latin America, leveraging digital substations and AI-driven monitoring. Brazil, meanwhile, is seeing rising demand for smart metering and advanced grid management systems.

Competitive Landscape

The market features global utilities and technology companies driving innovation:

Mitsubishi Heavy Industries (MHI) – Active in Japan’s smart grid projects, offering AI-based TOMONI® predictive solutions for power plants and microgrids.

Enel – A leader in Europe and Latin America with millions of smart meters deployed, focusing on digital substations and demand response.

Ormat Technologies – Expanded via a US$ 271 Mn acquisition of geothermal and solar assets from Enel Green Power North America in 2024, strengthening grid integration.

Other players: Calpine, Toshiba Energy Systems, Berkshire Hathaway Energy, NV Energy, Sumitomo Corporation, Energy Development Corporation, and Soltec.

Competition revolves around grid automation technologies, DER integration, AI-based predictive maintenance, and localized infrastructure investments.

Future Outlook

The smart grid market is poised for exponential growth, underpinned by:

Widespread renewable integration requiring intelligent balancing systems.

IoT and AI adoption enabling predictive maintenance and real-time optimization.

Government incentives and investments in grid resilience.

Rising electrification trends across EVs, urbanization, and industrial energy demand.

By 2035, with a market value projected at US$ 400.2 Bn, smart grids will represent the backbone of a sustainable, secure, and consumer-centric electricity ecosystem.

Conclusion

The smart grid market is a cornerstone of the global clean energy transition. With strong regulatory support, surging electricity demand, and unprecedented renewable energy integration, smart grids are evolving into flexible, intelligent, and resilient systems