Frost & Sullivan: Increase in Offshore Wind and Solar Farms Drive the European Smart Grid Advanced Components Market

LONDON, May 5, 2010 - The world is in urgent need of a complete modern power grid to meet the
growing requirements for a reliable, secure, cost effective and
environmentally responsible power solution. With green issues such as climate
change and carbon emissions gaining prominence everyday, there is a greater
emphasis on power generation from renewable sources. High voltage direct
current (HVDC) is the only viable technology for offshore wind farms, as
electric power transmitted through underwater cables is not possible with
alternating current (AC). HVDC has potential benefits for the emerging super
grid, as it can mitigate the effects of intermittency by averaging the
outputs of wind and solar farms.

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New analysis from Frost & Sullivan (www.energy.frost.com),
European Smart Grid Market - Advanced Component, finds that the HVDC market
earned revenues of 550 million euro in 2008 and estimates this to reach 973.7
million euro in 2015. Project cost estimates are inclusive of cable, cable
installation, converter, station construction, management and technical
support, risk insurance.

"Harmonisation of electrical grids is a major step in complete grid
automation," says Frost & Sullivan Senior Research Analyst Vikas Ravindran.
"The rise in offshore wind and solar farms has resulted in the logical move
of opting for HVDC for electrical power transmission, which is set to become
the norm." HVDC is the only viable technology for offshore wind farms as
electric power is transmitted through underwater cables which is not possible
with AC. HVDC has potential benefits for the emerging super grid as they can
mitigate the effects of intermittency by averaging the outputs of wind and
solar farms.

HVDC technology has been in use for more than three decades, and is
primarily used for bulk power transmission. When used for long-distance power
transmission, HVDC has been less expensive and has lower electrical losses
compared to AC. The European electricity market is moving towards homogeneity
of its electricity networks with the announcement of 28 projects, out of
which sixteen are complete.

However, problems such as high cost of technology and the inability to be
used for shorter distances are retarding the growth of HVDC. Government
intervention plays a major role in determining the success of a HVDC project
concerning smooth electricity trade off between any two regions.

"Although the lower line construction cost is an advantage, the high
costs of the components continue to be a major hurdle," explains Vikas. "If
the cost of the systems is brought down significantly, the demand can be
expected to increase."

The total cost advantage can be realised only when the cost of
technologies used is at par with the existing AC systems. Retrofit projects
are another alternative, which major market participants should capitalise
on, as most of the existing HVDC systems are more than two decades old.

"Overhauling is the next big opportunity for market participants and work
is already on to replace the existing systems," concludes Vikas. "Recently,
there has been a renewed interest in projects that were decommissioned
earlier due to lack of funding or inappropriate technology."

European Smart Grid Market - Advanced Component is part of the Energy &
Power Growth Partnership Services programme, which also includes research in
the following markets: European Smart Meter Markets, United States Smart Grid
Market, and United States Smart Meter Market. All research services included
in subscriptions provide detailed market opportunities and industry trends
that have been evaluated following extensive interviews with market
participants.

If you are interested in more information on this study, please send an
e-mail to Chiara Carella, Corporate Communications, at
chiara.carella@frost.com, with your full name, company name, title, telephone
number, company e-mail address, company website, city, state and country.

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    European Smart Grid Market - Advanced Component
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    Contact:
    Chiara Carella
    Corporate Communications - Europe
    P: +44-(0)-20-7343 8314
    M: +44-(0)-753-3017689
    E: chiara.carella@frost.com

www.frost.com

Chiara Carella, Corporate Communications - Europe of Frost & Sullivan, +44-(0)-20-7343-8314, mobile, +44-(0)-753-3017689, chiara.carella at frost.com