Smart Grid Market Projected to Reach US$ 259.15 Billion by 2035, Supported by Growth in Virtual Power Plants Says Astute Analytica

Driven by urgent decarbonization and electrification needs, the smart grid market is rapidly shifting toward digital intelligence and infrastructure resilience. Major industrial players are transforming legacy networks into autonomous, bi-directional systems to ensure global energy stability against climate volatility.

Chicago, Jan. 08, 2026 (GLOBE NEWSWIRE) — The global smart grid market was valued at US$ 52.55 billion in 2025 and is expected to reach USD 259.15 billion by 2035, growing at a CAGR of 17.30% during the forecast period 2026–2035.

The smart grid market is swiftly evolving from a phase of hardware connectivity into an era of cognitive automation. The sector is moving beyond basic Advanced Metering Infrastructure (AMI) rollouts toward deep “Grid Edge Intelligence.” This shift is quantifiable: the market for Generative AI in utilities already hit USD 1.03 billion in 2024, signaling that future value lies in software that proactively manages load rather than merely reporting it. Utilities are increasingly capitalizing on digital substations—a segment valued at USD 7.96 billion—to execute real-time, automated fault corrections. Consequently, the grid is transforming from a passive delivery mechanism into a self-healing network capable of orchestrating the chaotic interplay of distributed renewables without human intervention.

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Simultaneously, the functional boundaries of the smart grid market are expanding to absorb the transportation sector, effectively turning electric vehicles into mobile power plants. With North American V2G capacity reaching 37.5 GW in 2024, the grid is morphing into a dynamic, bi-directional flexibility machine. This structural revolution is underpinned by unprecedented capital commitments to physical hardening, evidenced by global transmission investments topping USD 343.2 billion in 2024. The trajectory is locked in by massive commercial inertia; industry giants like Siemens Energy now hold record backlogs exceeding EUR 136 billion, confirming that this modernization cycle is structurally secured for the coming decade. As supply chains localize to mitigate geopolitical risk, the market is heading toward a decentralized, highly hardened state where energy security and digital agility are inseparable.

Key Findings

• North America dominated the smart grid market with the highest revenue share in 2025, driven by massive utility investments in grid modernization and renewables integration.​
• Asia-Pacific set to register the highest CAGR through the forecast period, fueled by rapid urbanization, government initiatives like India’s smart meter rollout, and surging demand in China and India.​
• Among technologies, advanced metering infrastructure captured the largest revenue share in 2025, enabling real-time data for efficient billing and demand management.​
• In applications, distribution claimed the biggest market share at 35% in 2025.

By Technology, Advanced Metering Infrastructure Commands Top Revenue Share via Cellular Migration and VPP Integration

In 2025, the advanced metering infrastructure segment’s revenue dominance in the smart grid market was driven not just by unit volume, but by a massive technological migration toward Cellular IoT (NB-IoT and LTE-M). Unlike previous deployment cycles that relied on utility-owned RF mesh networks, 2025 saw a decisive pivot toward public cellular infrastructure. Utilities, aiming to reduce operational overhead, favored cellular-enabled meters that offer deeper penetration and lower latency. This shift significantly increased the average revenue per unit, as these next-generation meters are equipped with advanced edge computing modules necessary for the burgeoning Virtual Power Plant (VPP) market.

With over 37.5 GW of flexible VPP capacity now online in North America smart grid market alone, the smart meter has transformed from a billing endpoint into a high-frequency trading gateway. Utilities are no longer just collecting data; they are orchestrating millions of distributed assets—from residential batteries to smart thermostats—in real-time. This requirement for sub-minute interval data and bidirectional control has forced a hardware upgrade cycle that far exceeds the value of traditional metering, cementing AMI’s revenue leadership.

By Application, Transmission Captures 28% Market Share Driven by AI Loads and Climate Hardening

The Transmission segment’s capture 25% share of the smart grid market, which is the direct result of a “Capex Super-cycle” triggered by the AI Data Center boom. In 2025, the primary stressor on the grid shifted from variable renewable generation to the baseload intensity of hyperscale computing facilities. Meeting this unanticipated demand required the accelerated commissioning of high-capacity transmission corridors, turning data centers into the grid’s new “anchor tenants” and driving massive project values.

Furthermore, market share of the transmission application in the smart grid market was heavily bolstered by “Grid Hardening” initiatives. In response to severe weather events, utilities globally allocated record capital—up to 34% of total transmission budgets in some regions—specifically toward resilience measures like Strategic Undergrounding. The cost per mile for burying high-voltage lines is significantly higher than overhead construction, artificially inflating the segment’s market value. Consequently, the Transmission dominance in 2025 reflects a market pricing in the premium for physical security against climate threats, alongside the frantic expansion needed to power the digital economy.

Global Utilities Channel Record Capital Expenditure Into Physical and Digital Grid Upgrades

Capital flows into the Smart grid market reached historic levels in 2024 as nations moved to bridge the gap between legacy infrastructure and future energy demands. China State Grid exemplified this aggression by committing a massive 650 billion yuan (approx. USD 89 billion) for grid construction in 2025 specifically to support renewable integration. Western economies mirrored this trend, with the U.S. Department of Energy (DOE) announcing USD 4.2 billion in federal funding for 46 specific grid projects in October 2024 alone. Simultaneously, the European Union identified a funding gap requiring EUR 584 billion by 2030, a realization that triggered immediate, actionable investment plans throughout late 2024 to prevent systemic bottlenecks.

Corporations are aligning their manufacturing footprints to capture this surging demand. Hitachi Energy announced a INR 2,000 crore (USD 240 million) investment in Indian operations in October 2024 to support domestic projects, while global grid digitalization investment is projected to reach USD 81 billion for the full year 2024. National Grid in the UK announced a specific investment plan of GBP 35 billion (EUR 42.2 billion) starting in 2026, with initial spending ramping up in 2025. China Southern Power Grid allocated capital to upgrade its network, targeting a massive investment increase of over 50% by 2027.

Gigawatt Scale Renewable Integration Forces Immediate Physical Modernization Of Global Power Networks

The physical capability of the Smart grid market is expanding rapidly to accommodate the intermittent nature of gigawatt-scale renewable generation. China connected a record 1,350 GW of wind and solar capacity to its grid by year-end 2024, placing immense pressure on load management systems. To handle similar cross-border flows, the European Union set a binding target to integrate 23 GW of new transmission capacity by the end of 2025. SolarPower Europe reported that 65.5 GW of new solar photovoltaic capacity was added to the EU grid in 2024, necessitating advanced digital balancing tools.

Project-level executions demonstrate the scale of these engineering feats. Hitachi Energy successfully integrated over 150 GW of High-Voltage Direct Current (HVDC) links globally as of early 2025. In the United States smart grid market, Pattern Energy is constructing the SunZia Transmission project to integrate 3,515 MW of wind power, with operations targeted for 2025. Emerging markets are equally active; India tendered projects to evacuate 500 GW of renewable energy, awarding specific HVDC packages for the Bhadla-Fatehpur link in 2025. Furthermore, the UK connected 35 GW of new power generation and storage to its transmission network in the 2024-2025 cycle, proving that renewable integration is a primary driver of grid modernization.

Advanced Metering Infrastructure Remains The Primary Revenue Driver For Global Utility Digitalization in the Smart Grid Market

Smart meters continue to serve as the foundational sensory layer for the Smart grid market, providing the granular data required for modern billing and load analysis. The global installed base of smart meters surpassed 1.8 billion units by the end of 2024, creating a massive data ecosystem. North America contributed significantly to this figure, reaching an installed base of 152.4 million smart electricity meters in 2024. Developing economies are now accelerating deployment, evidenced by India installing 22.9 million smart meters under its national program as of March 12, 2025, and IntelliSmart installing 66,000 units in a single month during December 2024.

Large-scale contracts are sustaining this momentum across diverse geographies. LUMA Energy in Puerto Rico signed a contract to deploy 1.5 million smart meters across the island in December 2024 to enhance visibility. Similarly, JEPCO in Jordan initiated a project to manage data from 1.5 million smart meters using Itron’s system in 2024. Financially, these rollouts are lucrative; Landis+Gyr secured an order intake of USD 2.6 billion in its Fiscal Year 2024 driven by these AMI contracts. These deployments confirm that AMI remains the critical “edge” of the grid, feeding data into the broader digital ecosystem.

Artificial Intelligence and Cybersecurity Spend Is Outpacing Traditional Hardware Investment Growth Trajectories in the Smart Grid Market

Utilities are shifting their budgets toward software and intelligence, making AI a central pillar of the market. The market for Generative AI in utilities was valued at USD 1.03 billion in 2024, with 54% of utility executives surveyed identifying it as a pivotal tool for green energy management. Siemens Energy reported 32% year-on-year revenue growth in its Grid Technologies division in Q4 2024, driven specifically by this demand for digital grid solutions. Schneider Electric saw its software and services revenue grow, with 24% of 2024 end orders coming specifically from the data center segment that supports these digital architectures.

Cybersecurity has emerged as a parallel non-negotiable expense in the smart grid market due to rising threats. Forescout reported that U.S. utilities faced 1,162 distinct cyberattacks in 2024, highlighting the vulnerability of connected infrastructure. Check Point Research documented an average of 1,339 weekly attacks on utility networks by Q3 2024. These threats force utilities to invest in hardened systems, directly expanding the addressable market. Consequently, as the grid becomes more software-defined, the intersection of AI optimization and cyber defense is becoming the fastest-growing expenditure category for grid operators.

Vehicle To Grid Technology is Transitioning From Pilot Phase To Commercial Reality

The smart grid market is expanding to include mobile storage assets as Electric Vehicles (EVs) become grid-interactive. The North American V2G (Vehicle-to-Grid) market reached an operational capacity of 37.5 GW in 2024, effectively turning fleets into power plants. Consequently, the global V2G technology market infrastructure segment was valued at USD 2.17 billion in 2024. Major automotive players are validating this shift; Nissan announced in October 2024 that it will launch commercial V2G technology for its EVs starting in 2026, signaling mass-market readiness.

Legislative frameworks are expediting this integration. California passed a bill in late 2024 that could add 119 GWh of V2G capacity to the state grid by 2027. China set a national target to install 70,000 public chargers by 2030, with a major policy push initiated in 2024. Commercially, Nuvve Holding Corp launched a new AC V2G technology platform in October 2024, and Octopus Energy launched a commercial V2G service in the UK in February 2024. These developments prove that the boundary between transportation and the grid has permanently dissolved.

Virtual Power Plants are Aggregating Distributed Energy Resources At Massive Gigawatt Scale

Virtual Power Plants (VPPs) are monetizing distributed assets, creating a new flexibility layer in the Smart grid market. North American VPPs added 4.5 GW of new capacity in 2024 alone, while the number of active VPP company deployments in North America increased to 1,940 in 2025. Residential customers are playing a larger role, accounting for 10.2% of VPP wholesale market capacity in 2025, up from 8.8% in 2024. This shift indicates that consumer-owned devices are becoming critical grid assets.

International data corroborates this distributed trend. China raised its battery storage capacity target to 40 GW by 2025, having already installed 35 GW by the end of 2023. Distributed generation in Europe is projected to drive 18 GW of new residential solar capacity in 2024, providing the raw capacity for these virtual aggregations. Utility adoption is rising; Xcel Energy contracted Itron in December 2024 to deploy a DERMS system to manage residential battery storage in Colorado. These figures demonstrate that VPPs are maturing from experimental pilots to essential grid balancing tools.

Transmission Investment Surges Alongside Deployment of Advanced Digital Substations and Intelligent Sensors

Long-distance high-voltage infrastructure is being built in tandem with granular sensor networks to define the modern Smart grid market. Global transmission investment reached USD 343.2 billion in 2024 and is projected to climb to USD 372.6 billion in 2025, with substations accounting for USD 246.4 billion of the 2024 total. Simultaneously, the digital substation market reached USD 7.96 billion in 2024, with over 70% of global utilities planning deployments by 2025. More than 350 utility-scale renewable energy projects incorporated digital substations in 2024, and 70 pilot installations of Software-Defined Networking (SDN) were deployed.

Specific massive projects highlight this infrastructure boom in the smart grid market. The SunZia Transmission Project will utilize 885 km of HVDC lines upon completion in 2025, while Hitachi Energy was awarded a contract in April 2025 to deliver a 950 km HVDC link in India. China State Grid completed 3 new Ultra-High Voltage (UHV) lines in 2024, and the UK funded the GBP 2 billion Eastern Green Link 1 (EGL1) subsea cable in November 2024. At the sensor level, the global market was valued at USD 0.66 billion in 2024, dominated by voltage and temperature sensors, while 50 utilities specifically invested in cyber-hardened components.

Major Technology Players Report Record Backlogs Driven By Accelerated Grid Modernization Orders

The leading technology providers in the Smart grid market are experiencing unprecedented financial momentum. Siemens Energy reported a record order backlog of EUR 136 billion in FY 2025, with its Grid Technologies division specifically holding a backlog of EUR 38 billion as of Q4 2024. The division received EUR 4.2 billion in new orders in that quarter alone, reflecting the intensity of utility demand. Schneider Electric achieved a record revenue of EUR 38 billion in 2024, reporting a backlog of EUR 21.4 billion at the end of the year.

Competitors are seeing similar growth trajectories. Landis+Gyr reported a committed backlog of USD 4.6 billion as of March 31, 2025, driven by the global AMI refresh cycle. Hitachi Energy secured orders that integrated 10 GW of renewable energy in the US/Canada region by early 2025. These backlog figures are leading indicators, confirming that the demand for smart grid technologies is not transient but part of a sustained multi-year investment cycle that will reshape the global energy sector.

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Top Companies in the Smart Grid Market

• ABB
• Aclara
• Cisco
• Eaton
• GE
• Honeywell
• IBM
• Itron
• Landis+Gyr
• Oracle
• S&C Electric Company
• Schneider Electric
• Siemens
• Wipro Limited
• Other Prominent Players

Market Segmentation Overview

By Technology

• Advanced Metering Infrastructure
• Distribution Management
• Substation Automation
• Communications
• Security
• Network Management

By Application

• Generation
• Transmission
• Distribution
• Consumption

By Region

• North America
• Europe
• Asia Pacific
• Middle East and Africa
• South America

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About Astute Analytica

Astute Analytica is a global market research and advisory firm providing data-driven insights across industries such as technology, healthcare, chemicals, semiconductors, FMCG, and more. We publish multiple reports daily, equipping businesses with the intelligence they need to navigate market trends, emerging opportunities, competitive landscapes, and technological advancements.

With a team of experienced business analysts, economists, and industry experts, we deliver accurate, in-depth, and actionable research tailored to meet the strategic needs of our clients. At Astute Analytica, our clients come first, and we are committed to delivering cost-effective, high-value research solutions that drive success in an evolving marketplace.

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Astute Analytica
Phone: +1-888 429 6757 (US Toll Free); +91-0120- 4483891 (Rest of the World)
For Sales Enquiries: [email protected]
Website: https://www.astuteanalytica.com/ 

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