USTDA Speeches
Smart Grid Interoperability Panel Conference: Progress through Collaboration - Keynote Address
Palm Beach Gardens, FL
The Honorable Leocadia I. Zak, Director, U.S. Trade and Development Agency

November 6, 2013 — Good morning.  Thank you, Patrick, for that kind introduction. And thank you to John and the rest of the SGIP Board and membership for inviting me here today. I appreciate everything that SGIP has done to organize their inaugural conference, which comes at an ideal time for the sector. I especially want to commend them for being forward-thinking by adding a global dimension to the agenda. I was fortunate to meet some of our international colleagues this morning, and I look forward to hearing their presentations later today.

I would like to begin by telling you about a group that I met with recently. They were senior leaders from four distribution companies in Nigeria. They were part of a larger consortium that, with strong financial backing from industry, purchased 11 distribution companies from the Nigerian government.  When they finalized the sale this fall, they understood that they would be facing anywhere from 30-50% distribution losses in their power grids. And they signed agreements with the Nigerian government to reduce these losses by more than half over the next five years.

But the executives that I met with told me that, since they have taken control of these companies, they believe their distribution losses could actually be closer to 50-70%. They understand that it will be incredibly difficult to meet their reduction goals – and to earn returns on their investment – in such a short timeframe. But they came to the U.S. for a USTDA-sponsored reverse trade mission because they wanted to partner with U.S. companies. They understand the tremendous value of U.S. expertise in the energy sector.  And while many of the delegates were initially uncertain about whether they should consider adopting smart grid technologies, they left convinced that it was a valuable long-term goal. Several delegates have initiated discussions with U.S. companies about the next steps for developing plans to integrate smart grid technologies, and we expect these discussions to lead to future sales.

As this story illustrates, there is enormous potential for U.S. industry in Nigeria. The companies I met with – which, again, included only four of the 11 recently privatized discos – have a combined procurement budget of over $800 million. We would love to see as many of those dollars as possible be used to procure U.S. goods and services.

But this is just one example from a single country.  Our partners in Nigeria are not alone – there are plenty of project sponsors facing similar circumstances in high-growth markets around the world. Electric utilities in emerging economies are facing both significant losses and tighter emissions restrictions. Many foreign governments are developing plans to build smarter, greener, more integrated cities – and some of these plans will leapfrog current structures to adopt the latest technologies. Other countries are making significant investments to improve existing infrastructure, including transmission and distribution systems.

I realize that there are incredible opportunities for grid modernization projects here in the U.S., many of which will be highlighted at this conference. But a recent report estimated that North America's share of automated demand response-enabled (ADR) sites will decline sharply in the coming years: It is expected to drop from almost 90% in 2013 to 53% in 2019. That is only six years. By contrast, the Asia Pacific region is expected to account for almost 35% of total ADR-enabled global sites in 2019 – up from less than 0.5% today. Indeed, it seems that the global electricity transmission and distribution market, which is forecast to reach nearly $500 billion over the next seven years, is increasingly concentrated outside our borders.[1]

That is why I am here today – to encourage you to consider opportunities outside of the United States. Now is the perfect time to broaden your perspective to include nontraditional partners – and to come up with ways to turn them into your future customers. I can assure you that your foreign competitors are already developing in-roads in these markets. I would hate to see U.S. companies show up in five years – or even just a year from now – only to discover that non-U.S. technology is already in operation.

How do I know this? It is part of my Agency's job to help level the playing field for U.S. industry.  We link U.S. businesses to global infrastructure opportunities, and we have funded numerous activities that support grid enhancement in emerging economies. These projects have helped U.S. businesses form relationships with foreign buyers, often leading to the export of their goods and services.

We accomplish our mission by providing grants directly to overseas sponsors for priority infrastructure projects in their countries. The funding may be used to perform a feasibility study or to launch a pilot project, which can demonstrate the value of U.S. technologies in an operating environment overseas.

For example, USTDA is supporting a smart grid pilot project with Honeywell, AECOM and China's Electric Power Research Institute.  The project has demonstrated that Honeywell's technology could reduce energy loads in Chinese commercial buildings by 15% and in industrial sites by as much as 50% – highly significant savings.  As a result, our Chinese partners realize that U.S. companies can help them achieve their demand side management reduction goals.

We also connect project developers with U.S. businesses through our International Business Partnership Program.  Under this Program, we bring delegates like the ones I mentioned from the Nigerian discos to the United States for reverse trade missions.  We have also established Energy Cooperation Programs in China and India, which have generated significant U.S. exports.  These public-private partnerships have also helped us address some of the issues that often impede project implementation and procurement processes.

For example, we have designed workshops that address prohibitive standards and regulations.  USTDA is sponsoring a series of National Electrical Manufacturers Association-hosted technical meetings to help China develop a common electricity metering standard, which will enable the wider adoption of smart meters, including those from the United States.

Based upon the demand for smart grid technology, USTDA has also hosted conferences in promising markets like South Africa, Southeast Asia and Turkey. Earlier this year, we met in Istanbul to discuss ways that U.S. industry can partner with Turkish companies to modernize the country's electricity and distribution infrastructure. The event was co-sponsored by ELDER, an association of 21 Turkish distribution companies, all of whom were represented at the conference. The workshop has been a catalyst for several follow-on meetings between ELDER and various U.S. companies. As a result, USTDA and ELDER are hosting a second workshop in Istanbul next month, this one designed to foster technical exchanges between U.S. businesses and Turkish distribution companies, who plan to invest more than $5 billion in their power grids in the coming years.

These activities have produced results for both U.S. industry and our partners in emerging markets.  It is truly a win-win scenario: U.S. companies are provided access to the lead smart grid project developers around the world, while our local partners gain insight into the latest, most appropriate technologies to meet their demands.

The last market that I want to talk about is Africa. I was recently in Tanzania with President Obama when he announced the Power Africa initiative, which aims to increase electricity access to at least 20 million households and businesses within five years. $16 billion of public and private capital are committed to this effort.

We believe smart grid solutions offer the most immediate means to achieve measureable results for Power Africa. Smart grid investments can be realized much quicker – and at a much lower cost – than traditional electricity generation investments, resulting in savings that put less demand on utilities for the supply of new power generation.  Equally important, smart grid investments provide a larger pathway for utilities to receive power from renewable energy sources. In order to achieve results for Power Africa within the next five years, we must continue to support grid modernization activities. As a matter of fact, next week we will be hosting a delegation from South Africa's public electricity utility.

This is just one of several smart grid activities we have planned over the course of the next year. In addition to next month's technical workshop in Turkey, we are hosting a broader smart grid conference in Colombia in February. I encourage you all to join USTDA and our partners at these events. We welcome your thoughts on how we can support your businesses.

But most importantly, I encourage you to look to emerging markets when you plan for the future. Five years from now, I would love to hear that the 2018 SGIP conference is taking place in Istanbul.  Or Bogotá. Or Johannesburg. I would love to hear that the companies here today have forged partnerships that have enabled them to become the technology providers of choice in markets that, as you have heard, have enormous potential. By establishing those relationships today, you can ensure your company's place in the world's leading markets of tomorrow.

Thank you.


[1] Navigant Research, "Smart Grid: 10 Trends to Watch in 2013 and Beyond," published 1Q 2013, available at: http://www.navigantresearch.com/research/smart-grid-10-trends-to-watch-in-2013-and-beyond.

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