Interview with Leocadia I. Zak, Director of the U.S. Trade and Development Agency
You were named one of Smart Grid Today’s Smart Grid Pioneers in 2013. What is USTDA, and how did the Agency get involved in smart grid work?The U.S. Trade and Development Agency (USTDA) is an independent federal government agency that links U.S. businesses to global infrastructure opportunities. The Agency has a unique mandate: That is to support projects that lead to economic growth in our partner countries, while also identifying business opportunities for U.S. companies. We accomplish our mission by providing grants directly to overseas sponsors for priority infrastructure projects in developing and middle-income 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. We also connect project sponsors with U.S. businesses by establishing public-private partnerships, hosting conferences and workshops, and sponsoring reverse trade missions. These activities produce results for both U.S. industry and for our partners in foreign countries: U.S. companies are provided access to the design and development of priority infrastructure projects, while our overseas partners are provided knowledge and insight into the latest, most appropriate technologies to meet their needs.
At USTDA, we pride ourselves on being responsive to the needs of our partners in both U.S. industry and high-growth emerging markets. We became involved in the smart grid sector because our overseas partners were increasingly looking to smart grid solutions to help them modernize their electrical grids, reduce technical losses and integrate renewable energy. As a result, U.S. businesses approached us to help connect them to the enormous investments being made in electricity transmission and distribution projects overseas.
The Agency’s reverse trade missions, which bring foreign decision-makers to the U.S. to observe the design, manufacture and operation of U.S. goods and services, have provided a valuable platform for fostering relationships between foreign project sponsors and U.S. smart grid companies. Last fall, we sponsored a reverse trade mission for a delegation of senior officials from Nigeria’s newly privatized distribution companies to the United States. The companies represented by the delegation – which included four of Nigeria’s 11 recently privatized distribution companies – have a combined procurement budget of over $800 million. Nearly 60 U.S. equipment and service providers interested in connecting to these opportunities participated in the reverse trade mission. One U.S. company reported $50 million in sales as a result of the relationships they established, and they anticipate follow-on opportunities. And we expect that additional companies will export their goods and services as a result of this reverse trade mission. We are also working with three of the distribution companies from the delegation on potential follow-on projects.
Why should U.S. smart grid companies consider international markets for their technologies and services?
While there have been a great number of grid modernization projects in the United States in recent years, U.S. investments in smart grid are starting to trend down, while smart grid needs in international markets are increasing. In fact, China surpassed the U.S. as the world’s largest smart grid market last year. As a whole, the Asia-Pacific region is expected to account for almost 35% of global automated demand response-enabled sites in 2019 – up from less than 0.5% today. By contrast, North America’s share of ADR sites is expected to drop by almost 40% in that same timeframe.
The global electricity transmission and distribution market, which is forecasted to reach nearly $500 billion over the next seven years, is increasingly concentrated outside U.S. borders. We at USTDA want to make sure that industry-leading U.S. companies do not miss out on these enormous opportunities. That is why we hosted a workshop in Bogotá, Colombia earlier this year that brought U.S. industry together with decision-makers from Colombia’s energy sector to identify opportunities for collaboration. We heard from our Colombian partners that they have successfully completed some grid optimization projects, but are looking to implement these solutions in a larger, more coordinated manner. In fact, they specifically stated that they are seeking international partners to help them develop a smart grid roadmap for Colombia.
And Colombia is not the only potential market: Last year, we hosted two workshops in Istanbul to discuss ways that U.S. industry can partner with Turkish companies to modernize the country’s electricity and distribution infrastructure. Both events were co-sponsored by ELDER, an association of 21 Turkish distribution companies that plan to invest more than $5 billion in their power grids in the coming years.
As we hear about these enormous opportunities, we are encouraging U.S. companies to broaden their perspective to include non-traditional partners – and to turn them into future customers. We have seen that our foreign competitors are already developing in-roads in these markets, and we would hate to see U.S. companies show up in five years – or even one year from now – only to discover that non-U.S. technology is already in operation. We also do not want to see our international competitors taking these opportunities and turning them around to gain an advantage in the market here at home.
Many companies may be reluctant to enter emerging markets because of regulatory, intellectual property, and other concerns. How does USTDA help level the playing field in these markets?
One of the great things about a USTDA-sponsored activity, whether it is a feasibility study or a reverse trade mission, is that it typically convenes all relevant stakeholders from the start: In addition to the foreign project sponsor and technical experts, we also try to bring in regulatory officials and financiers to ensure we are addressing all facets of a program. Additionally, USTDA staff frequently analyzes barriers to project implementation to identify where we may be able to help fill gaps. This type of analysis has led us to support projects that address standards, regulatory and intellectual property issues in places like China and India. It also led us to design our Global Procurement Initiative: Understanding Best Value, which levels the playing field for U.S. businesses by sharing best practices with public procurement officials in emerging economies in order to foster fair, transparent procurement systems that utilize best-value determinations and life-cycle cost analysis. While the Initiative is not focused entirely on the smart grid sector, it has strengthened the Agency’s relationships with our partners at the multilateral development banks, who can be a vital resource for smart grid projects.
We also held our first-ever Trade Talk, which invited U.S. smart grid companies to USTDA for a discussion of issues that can limit market access, as well as the U.S. government resources available to help businesses break these barriers. The event generated a lot of interest and fostered a frank, open dialogue with industry, which we hope will continue as both sides work to open new markets for exports of U.S. smart grid technologies.
Can you provide an example of a successful smart grid project that USTDA has sponsored?
USTDA supported a pilot project with Honeywell (Morristown, NJ) and AECOM (Los Angeles, CA) to help the China State Grid Corporation’s Electric Power Research Institute achieve its demand side management reduction goals. The project demonstrated that U.S. technology could reduce energy loads of commercial buildings in China by 15% and that of industrial sites by as much as 50% – highly significant savings. China State Grid Corporation is planning to expand this pilot to other cities, which should present follow-on contract opportunities for Honeywell. Based on this work, Honeywell won the 2013 China Low Carbon Model Award from the Economic Observer, a Chinese newspaper, for their contributions to the project.
If companies are interested in learning more about exporting their smart grid technologies or working with USTDA, who should they contact?
USTDA’s staff is generally organized by region, but we have a cross-regional team that is devoted to tracking smart grid trends. The team works with U.S. industry and our U.S. government colleagues to identify project opportunities. They serve as conduits of information about smart grid developments, which they share with the rest of our program staff in order to understand all of the areas where U.S. technologies can be deployed overseas. The team organized Trade Talk: Smart Grid and is working with relevant stakeholders to follow up on the issues that arose during that discussion. Companies that are interested in working with USTDA on smart grid projects can email the team at [email protected] or call them at 703-875-4357.
Our website (www.ustda.gov) is also a great resource, as it is always up to date with the latest smart grid project opportunities and events.
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