By Dave Brown —Exclusive to Lithium Investing News A recent agreement between Korea and the United States indicates that the two countries will collaboratively develop research in areas including green transportation, smart grid technology, energy efficiency, renewable energy, and energy storage systems. The exchange in scientific and technical research will promote and advance joint investigations and development projects through organized workshops and direct bilateral cooperation. A visit earlier this month cemented the alliance in addition to enhancing economic ties between the United States and the Republic of Korea. The joint initiative and increased economic ties may provide acceleration for lithium battery manufacturers in Korea which have been competing for growing market share with Japan for global leadership. Investors will also note that the agreement covers the area for smart grid technology which have emerged as potential solutions for grid-scale storage modules. Smart grid industry applications With global energy prices increasing the demand for solutions to minimize impacts could provide a strong catalyst for growth in the lithium industry. The application of smart grid solutions to inflationary energy prices has been forecast to drive demand for lithium batteries. Under the American Recovery Reinvestment Act the United States government has allocated $4.5 billion to grid modernization including over $185 million for energy storage and demonstration which could be of significant note for lithium stakeholders and observers. A recently released Smart Grid Market Forecast, from research and consulting firm Northeast Group, expects the smart grid market in Mexico to total $8.3 billion by 2020. According to the report, Mexico trails only Brazil in terms of potential for smart grid in the Latin America region. Mexico is projected to invest heavily in home energy management in the latter half of the decade. The report suggests that Mexico is distinguished by, “proximity to the US and its largely monopolized utility sector. Mexico has been in close coordination with the US on smart grid cooperation and is a natural market for US vendors, in particular, to enter. As a result, the country has the potential to become a key market for wireless mesh communication technologies popular in the US.” According to a report issued by the International Energy Agency ( IEA) the Chinese government has developed a broad based, long-term stimulus plan to invest in smart grid technology and electrical power infrastructure projects. Smart grids are seen by the government as a way to reduce energy consumption, increase the efficiency of the electricity network and manage electricity generation from renewable technologies. According to the report, China has already outlined plans in 2010 for a pilot smart grid program that maps out deployment to 2030 with investment forecast to reach at least $96 billion by 2020. South Korea infrastructural development Last year the government of South Korea launched a $65 million program initiative consisting of a fully integrated smart grid system for residential application, in collaboration with industry and wind farms. South Korea is anticipating a national program to incorporate smart grid technology and storage application nationwide by 2030. Opportunities and challenges Lithium investors should note that the growth in demand for smart grid technology is expected to vary between regions, as more industrialized countries may be at risk of becoming impacted by a global recession. The industrialized countries may expect reduced industrial productivity relative to emerging economies; however, developing economies and emerging markets are often characterized by marginally higher electrical demands with increased technical and commercial deficiencies in a context of rapid economic growth. This is often set within a context of rapid urbanization with densely populated cities and broadly dispersed rural settlements. These aspects can present both significant opportunities and challenges for smart grid technology enabling new electricity infrastructure to be developed to maximize resources through long term cost effective solutions and efficient operations.