Australia - Electricity - Industry Market Overview

Synopsis

The electricity industry is one of Australia’s largest industries, contributing 1.4% to Australia’s. The industry consists of generators, transmission and distribution networks and retailers. Over the ten years from 1999 to 2009, Australia’s electricity use increased at an average rate of 2.5% per year. In 2011 in some parts of the country electricity use has fallen for the first time ever.

The industry is now on the eve of its largest change ever, a full transformation similar to the transformation of the telecommunications industry that started 20 years ago. It is also one of the last industries to face digitalisation, which is essential to manage the pressures of energy savings, climate change and renewable energy policies. Underinvestment in the network meant that large investment increases were suddenly needed to upgrade the grid. Part of the problem here has been the lack of proper government policies and regulations that could have stimulated these investments. It was only in 2011 that the regulator admitted that there are problems that need to be addressed. In the meantime this situation has led to very steep increases in electricity prices, which is making customers far more vocal, and they will need better tools to manage their own energy use and carbon footprint. There is a significant absence of communication between the electricity companies and their customers and this has been aggravating the already difficult situation.

Already network investment plans worth over $10 billion have been approved by the companies involved.

All of this leads to developments around intelligent electricity infrastructure, or smart grids. These developments will bring with them enormous challenges, but untold new business opportunities as well.

This report provides general background information and statistical information on the electricity utilities market and its regulatory environment. It also provides an overview of the telecoms activities of the utilities.

Companies covered in this report include:

Ausgrid (formerly Energy Australia), Endeavour Energy (formerly Integral Energy), Essential Energy (formerly Country Energy), CitiPower, Powercor, SP AusNet, UED, Powerlink, TransGrid, ElectraNet, Transend.

Table of Contents

• 1. Synopsis
• 2. Australian Energy Market
  • 2.1 Energy update 2011
  • 2.2 Australia’s energy supply market 2011
  • 2.3 Domestic energy consumption
  • 2.4 Renewable Energy
  • 2.5 Energy planning reports
• 3. electricity market
  • 3.1 Introduction
  • 3.2 Key facts and figures
  • 3.3 Investment challenges
  • 3.4 industry analysis
  • 3.5 Demand side participation
  • 3.6 Fuel Poverty
• 4. Structure of the industry
  • 4.1 National Electricity Market (NEM)
  • 4.2 Generation
    • 4.2.1 Generation ownership
    • 4.2.2 Capacity
    • 4.2.3 Technology mix
    • 4.2.4 Alternative generation investments
  • 4.3 Distribution companies
    • 4.3.1 Industry overview
    • 4.3.2 Electricity network revenues
    • 4.3.3 State of the Distribution Networks - Key Trends
    • 4.3.4 Energy network investments 2011 - 2015
    • 4.3.5 Regulatory investment hurdles
  • 4.4 Energy Retail Market
• 5. Electricity prices
  • 5.1 Introduction
  • 5.2 Electricity charges to rise
    • 5.2.1 Prices set to double by 2017
    • 5.2.2 Consumer prices hardest hit
    • 5.2.3 Wholesale prices going up
  • 5.3 NUS Electricity Report and Cost Survey – 2010-2011
    • 5.3.1 Developments in Australia
  • 5.4 Electricity prices report from CME
    • 5.4.1 Comment
• 6. Regulatory overview
  • 6.1 Market deregulation
  • 6.2 Regulatory developments
  • 6.3 regulatory environment
  • 6.4 Australian Energy Regulator
  • 6.5 Victoria is driving the deregulated markets
  • 6.6 The missing link - Grid Regulations
• 7. Industry investments
  • 7.1 Financial considerations
  • 7.2 Utilities need to expand
  • 7.3 The emergence of gencos
• 8. Related reports

• Table 1 - Energy related industries in Australia, 2008-09
• Table 2 - National Electricity Market at a glance
• Table 3 -Australian electricity generation by fuel, 2008-09
• Table 2 - Vertical integration - energy retail and electricity generation, 2006-2011
• Table 4 - Electricity distribution networks
• Table 5 - Electricity transmission networks
• Table 1 – Recent AER decisions – energy networks
• Table 6 - Network investments over the 2011-2015 period
• Table 7 - Active energy retailers - small customer market, October 2011
• Table 8 - Where does household energy go?
• Table 9- Survey of top 15 countries based on prices as of 1 June 2011

• Exhibit 1 – Market deregulation in Australia