2009 Australia - Smart Grid Market

BuddeComm’s annual publication Australia - Smart Grid Market profiles this emerging market. It provides policy and strategy analysis as well comprehensive market overviews on the electricity utility market and the added smart grid eco system that is rapidly developing around it.

The report reveals that the Australian electricity market will undergo a massive transformation over the next decade. The transformation will be caused by environmental and climate change developments, as well as the fact that production of fossil fuels has reached its peak due to unprecedented demand. This will result in significant price increases which will accelerate the development of alternative energy resources.

The electricity industry is therefore on the eve of the most important overhaul in its existence. It is one of the last industries to face digitalisation – this is essential to manage the above mentioned pressures.

Furthermore, with higher end-user energy prices, customers will become more vocal and will need better ways to manage their own energy use and their carbon footprint. All of this leads to developments around intelligent electricity infrastructure or smart grids. These developments will bring with them enormous challenges, but also untold new business opportunities. Our report provides general background information on the electricity utilities market, focussing on the communications aspects.

While privatisation will assist companies to be better prepared for these developments, major government policy initiatives are required to give clear direction to the market.

Smart grids support the delivery of electricity to consumers using digital communications technology to improve efficiency and reduce costs. The next few years will be a crunch years for smart grids. Fortunately the implementation of the government’s smart meter project, planned for 2007 has been delayed till 2009, enabling the utilities involved to review their plans, while at the same time allowing for a national review of the regulatory regime. This needs to be changed so that utilities will be encouraged to invest in smart grids rather than just in smart meters. Victoria took the leadership in smart meters and that made many utilities also focus on the underlying infrastructure; building on this we will start seeing the first smart grids arriving in Australia in 2009.

The major players building smart grids in Australia are mostly large energy retailers and producers supported by IT and telecommunications firms. Country Energy and EnergyAustralia are perhaps the most active in this area. The period over 2009 and 2010 is likely to see significant development by firms relating to smart grids driven by government initiatives.

Slowly some of the CO₂ policies such as the Cap and Trade system as well as policies in relation to renewable energy started to become clearer. Intensive lobbying aimed at risk aversion rather than at looking towards new opportunities, is making it more difficult to drive changes through new technologies for renewable energy and for smart grids. It could well be that in the end, clean energy policies driven by photovoltaics are going to be the catalyst for the development of smart grids.

Utilising the momentum of this development the government has earmarked a $100 million investment in a smart grid demonstration project which will be linked to the National Broadband Network initiative in Australia.

This is a significant shift away from the smart meter debate which originated in 2004. This initiative was around the utilities’ need to be able to capture electricity usage in 30-minute intervals. This enables differential pricing by time-of-day and enables utilities to discourage certain types of ‘non-time-critical’ use during periods of high demand. Reducing peaks has a major impact on electricity generation costs – alleviating the need for new power plants and cutting down on damaging greenhouse emissions. However, based on the latest environmental policies, the debate needs to be shifted to smart grids.

Key highlights:

·         In 2009 new business models are beginning to emerge as the players entering the smart grid space begin to seriously take note.

·         The market is shifting from a focus on energy savings to one on facilitating the feed in and the management of renewable energy.

·         This is closely linked to the rapid developments in photovoltaic technologies.

·         The government is supporting this with a $100 million trans-sector demo project which involves the Departments of the Environment, Energy and Broadband.

·         Until recently the market was stuck within the rather narrow context of smart meters. Good progress has been made, with Victoria now leading this development.

·         Utilities are also involved in the NBN and in particular plans to invest $250 million in the backbone network for this project.

·         Country Energy is set two launch two large scale smart grid projects in 2009. Most other utilities are now at least looking at pilot projects.

Data in this report is the latest available at the time of preparation and may not be for the current year.