2012 Australia - Smart Grids - Key to the transformation of the Electricity Industry

Publication Overview

This report provides overviews and critical statistical information on the electricity market, as well as detailed information on smart grid, smart meter projects and the key players in this market. Developments in PV and smart cars and their implications on national infrastructure are also highlighted.

Researchers:- Paul Budde, Stephen McNamara, Kylie Wansink
Current publication date:- January 2012 (8th Edition)

Executive Summary

Smart Grids essential for future energy management

For decades the electricity market has been a stable and rather boring one. The basic business model remained steady-as-you-go and developments in the market were largely dictated by government policies, which were basically aimed at keeping energy prices down and ensuring the reliability and safety of the network.

The privatisation of the industry in some parts of the country during the 1990s did change ownership structures but overall it did not do much to change the structure and dynamics of the market.

During the early 00s some entrepreneurial electricity companies started to venture into the telecommunications business, and while they ultimately moved out of this market they left behind several new telecommunication companies that provided competition, particularly in the heavily monopolised telecoms infrastructure market.

This brush with the telecoms market as an enabling technology was useful later in that decade when climate change issues started to dominate the political agenda. While the industry was very slow to take these political issues seriously a change in government in 2007 forced them to pay attention and to begin to take action.

Slightly predating these activities were the energy problems that several utilities experienced earlier that decade. A combination of climate change developments, resulting in extreme hot weather and the purchase of more air-conditioners by an affluent population, led to peak-demand network problems and major blackouts.

Electricity companies not just in Australia but around the world were all facing similar problems, and they began to investigate smart meters. These devices would allow them to better manage peak demand, thus avoiding breakdowns in energy supply.

Several problems now started to intersect with each other:

  • Customers became concerned about climate changes and the environment.
  • An unprepared industry system suddenly faced the need for major new investment in energy efficiency, which led to significant price increases for their customers.
  • Both the government and the industry were unprepared to engage and communicate with their customers about all of this.
  • The industry lacked the culture and flexibility to react swiftly to the changes in society and in the market.

The smart meter rollouts started to collide with these developments. Customers were either poorly informed or not informed at all about any potential benefits for them of this development. At the same time the customers faced significant price increases and they began to revolt against these smart meter rollouts. In Australia this happened in Victoria.

A problem, associated with this but of a more technical nature, was that by the time the smart meter rollouts were planned there was already an understanding among experts that a far more comprehensive plan was required to address the broader range of challenges that the industry was facing – this was the smart grid concept. However, a rather sluggish utilities-based industry had never seriously taking into account the upcoming rather rapid changes. Again, all of these political and technical issues started to intersect with each other:

  • Climate change policies would lead to a price being put on the heaviest polluters – and the electricity industry is the key industry in this. This requires them to bring pollution down and smart technologies can assist in this.
  • Under-investment over decades had largely left the electricity grid a dumb network, with little or no intelligence that could – in a timely fashion - improve maintenance and management.
  • Clean industry initiatives such as PV (solar panels) and electric vehicles require a far more sophisticated infrastructure.
  • Customers – under cost pressure and concerned about the effects of climate change – require smart tools to enable them to better manage their electricity use.

It is obvious that this perfect storm cannot be addressed in the linear fashion of the last 50 years or so. It requires nothing less than a total transformation of the industry. These changes are well beyond the capabilities of the electricity industry; they will require far broader industry collaboration – or, as BuddeComm calls it, a trans-sector approach.

Key sectors that need to be involved in the transformation of the industry:

  • Federal and state governments
  • Regulators
  • Consumer organisations and advocacy groups
  • Large energy users (manufacturers, mines, industry)
  • Electricity companies (generation, transmission, distribution, retail) and its vendors
  • Renewable industry
  • Telecommunications infrastructure (mobile , fixed, broadband)
  • IT industry (systems, integration, software, hardware)
  • Data processing, analytics, data centres, cloud computing
  • Consumer electronics, consumer appliances and consumer applications (internet)
  • Management consultancy companies and system integrators
  • Consumer communication and education companies

There are numerous issues that need to be addressed, but the key ones include:

  • Review of the old  policies and regulations
  • New set of integrated government policies and related regulations
  • Consumer issues, especially energy prices
  • Infrastructure and smart technology issues

It has become clear that it is essential that the government needs to address all of these issues in an integrated way. Current policies in relation to home insulation, solar panels, energy efficiencies, clean energy, renewable energy and electric vehicles all need to be addressed within one national blueprint, from which individual strategies can be developed.

Smart infrastructure and smart tools are the glue that can provide the horizontal integration of the various sectors and projects involved in this complex transformation process, and it can also provide the platform for a cohesive policy aimed at sharing infrastructure. This, in turn, leads to significant cost savings.

The government has already launched two significant trans-sector projects: the NBN (national broadband network) and the Smart Grid/Smart City project. These projects provide answers as to how these diverse issues can be addressed within one national blueprint. The experience and knowledge that Australia has been building up in these projects now needs to be extended to include all of the abovementioned issues.

Economic data all points towards a green economy that will create a large number of new jobs and offer business opportunities for innovative entrepreneurs. And if Australia can maintain its leadership role that would support its export earnings also.

This report provides overviews and critical statistical information on the electricity market, as well as detailed information on smart grid, smart meter projects and the key players in this market. Developments in PV and smart cars and their implications on national infrastructure are also highlighted.

Market Highlights:

  • Australia’s Smart Grid/Smart City project is a world leader
  • Australia saw residential PV (solar panels) increase from 1% to 5%, the highest growth in the world
  • The world is waiting for the electric vehicle (EV) tsunami (watch out for China)
  • Both PV and EV require smart grid infrastructure
  • Smart cars are being positioned as have-to-have products (like smartphones)
  • Urgent need for a comprehensive federal energy policy to bring all the different projects together
  • The smart meter development in Victoria is being used as a case study around the globe
  • Electricity industry is at the heart of all these developments
  • The industry needs a business transformation similar to the one that changed the telecoms industry.

Table of Contents

  • 1. Electricity Market
    • 1.1 Australian Energy Market
      • 1.1.1 Energy update 2011
      • 1.1.2 Australia’s energy supply market 2010
      • 1.1.3 Domestic energy consumption
      • 1.1.4 Renewable energy
      • 1.1.5 Energy planning reports
    • 1.2 electricity market
    • 1.3 Electricity Market Key trends and developments
      • 1.3.1 industry analysis
      • 1.3.2 Production
      • 1.3.3 Capacity
      • 1.3.4 Energy network investments 2011 - 2015
      • 1.3.5 Regulatory investment hurdles
      • 1.3.6 Electricity charges to rise
    • 1.4 NUS Electricity Report and Cost Survey - 2010
      • 1.4.1 Rising oil prices lifting power prices
    • 1.5 The Australian electricity utilities market
      • 1.5.1 Market overview
      • 1.5.2 National Electricity Market
      • 1.5.3 Industry groups
      • 1.5.4 State of the Energy Networks - Key Trends
      • 1.5.5 Energy Retail Market
    • 1.6 Regulatory overview
      • 1.6.1 Market deregulation
      • 1.6.2 Regulatory developments
      • 1.6.3 Regulatory environment
      • 1.6.4 Australian Energy Regulator
      • 1.6.5 Victoria is driving the deregulated markets
      • 1.6.6 The missing link - Grid Regulations
    • 1.7 Industry investments
      • 1.7.1 Financial considerations
      • 1.7.2 Utilities need to expand
      • 1.7.3 The emergence of gencos
  • 2. Climate Changes and Photovoltaics
    • 2.1 Climate change requires smarter responses
    • 2.2 Climate change policies
      • 2.2.1 Global warming – a new important political consideration
      • 2.2.2 Copenhagen Climate Council
      • 2.2.3 Reducing Carbon Pollution
      • 2.2.4 Australia endorses law on 20% renewable energy target
    • 2.3 Beyond the ETS - Smart Energy
    • 2.4 Renewable energy
      • 2.4.1 Renewable Energy Fund
      • 2.4.2 Australia lagging behind
      • 2.4.3 Renewable energy scheme
      • 2.4.4 Competition might come from different directions
      • 2.4.5 People-driven demand
      • 2.4.6 Renewable Energy Sources
    • 2.5 Trans-sector approach to climate change
      • 2.5.1 CO2 and ETS are becoming too esoteric for most
      • 2.5.2 Home energy improvements
      • 2.5.3 Smart grids
      • 2.5.4 Smart communities and smart buildings
      • 2.5.5 Empowering people to develop their smart community
      • 2.5.6 Smart grid demo could be the catalyst
      • 2.5.7 Government information and education campaign
    • 2.6 Smart grid driven by user-driven photovoltaics
      • 2.6.1 Good for the economy, the environment and saving energy
      • 2.6.2 Government still stuck with dumb meters policy
      • 2.6.3 Lack of trans-sector approach
      • 2.6.4 Current grid can’t handle renewable energy
      • 2.6.5 International examples of failing grids
      • 2.6.6 Customers want to be in charge
      • 2.6.7 Without smart grids 20% renewable target will not be reached
      • 2.6.8 Analysis of the situation in 2011
  • 3. Clean Energy Program
    • 3.1 Broadband and climate change
      • 3.1.1 The broader context
      • 3.1.2 Challenge: trans-sector approach
    • 3.2 Overview of the package
    • 3.3 Clean Energy Finance Corporation
    • 3.4 Australian Renewable Energy Agency
    • 3.5 Clean Technology Innovation Program
    • 3.6 Industry assistance
    • 3.7 Effects on the electricity industry
      • 3.7.1 Industry transformation
      • 3.7.2 Energy Security Fund
      • 3.7.3 Payment for closure
      • 3.7.4 Assistance for strongly affected generators
      • 3.7.5 Energy Security Council
      • 3.7.6 Smart Grids
    • 3.8 Analysis 2011
      • 3.8.1 CO2 policy will lead to energy efficiency and clean energy- October 2011
    • 3.9 CPS boon for innovation and new business opportunities – July 2011
  • 4. Smart Grid – Market Overview
    • 4.1 Introduction
      • 4.1.1 Current grid outmoded and outdated
      • 4.1.2 Old technologies, and fewer young engineers
      • 4.1.3 Drop in overall demand, but not in peak demand
      • 4.1.4 The industry is ready for action
    • 4.2 New industry visions
      • 4.2.1 From UtiliTel to smart grids
      • 4.2.2 Trans-sector approach for telecoms and energy
    • 4.3 Smart Grid Australia
      • 4.3.1 Trans-sector approach towards smart grids
      • 4.3.2 What is Smart Grid Australia?
      • 4.3.3 Vision statement
      • 4.3.4 Trans-sector participation
      • 4.3.5 Global Smart Grid Federation
  • 5. The Market Moving Into 2012
    • 5.1 Key trends and developments
      • 5.1.1 Spending increases to $2.4 billion in 2012
      • 5.1.2 The Internet of Things and user-generated internet energy
      • 5.1.3 Smart Grids and the Digital Economy
      • 5.1.4 Price of electricity to double
      • 5.1.5 Smart meters in Victoria – Case Study (separate report)
    • 5.2 Industry Surveys
      • 5.2.1 Smart grid: $5 billion in annual benefits
      • 5.2.2 Smart grids and CO2 emission savings
      • 5.2.3 Smart grids studies – Logica
    • 5.3 Green economy
      • 5.3.1 New jobs for an aging industry
      • 5.3.2 Clean energy resources in regional Australia could lead to employment and investment opportunities
    • 5.4 government initiatives
      • 5.4.1 Review of smart meter consumer protections and pricing in Australia
      • 5.4.2 Smart Energy – Clean Energy Program
      • 5.4.3 Prime Minister’s Task Group on Energy Efficiency
      • 5.4.4 Smart grid to deliver renewable energy
      • 5.4.5 The Prime Minister on smart grids
    • 5.5 Regulatory framework
      • 5.5.1 Confusion regarding regulations
      • 5.5.2 Action needed
    • 5.6 The Smart Grid Market – Analysis 2011
      • 5.6.1 Making good progress
      • 5.6.2 Industry and society transformation
      • 5.6.3 Off to a very bad start
      • 5.6.4 From cheap to expensive electricity
      • 5.6.5 Smart grid projects
      • 5.6.6 Smart grids and climate change
      • 5.6.7 Energy efficiency
  • 6. Major Players and Projects
    • 6.1 Major Players
      • 6.1.1 AGL Energy (AGL)
      • 6.1.2 Aurora Energy
      • 6.1.3 Ausgrid
      • 6.1.4 Endeavour Energy (formerly Integral)
      • 6.1.5 Energex
      • 6.1.6 Ergon - Nexium Telecommunications
      • 6.1.7 Essential Energy
      • 6.1.8 ETSA
      • 6.1.9 Hydro Tasmania
      • 6.1.10 Jemena
      • 6.1.11 Powerlink
      • 6.1.12 SP AusNet
      • 6.1.13 TransGrid
      • 6.1.14 United Energy
      • 6.1.15 Western Power
    • 6.2 Technology project
      • 6.2.1 Fault detection isolation and restoration (FDIR)
      • 6.2.2 Substation and feeder monitoring
      • 6.2.3 Distributed generation (DG) enablement
      • 6.2.4 Other applications
      • 6.2.5 Smart electricity metering in Fibre-to-the-Home (FttH) project
    • 6.3 Global Intelligent Utility Network Coalition (GIUNC)
  • 7. Smart Grid-Smart City Project
    • 7.1 Project led by Ausgrid
    • 7.2 Update early 2012
    • 7.3 Background information
      • 7.3.1 Outlining the government’s National Energy Efficiency Initiative (NEEI)
      • 7.3.2 4G LTE/WIMAX Network
      • 7.3.3 Electric vehicles within Smart Grid/Smart City project
      • 7.3.4 Key reasons for the project
      • 7.3.5 Implementation study
      • 7.3.6 Recommendations
      • 7.3.7 Key objectives of the project
      • 7.3.8 Key applications
    • 7.4 The other Smart Grid-Smart City contenders (Historic)
      • 7.4.1 Victoria - Frankston
      • 7.4.2 Queensland - Townsville, Brisbane, Toowoomba
      • 7.4.3 New South Wales – Essential Energy (formerly Country Energy)
  • 8. National Broadband Network and Smart Grids
    • 8.1 Key to Smart Grids in telecommunications
    • 8.2 NBN access for smart utility services
    • 8.3 Smart Grid Australia and the NBN (analyses)
      • 8.3.1 Smart Grid/Smart City and the NBN
      • 8.3.2 Developments in 2011
    • 8.4 Power and Water Corporation
    • 8.5 Smart grids and the National Broadband Network (NBN)
      • 8.5.1 Introduction
      • 8.5.2 Exploring synergies and opportunities
      • 8.5.3 Using electricity infrastructure to roll out broadband
      • 8.5.4 NBN and smart infrastructure
  • 9. Smart Meters
    • 9.1 Market Overview
      • 9.1.1 The road from automated meter reading (AMR) and demand side management (DSM) to smart grids
      • 9.1.2 Smart meter policies – analyses
      • 9.1.3 From AMR to smart meters
      • 9.1.4 Smart water metering
      • 9.1.5 Smart grids projects and players (separate report)
    • 9.2 Smart meters in Victoria – Case Study
      • 9.2.1 Plan for national smart meter rollout
      • 9.2.2 The rollout of smart meters in Victoria
  • 10. Intelligent Transport Systems
    • 10.1 What are intelligent transport systems (ITS)?
      • 10.1.1 Background information
      • 10.1.2 Overview of ITS activities
    • 10.2 ITS Australia
      • 10.2.1 Overview
      • 10.2.2 Outcomes of ITS Summit, 2009
      • 10.2.3 Government Inquiry – 2002
    • 10.3 Industry developments
      • 10.3.1 Electronic transport diaries
      • 10.3.2 The SMART Infrastructure Facility
      • 10.3.3 Broadband extends to public transport
      • 10.3.4 Australian Road Research Board
    • 10.4 Dedicated short-range communications (DSRC)
      • 10.4.1 Overview of latest developments
      • 10.4.2 Regulatory framework – 2010
      • 10.4.3 eTags
      • 10.4.4 epay and Queensland Government motorway joint venture
    • 10.5 Smart transport and the National Broadband Network (NBN)
      • 10.5.1 NBN access for smart utility services
      • 10.5.2 Trans-sector approach to NBN
      • 10.5.3 Government’s smart infrastructure initiative
      • 10.5.4 Transport and energy use
      • 10.5.5 Managed Motorways
  • 11. Electric Vehicles
    • 11.1 The Electric Vehicle (EV) market in Australia
      • 11.1.1 Introduction
      • 11.1.2 Smart vehicle technology
      • 11.1.3 Market overview - 2012
      • 11.1.4 Market predictions
      • 11.1.5 EV recharge network
      • 11.1.6 Increased demand for electricity
      • 11.1.7 Vehicle to Grid (V2G)
      • 11.1.8 Portus and Ergon testing smart grids and EVs
    • 11.2 The upcoming electric vehicle tsunami analysis
    • 11.3 Electric vehicles within Smart Grid/Smart City project
  • 12. The Internet of Things
    • 12.1 Statistical information
    • 12.2 Staggering IoT predictions
    • 12.3 Analysis - Who will dominate the IoT market?
    • 12.4 Building smart communities and smart countries
      • 12.4.1 Stage one - infrastructure
      • 12.4.2 Stage two – trans-sector policies
      • 12.4.3 Stage three - the business game-changer
    • 12.5 Key trends and Developments
      • 12.5.1 Deep packet inspection
      • 12.5.2 Ubiquitous Complex Event Processing
      • 12.5.3 Behavioural Attitudinal Geolocation
      • 12.5.4 Lifetime customer relationships
    • 12.6 Smart cities and smart countries
      • 12.6.1 Electricity companies and the Internet of Things
      • 12.6.2 Data analytics solutions
    • 12.7 How do we get there?
    • 12.8 Change in services driven by Sensing and monitoring information
  • 13. Glossary of Abbreviations
  • Table 1 - Energy related industries in Australia, 2007-08
  • Table 2 -Australian electricity generation by fuel, 2008-09
  • Table 3 - Network investments over the 2011-2015 period
  • Table 4- Survey of top 15 countries based on prices as of 1 June 2010
  • Table 5 - Electricity transmission networks
  • Table 6 - Electricity distribution networks
  • Table 7 – Market share of energy generation in Australia by energy source – 2006 - 2008
  • Chart 1 – Best features of an intelligent meter survey – 2010
  • Exhibit 1 – Who owns power – 2010
  • Exhibit 2 – Market deregulation in Australia
  • Exhibit 3 - Solar Cities
  • Exhibit 4 – The results of climate change by 2050
  • Exhibit 5 – Photovoltaics
  • Exhibit 6 - Key points of the Carbon Price Scheme
  • Exhibit 7 – What is a smart grid?
  • Exhibit 8 – Utilities and telecoms
  • Exhibit 9 – Smart Grid Australia – an industry alliance
  • Exhibit 10 – Retail price rises in 2010 compared with annual bill in July 2009
  • Exhibit 11 - Essential Energy: Smart Grid in Action
  • Exhibit 12 – Non-regulated business (telecoms) activities
  • Exhibit 13- Newcastle
  • Exhibit 14 – Smart grid applications
  • Exhibit 15 – Smart air-conditioning control
  • Exhibit 16 - Noise monotony in Melbourne
  • Exhibit 17 – eTags and tolls overview – 2011
  • Exhibit 18 - Learning from e-cars

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Technologies

Broadband Fixed
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Strategies & Analyses (Industry & Markets)

Number of pages 158

Status Archived

Last updated 1 Feb 2012
Update History

Analyst: Paul Budde

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