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Australia - Smart Grid Market in 2011

This annual report offers a wealth of information on the emerging smart grid market in Australia. The report includes analyses, statistics, forecasts and trends. It provides a comprehensive insight into the progress of the developments and examines the key issues in the market and the business opportunities arising from these new developments.

Subjects covered include:

  • Update of the latest government policies that will shape the industry for the future
  • Explanation of smart grids, applications, and how the Australian industry - led by Smart Grid Australia - is preparing itself for the changes that these new policies will bring with them
  • Overview of the major players in the Australian smart grid market and related projects Smart Grid/Smart City project
  • The national broadband network and smart grids
  • Developments in relation to smart meters
  • Overview of the high-level political situation that has developed after Copenhagen
  • Smart transport systems
  • Developments taking place around the world towards building smart cities and communities
  • Consumer issues.


Smart Grids Transforming the Energy Industry

Market overview

For numerous reasons the electricity industry is one of the last industries that has to undergo a major transformation in order to enter the digital economy. An emphasis on keeping electricity prices as low as possible led to severe under-investment in the grid and this resulted in the side-lining of issues such as energy efficiency, the integration of renewable energy sources and consumer tools aimed at managing home energy use more efficiently.

Things began to change when a new government arrived in 2007 - one that was more sensitive to those issues. New government policies forced the electricity industry to become more focussed on them, and also led to the formation of the industry alliance, Smart Grid Australia.  This organisation was instrumental in putting smart grids on the government’s agenda. The years 2009 and 2010 saw new government policies being implemented, including the launch of the Smart Grid/Smart City project and the establishment of the Energy Efficiency Taskforce. 

The Smart Grid/Smart City project will have a significant effect but, perhaps even more importantly, the government initiative has clearly been a wake-up call to all electricity companies to become more serious about their smart grid plans. Procrastination is no longer a viable option and all the electricity companies have now embarked on their own industry transformation plans - they will all be starting to implement the first elements of their smart grids.

Smart grids are a concept, not a technology, and there are different ways to carry out the process of change. This in itself will be interesting and the industry will learn from the different approaches taken by the various projects. The initial results of this process will become evident in several projects being carried out in Victoria. They took leadership in smart meters and this encouraged many other utilities to also focus on their underlying infrastructure.

Major players and projects

Smart grids support the delivery of electricity to consumers using digital communications technology to improve efficiency and reduce costs. The major players building smart grids in Australia are mostly large energy retailers and producers, supported by IT and telecommunications firms. SP Ausnet, Ergon, Country Energy and EnergyAustralia are perhaps the most active companies in this area. The period 2011-2013 is likely to see significant development by companies relating to smart grids driven by government initiatives.

The aim of the Smart Grid/Smart City project was to link possibly as many as 15,000 homes to a smart grid during the period 2010-2013.

Smart grids and the national broadband network

Australia is in a unique position to benefit from two infrastructure projects that are being developed simultaneously.  NBN Co is currently rolling out the government-initiated National Broadband Network (NBN) and a clear policy has been introduced, known as ‘digital productivity’ - where the government is taking a leadership role in ensuring that other government sectors use this infrastructure for the delivery of trans-sector services (e-health, e-education, smart grids, etc.).

Smart Grid Australia and NBN Co are working together to investigate synergies between the smart grid and NBN infrastructure projects and a preliminary report mentions possible savings of $2 billion if the projects can be aligned.

Smart meters

While developments in automatic meter reading (AMR) and demand side management (DSM) have been taking place over many decades, the current smart meter debate originated in Victoria in 2004. This started with the utilities modernising the meter network which would, among other things, allow them to capture electricity usage in 30-minute intervals. This enables differential pricing by time-of-day, and allows 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. It also impacts on the capital investment in the grid itself, since infrastructure has to be scaled to cope with peak demand, even if that demand occurs for only a very small percentage of the time. There are other benefits, such as electronic meter reading, but these tend to be incidental to the issue of better managing supply and demand.

Based on the latest environmental challenges the focus needs to be shifted to smart grids, and smart meters should only be considered in the broader context of the modernisation of electricity networks through the introduction of sensing, communications and information technology into the grid.

Implementation of the Victorian government’s smart meter project, originally planned to start 2007, has been delayed slightly (until 2012) and this gives the utilities involved a little more breathing space 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.

Smart cities, buildings, communities and transport

The report also covers several related developments.

Smart transport systems or intelligent transport systems (ITS) encompass a range of wireless and wired communications-based information technologies that can be integrated into transportation infrastructure and vehicles.

Smart infrastructure is also looked at in the context of the NBN. This network is aimed at providing the basic telecommunication infrastructure for a range of sectors, including transport. In late 2009 the government took the initiative to canvass new ideas for smart infrastructure policies.

Smart communities cannot be developed according to the current silo structure that dominates our thinking; they require a holistic approach, which includes environmental factors such as self sufficient energy buildings, energy exchanges for renewable energy and e-cars, delivery of e-health, e-education and e-government services, as well as digital media and Internet services.

Renewable energy, energy efficiency and CO2 reduction

The Copenhagen Summit was the first global event where countries came together to address a common cause. This in itself was an enormous achievement - a beacon to illuminate future global policy-making. True, the conference itself may have been a disappointment, but nobody walked away in anger. The reason for the summit remains unchanged, and the need for cooperation and support in solving climate change issues continues to be a top priority for all the countries that were involved.

As most countries have been building up a formidable body of knowledge and expertise in the field of climate change some of this is now being redirected at energy-saving policies.

Environmental policy continues to be one of the key global problems being faced around the world. While the climate change issue has dropped out of the headlines it is still very high on the agenda of most countries. With fossil fuel energy being the single largest culprit to the problem, no matter how one looks at this issue, the overriding solution is to move away from fossil fuels to renewables as quickly as possible.

A significantly large part of the population is interested in lowering their CO2 footprint. Furthermore, there is evidence that moving to renewable energy, plus other energy-saving measures, can lead to an overall reduction in energy usage of around 30% . This could largely offset the increased electricity prices

Disruptive energy developments from new energy service providers who will build new business models around distributed (renewable) energy will also add to the dynamics of the emerging market.

Consumer issues

Unfortunately the customer has been somewhat disregarded during the development of smart meters and smart grids, and the industry is paying dearly for that oversight.

The Netherlands parliament has simply forbidden the rollout of the so-called smart meters. In the USA customer groups have successfully brought lawsuits against electricity companies that are rolling out smart meters and charging customers for it. And in the Australian state of Victoria the Auditor General has also asked about the customer benefits.

What this tells us is that there is very little interest among the customers in smart grids and smart meters, simply because the industry has failed to tell them what is in it for them. If the industry had had a smart grid vision instead of a smart meter vision they would have been able to tell their customers that they would provide them with tools that would enable them to manage their energy use better - and that this would save energy and therefore lower the costs to such an extent that it could even produce a neutral outcome in relation to the ever-increasing electricity prices.

Instead, their smart meter ‘vision’ was simply based on an internal strategy that would allow them to shave off peak demand through tariff systems.

The impact of higher energy prices is often overlooked in relation to the most vulnerable members of society. Although solutions can be found - and in our view, without too much cost - so far these consumer issues have largely been ignored.

Market highlights:

  • Much of the current activity is being driven by government mandates that will see the rollout of nearly eight million smart meters across Australia, representing an investment of nearly $2.1 billion by 2015.
  • Preliminary analysis carried out by the Australian government indicates that implementing smart grid technologies across Australia could deliver at least $5 billion of gross annual benefit to Australian society.
  • October 2010 the government released the Prime Minister’s Task Group on Energy Efficiency report. The report was commissioned by the government to provide advice on the development of policy that will strengthen Australia’s response to climate change and reduce pressure on the costs of energy to all Australians.
  • There will be further pressure on the government to better align energy and environmental policies, as well as electricity regulations.
  • The major players building smart grids are mostly large energy retailers and producers supported by IT and telecommunications firms. Country Energy, Ergon and EnergyAustralia are perhaps the most active firms in this area. However, during 2010 others such as SP Ausnet and Integral have also stepped up their smart grid activities.
  • Australia has assumed international leadership with its $100million Smart Grid/Smart City project, the rollout of which commenced in late 2010.
  • Smart Grid Australia and NBN Co are working together to investigate synergies between the National Broadband Network and the national rollout of smart grid infrastructure projects and a preliminary report mentions possible savings of $2 billion if the projects can be aligned.
  • The energy price increase of 25% in some parts of Australia kindled an interest from some of the larger users in how these energy companies are run and what could be done to counteract such an enormous price increase. Suddenly - albeit at a business user level - we see a grassroots-type reaction that is now involving these users in discussions about smart buildings, smart grids and national ICT infrastructure that can be used to improve all aspects of our society and the economy. A significantly large part of the population is interested lowering their CO2 footprint. Furthermore there is evidence that this and other energy-saving measures can lead to an overall reduction in energy usage of around 30%. This could largely offset the increases in electricity prices.Compelled by court cases and political backlashes the electricity industry is now well and truly on course to engage the customer in its smart meter and smart grid plans.Data in this report is the latest available at the time of preparation and may not include the current year.

1. Market Overview and Key Developments
1.1 Smart grids overview
1.2 The market moving into 2011
1.2.1 Value of Australian Smart Grid market
1.2.2 Key trends going forward into 2011
1.2.3 New government initiatives
1.2.4 Policy analysis
1.2.5 Regulatory framework
1.2.6 Industry still searching for direction
1.2.7 Industry transformation
1.2.8 ICT solutions for global warming and energy saving
1.3 Market overview
1.3.1 Current grid outmoded and outdated
1.3.2 Old technologies, and fewer young engineers
1.3.3 Demand for energy larger than ever before
1.3.4 The industry is ready for action
1.3.5 New industry visions
1.3.6 Smart Grid Australia


2. Major Players and Projects
2.1 Key smart grid projects
2.1.1 Introduction
2.1.2 Fault detection isolation and restoration (FDIR)
2.1.3 Substation and feeder monitoring
2.1.4 Distributed generation (DG) enablement
2.1.5 Smart electricity metering in Fibre-to-the-Home (FttH) project
2.1.6 Global Intelligent Utility Network Coalition (GIUNC)
2.1.7 Other applications
2.2 Major Players
2.2.1 Country Energy
2.2.2 EnergyAustralia
2.2.3 AGL Energy (AGL)
2.2.4 Powerlink
2.2.5 Western Power
2.2.6 Ergon - Nexium Telecommunications
2.2.7 SP AusNet
2.2.8 TransGrid
2.2.9 Integral Energy
2.2.10 ETSA


3. Smart Grid-Smart City Project
3.1 Introduction
3.2 Project led by EnergyAustralia
3.3 Developments and implementation
3.3.1 LTE based smart grid
3.4 Background information
3.4.1 Outlining the government’s National Energy Efficiency Initiative (NEEI)
3.4.2 Key reasons for the project
3.4.3 Implementation study
3.4.4 Recommendations
3.4.5 Key objectives of the project
3.4.6 Key applications
3.5 The other Smart Grid-Smart City contenders
3.5.1 Victoria - Frankston
3.5.2 Queensland - Townsville, Brisbane, Toowoomba
3.5.3 New South Wales - Country Energy
3.6 Smart grid economics


4. Smart Grids and the NBN
4.1 Introduction
4.2 NBN access for smart utility services
4.3 Smart Grid-Smart City and the NBN (Analysis)
4.4 Smart grids and the National Broadband Network (NBN)
4.4.1 Introduction
4.4.2 Exploring synergies and opportunities
4.4.3 Using electricity infrastructure to roll out broadband
4.4.4 NBN and smart infrastructure


5. Smart Meters
5.1 Introduction
5.2 The government’s smart meter policies
5.2.1 Ministerial Council on Energy (MCE)
5.3 Smart meter policies - analyses
5.3.1 Victoria first cab off the rank
5.3.2 The once-in-a-lifetime smart grid opportunity for Australia
5.3.3 Key to smart grids: the right vision from the government
5.3.4 Open networks
5.4 From AMR to smart meters
5.4.1 Energy Networks Association (ENA) takes smart metering policy initiative
5.4.2 The broader view of Smart Grid Australia
5.4.3 Overview of early smart meter developments
5.5 Smart water metering


6. Smart Transport Systems
6.1 What are intelligent transport systems (ITS)?
6.2 Overview of ITS activities
6.3 Outcomes of ITS Summit 2009
6.4 ITS Australia
6.5 Government Inquiry - 2002
6.6 Dedicated short-range communications (DSRC)
6.6.1 Overview of latest developments
6.6.2 Regulatory framework - 2010
6.6.3 eTags
6.6.4 epay and Queensland Government motorway joint venture
6.7 Smart transport and the National Broadband Network (NBN)
6.7.1 NBN access for smart utility services
6.7.2 Trans-sector approach to NBN
6.7.3 Government’s smart infrastructure initiative
6.7.4 Transport and energy use
6.8 The Electric Vehicle (EV) market in Australia
6.8.1 Market Overview
6.8.2 EV recharge network


7. Smart Cities, Buildings and Communities
7.1 Introduction
7.2 Building smart cities to ease the stress
7.2.1 A population of nine billion people
7.2.2 The role of smart cities
7.2.3 We need to use people power
7.2.4 Education, information, empowerment
7.2.5 Changes are starting to drive action
7.3 Key components of smart cities
7.3.1 Smart grids
7.3.2 Next generation telecoms/National broadband networks
7.3.3 Open networks
7.3.4 Smart buildings/homes
7.3.5 Smart transport
7.4 Strategies for smart communities
7.4.1 Tran-sector thinking
7.4.2 Rebuilding communities
7.4.3 Greenfield communities
7.5 Brief examples of smart communities
7.5.1 Asia
7.5.2 North America
7.5.3 Europe
7.6 Intelligent/smart technologies and systems
7.7 Intelligent Communities Forum


8. Smart Grid Market Analyses
8.1 Smart grids - after Copenhagen
8.1.1 The global political situation after Copenhagen
8.1.2 The disappointments
8.1.3 The achievements
8.1.4 The way forward
8.1.5 Analysis of the Copenhagen Summit (December 2009)
8.2 Smart grids - key aim - renewables
8.2.1 Introduction
8.2.2 Renewables should drive the energy agenda
8.2.3 Geo-political power based on clean energy
8.2.4 No investments without an ETS
8.2.5 Energy saving not in the interest of the retail owners
8.2.6 Disruptive energy
8.3 Consumer issues
8.3.1 Customers need to become central
8.3.2 Brief case study: BGE smart grid services
8.3.3 Smart appliances


9. Glossary of Abbreviations


List of Exhibits
Exhibit 1 - What is a smart grid?
Exhibit 2 - Retail price rises in 2010 compared with annual bill in July 2009
Exhibit 3 - Utilities and telecoms
Exhibit 4 - Smart Grid Australia - an industry alliance
Exhibit 5 - Country Energy: smart grid in action
Exhibit 6 - Non-regulated business (telecoms) activities
Exhibit 7- Newcastle
Exhibit 8 - eTags
Exhibit 9 - Smart City - Masdar City - Abu Dhabi
Exhibit 10 - Smart homes
Exhibit 11 - Example of trans-sector collaboration in a Smart City
Exhibit 12 - Smart shopping
Exhibit 13 - Learning from e-cars
Exhibit 14 - The disappointments of Copenhagen
Exhibit 15 - The achievements of Copenhagen
Exhibit 16 - Smart grids for distributed renewables

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