Energy industry charged up for Australia's smart grid

20 October 2009


  • Australia’s first in-depth smart grid survey of energy sector released
  • Calls for an improved regulatory framework
  • Smart grid is a national imperative - from power plant to power point
  • Investment  and returns – difficult to establish and justify a business case
  • Major paradigm shift for the energy industry
  • Consumer engagement key to realising smart grid benefits


Leading international technology company Logica today announced the findings of Australia’s first in-depth smart grid survey of the electricity energy sector.

The 2009 Logica Smart Grid Study interviewed 35 senior executives from Australia’s leading energy distributors and network owners to understand the strategies, priorities, challenges, timelines and business case for Australia’s smart grid adoption.

Respondents to Logica’s 2009 Smart Grid Study believe that the Australian Government’s initial $100 million investment in the National Energy Efficiency Initiative (Smart Grid, Smart City) is a step in the right direction. Many indicated the need for an evolving policy and regulatory framework more attuned to smart grid investments.

Respondents unanimously agreed that a collaborative effort is needed between government, the energy regulators and the electricity industry to provide the optimal market conditions for smart grid development. 

Hugh Bickerstaff, Managing Director, Business Solutions, Logica, described Australia’s smart grid opportunity as a generational pivot point for the energy industry.  The current electricity network was designed for a paradigm based predominantly on the centralised generation and uni-directional distribution of electricity. The network of the future will require capabilities in bi-directional energy flow, communication and transparency in order to enable consumers to better manage their energy use.

The study revealed three key focus areas:

  1. An improved regulatory and policy framework is seen to be a key catalyst for progress by the energy sector. Strategy development was in some cases limited by regulatory determinations, making the government’s role pivotal.

“The respondents were unanimous that smart grid is a business imperative for the future of energy efficiency in Australia,” says Bickerstaff.

  1. Developing the right strategy. 25% of the respondents reported that they already have a corporate smart grid strategy in place; the remainder have begun development of an overall smart grid strategy, which in many cases is an extension of their existing business strategy. The industry is, however, far from stationary. There are currently wide programs of work delivering pilots, proof of concepts and discreet projects that now fall under the smart grid banner. 

  “The respondents told us that they are looking overseas for smart grid business cases and some noted Europe currently appears more advanced in smart metering and technology development,” says Bickerstaff.

“ Many pointed out that consumer engagement and empowerment is key to the successful adoption of a smart grid. Many agree responsibility to educate and inform consumers on how they can improve their energy efficiency should be shared by industry as well as government ,” says Bickerstaff.

  1. Investment framework. Respondents identified significant investment is required to develop and maintain a smart grid. They expressed caution around preliminary investment, expressing their reluctance to invest in solutions without knowing the shape of the challenges they address and the exact nature of benefits that may be realised.

“The industry is finding it difficult to quantify the total investment required for Australia’s smart grid and due to the current regulatory framework. The respondents indicated it is somewhat unknown who is going to get the benefit in the long term as disaggregation of the industry means benefits are dispersed amongst generators, distributors, retailers and consumers. Therefore, who makes the investment?”

“Australia’s current $60 billion energy infrastructure was built in the 1960s with a 40 year asset lifecycle. Smart grid is seen as the next step in creating a new energy ecosystem in Australia enabling us to be more efficient with our use of energy, prepare for additional use of renewables,  generation in the home, and future-proof our network,” confirmed Bickerstaff.

“For a significant portion of the existing asset base with the introduction of new smart grid technologies this life cycle will shrink to five to ten years. This will have significant implications on business structures and investments. The technology decisions made as part of the smart grid strategy will be critical to its success,” concluded Bickerstaff.

The study revealed the short term (five year period) drivers for the energy industry behind their smart grid strategies are:

  • demand side management
  • reducing networks costs
  • increased network performance reliability
  • reduced capital investment

The long term drivers revealed the industry’s growing awareness of the key role consumers will play in shaping energy supply and use in the future. These included: 

  • increased demand for renewable energy
  • reducing carbon emissions
  • electric cars / energy storage / micro-generation


The respondents agreed that the Government along with the energy sector will need to play a leadership role in engaging consumers around the logistics, benefits, behavioural changes and opportunities that a Smart Grid will deliver to the community.

The 2009 Smart Grid Study identified the key industry challenges to be:

  • The need for an improved regulatory framework
  • Disaggregation of the industry
  • Establishing solid business cases to secure funding for smart grid development
  • Development and roll-out of new technology (ICT) and real-time systems
  • Workforce development and training
  • Revolutionising the distribution business’s approach to consumer engagement and education


The study reports much of the initial investment in smart grid preparation is prioritising:

  • study trips
  • smart metering
  • integrating telecommunications and back-end infrastructure to support two-way data flow

 

NOTES TO EDITORS

About Smart Grid
The electricity networks of today—transporting energy from major generation sources using mostly non-renewable fuels, to consumers who have limited knowledge of their consumption, where outages affecting customers are largely unknown until the customer alerts the network operator, and

A future smart network—serving as a dynamic network for two-way energy flows; linking widely dispersed micro level renewable energy sources at the customer level and large-scale energy sources; providing more dynamic information to customers; facilitating greater customer choice about energy source and level of consumption; and providing real-time information on the performance of the network and optimising the network operations

 

About Logica
 Logica is a global provider of business consulting, systems integration, as well as IT and business process outsourcing services. In Australia, Logica is a leading technology supplier to energy and utilities companies. Energy network businesses, gas and water companies make up over 50% of Logica’s local customers. Logica currently provides a range of IT services and solutions to 11 of Australia’s 13 Energy network companies. Its breadth of coverage across Energy Network operations, together with its expertise in ICT, puts Logica in a strong position to support Australia’s smart grid marketplace. Logica is already delivering on key smart grid projects both in Australia and globally, including smart metering projects in Victoria and is a member of the EU consortium to rollout the first national smart grid in Portugal.
Logica employs 40,000 people globally and is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More information is available at www.logica.com