Australia - Smart GridAustralia - Smart Grid

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last Published: 7/24/2018

Overview

Smart Grid is an increasingly sought-after solution to Australia’s rising electricity costs, aging infrastructure, and the political pressure to close coal fired power stations. Smart Grid investments in Australia will improve the operations of utility firms and provide grid reliability. The importance of ensuring that the supply of electricity remains robust and secure cannot be overstated. Australia’s economic growth and its desire to encourage innovative technology and manufacturing industries are largely dependent on it.

The current and forecasted consumer electricity demand is tapering off while the number of consumers continues to grow. Decreased forecast demand has allowed network service providers to delay capital investment. However, the requirements of maintaining and replacing elements of an aging network subject to higher risks of failure is becoming more critical. For example, in September 2016, a storm in South Australia caused widespread damage to electricity transmission infrastructure, resulting in almost the entire state losing its electricity supply.

Simultaneously, consumers have become more sensitive to prices in this utility sector. As competitive alternatives to network delivery of electricity have become more affordable (e.g. residential solar PV installations), and consumer uptake of energy efficient appliances increases, continued downward pressure on network energy is inevitable. As such, energy storage will be crucial in the transformation of the Australian electricity network. In 2017, Australia was the world leader in the installation of residential battery storage in terms of power capacity.

	2015	2016	2017	2018 (Estimated)
Total Local Production	55	57	59.4	69
Total Exports	5	5.3	5.5	6.2
Total Imports	250.0	263.3	273.9	316.2
Imports from the US	100	105.32	132	152
Total Market Size	330	347	364	381
Exchange Rates	0.74	0.77	0.77	0.77

(total market size = (total local production + imports) - exports)
Unit: USD millions

Data Sources: I&A Report, Global Trade Atlas

Leading Sub-Sectors

Information Communication Technologies

Growth is anticipated across Information Communication Technologies that leverage automation and digitalization to enhance grid efficiencies. Australia will see an increase not only in smart meter hardware investment, but also in analytical, visualization and customer engagement services and tools.

Australia is a ripe market for blockchain applications in the renewable energy space. In June 2018 for example, IOT Group signed an agreement with Hunter Energy to build a blockchain center inside the Redbank coal-fired power station to provide cheap electricity for blockchain applications. The deal is the first of its kind in Australia and will put the center ‘behind the grid’, giving it direct access to wholesale electricity prices to avoid additional costs from the retailer, transmission, and being connected to poles and wires. The proposed two-hectare development has the potential to cut energy prices by up to 20%.

Energy Storage

Improved technologies, more complex electricity market designs, and increased penetration of renewable energy haves been driving the deployment of energy storage solutions in Australia. In 2017, the number of residential battery systems installed in Australia triped from the previous year. Almost 21,000 systems were installed in Australian homes during 2017. The appetite for storage systems has meant that Australia has become a leader for new energy storage products. Out of a worldwide total of 1.4 gigawatts of battery storage capacity providing on average 1.6 hours of supply in 2017, Australia led the way on the installation of power capacity, with 246 megawatts for 1.7 hours.

Energy storage will play a key role smoothing out the peaks and troughs of renewable energy generation. The two most mature energy storage technologies in Australia are pumped hydro and lithium-ion batteries. South Australia is home to the world’s largest lithium-ion battery, supplied by Tesla and owned by Neoen, which started operating at the Hornsdale wind farm in December 2017.

It is forecasted that the industry in Australia could implement dynamic tariffs (time-of-use tariffs) to shift some peak load and flatten peaks in electricity demand, leading to a decrease in the costs of running the electricity transmission and distribution networks. As energy storage continues to grow, micro-grids will become more dependent on renewable fuels rather than fossil fuels.

Opportunities

Future smart grid investments will focus on improving smart electricity metering, battery storage, advanced storage, and grid communications. The market opportunity remains open for vendors. Northeast Group estimates investments in smart grid infrastructure reaching USD6.1 billion between 2017 and 2027 in Australia.

US firms have found success in the Australian market to date. Regional diversity will continue to determine which sub-sectors represent opportunities in different states. Near-term market considerations include:
Opportunities:

Energy storage solutions in South Australia for grid stability
Smart metering and associated analytics
Behind-the-meter solar plus storage solutions
Products and services to improve the Western Australia (WEM) and the Northern
Territory (Power and Water Corporation) grids
Renewable integration smart grid ICT solutions

Challenges:

Reduced revenues from grid defection, affecting working capital of utilities
Powerful lobbying against renewable energy, which could affect the overall regulatory framework
Decreasing government renewable energy subsidies

New Government initiatives have been introduced to support the growth of the smart grid industry in Australia. The USD37.1 million (AUD50 million) competitive Smart Cities and Suburbs Program supports projects that apply innovative technology-based solutions to urban challenges. 50 projects were funded under Round One of the Program and shared USD28.5 million of Australian Government funding. Round Two was announced on May 2, 2018 and will support USD22 million of funding available through a competitive grant process. Funding flowed to all states and territories with nearly 40% of projects located in regional areas.

The program encourages eligible organizations–local governments, private companies, research organizations and not for profit bodies–to deliver collaborative smart city projects that improve the livability, productivity and sustainability of Australian cities, suburbs and towns.

Web Resources

Smart Grid, Smart City: Shaping Australia’s Energy Future, July 2014
Department of Industry, Innovation and Science - Smart Grid, Smart City Project
Smart Grid Top Markets Report
https://australianenergystorage.com.au
http://www.chiefscientist.gov.au/wp-content/uploads/Energy-storage-paper.pdf
https://cities.infrastructure.gov.au/smart-cities-program

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