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While several Australian electricity distribution utilities have progressed toward smart grid implementation, they are reluctant to substantially invest any further in smart grids due to the lack of specific payback periods, according to a new report from Frost & Sullivan. These reduced investments, along with unsatisfactory performances of smart grid technologies when tested in real application environments, will restrict the smart grid market's growth in Australia. 

Frost & Sullivan says the market earned revenues of more than $400 million in 2012 and estimates this to reduce to $260 million in 2016. Nevertheless, the report says demand is likely to pick up beyond 2015 as power companies experiment and improve rollout results.

The ease with which people can remotely read smart meters and potentially even control meter readings has created a level of discomfort among consumers, thus affecting adoption, the report says. Intensive consumer education and improved understanding are crucial to alleviate these concerns and encourage customers to install new technologies.

"The disaggregated structure of the Australian power transmission, distribution and retail industries poses a challenge for smart grid deployment," says Sarah Wang, Frost & Sullivan’s energy and power systems senior consultant. "While power distribution companies owned by the state governments actively encourage consumers to reduce peaks in energy demand, privately owned retail companies build peaking generators to meet energy demand, thus inhibiting the full utilization of smart grids."

The high initial costs of advanced metering infrastructure (AMI) smart grids and regulators' hesitation in approving cost-reflective tariff schemes have also postponed large-scale smart meter rollout, the report adds. The challenges encountered during previous rollouts and the unclear business cases in some instances have delayed approvals for proposed projects.

Participants are striving to get these delayed projects back on track through increased focus on demand management and the active participation of customers, which have led to successful business case demonstrations. Power companies are using smart grids to achieve operational competence, streamline processes, and meet the demand for energy efficiency. Capital investment deferral is another factor compelling companies to shift to smart grids.

While smart grids enable the successful integration of renewable energy into the electric power network and effectively improve network efficiency and stability, the report notes that there is no one-size-fits-all solution.

"Vendors must collaborate closely with utilities and actively experiment with various solutions, installing sensors and monitors at substation transformers and poles,” says Wang. “Resorting to pay-as-you-go meters instead of selling off-the-shelf solutions is another option. They need to examine and enhance existing infrastructure, including automating networks using supervisory control and data acquisition (SCADA) and communication systems."

Installing these systems with the latest developments in monitoring and communications will yield returns and ensure market survival, the report concludes.






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