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Frost & Sullivan: High Costs, Uncertain Returns Curb Utilities' Investments In Australian Smart Grid Market

SYDNEY, Jan. 21, 2013 /PRNewswire/ -- 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. 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. Nevertheless, demand is likely to pick up beyond 2015 as power companies experiment and improve roll-out results.

Frost & Sullivan's new analysis, Australian Smart Grid Market - Utility Survey, ( http://www.energy.frost.com), finds that the market earned revenues of more than $400.0 million in 2012 and estimates this to reduce to $260.0 million in 2016.

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. 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," said Frost & Sullivan Energy & Power Systems Senior Consultant Sarah Wang. "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 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.

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