Australia Disconnect - Opportunities and Challenges for the Utility

The coming disconnect in Australia will call for change within the utility as an increasing number of consumers opt to go off-grid.
Published: Tue 04 Feb 2014

By 2027, all but the most energy intensive users in Australasia may be able to cost effectively disconnect from the electrical network, says Ezra Beeman, Managing Director, Energeia, Australia, in his presentation The Coming Disconnect at the European Utility Week.

With cost-effective energy efficiency measures in place, energy consumption will be reshaped and reduced by 75% in the average home. With the escalation in tariffs, falling technology costs, and emergence of new products, there will be a move towards consumer-side energy investment.

The drivers of this disruptive change are:

  • Environment policy-This increases distributed resources such as solar photovoltaic, micro-wind, fuel cells, and electric vehicles.

  • Environmental policy and asset replacement cycle-This increases retail prices and as a result, makes self-generation more attractive.

  • Renewable energy integration technology is becoming more cost-effective

As renewable energy technology develops, more energy will be sourced from solar, geothermal and wind supplies. It can then be stored and traded through gas, electricity or transportation in an integrated ‘Energy Grid’ a view long held by Engerati.

Mr Beeman suggests that in the future, energy industry revenues would come mainly from selling, financing, installing and servicing this equipment which supports renewable generation. This market could be worth around $20 billion by 2019.

Key Smart Energy Markets

There are three main smart energy markets which should be explored:

  • Solar photovoltaic

If this development is unconstrained, an analysis shows that 34-50% market adoption is possible by 2020. This growth is possible as long as there are no network access issues and feed-in tariffs are generous. Utilities also need to consider the middle growth scenario, key system and electricity pricing assumptions.


The following solar photovoltaic opportunities are available to the utility:


  1. Maintenance and assurance services

  2. Storage and Home Energy Management Systems integration

  3. Building Integrated photovoltaics and third generation technology (paint or print)

  4. Kwh pricing

  5. Time of Usage optimisation

  • Energy Efficiency

There is great opportunity for utilities in the energy eficiency arena. Analysis shows energy reductions of around 75% over 10 years. The national target has been set at 30% by 2020. However, the market is constrained by replacement activity and insulation fears.

  • Demand Response

History shows that adoption could reach over 60%, however, pricing, channels and technology will be major challenges. Currently, the focus is being placed on Queensland and Victoria.

Industry challenges

Although there is significant opportunity in the market, the region finds itself up against a number of challenges:

  • Cost-reflective network pricing-The Long-run marginal cost is greater than the marginal price which can lead to underinvestment in peak reduction

  • Good metrology investment decision-making-Often sites with multiple smart devices are not taken in to account.

  • Streamlined Network Access and Integration on the existing network may prove to be challenging.

Today’s conventional business models are not well-positioned for growth as high fixed costs impact margins and prices.

The emergent business models (retailer of the future) will integrate mains, solar, efficiency, and management opportunities. Tomorrow’s dominant player could be feeding and growing in new markets – all they need is a retail license to cut out the middle man.

Significant regulatory and institutional barriers exist but availability of cost reflective network pricing is the most significant of them all.

The conclusion is that a full disconnection from the grid, resulting in microgrids is probably still over a decade away but the ability to substitute capacity and energy will emerge from 2015.