The concept of ‘smart utility network’ does not end with the design and implementation of a smart grid system in a country. Power utility in every country must understand that smartening of the power grid system is considered to be an evolutionary process that requires considerable effort from both technology and regulatory standpoints. From a technology standpoint, ‘smart utility network’ is the culmination of three different but largely interconnected segments, namely smart meter/advanced metering infrastructure (AMI), smart consumer applications, and grid level applications. The growing importance of smartening a country’s power grid system is exacerbated by the growing ‘prosumer’ model happening through the rise in decentralized power generation systems such as Rooftop Solar PV and Waste-to-Power technologies. These activities might be selective in the Asia-Pacific region. However, the most pressing issue affecting countries such as the Philippines and Myanmar is that they are reeling under the shackles of decades old power grid systems leading to heavy transmission line losses averaging between 15% and 25% making electricity supply a huge cause for concern in these countries. It is therefore imperative that governments in these countries must work in tandem with their respective utilities and DSOs to ensure not only revamping the T&D system but also to bring in a change through effective regulation and adequate policy support that makes smartening of the power grid system possible.

Key Areas of Growth

In Asia-Pacific, over the recent past countries such as Japan, Australia, and South Korea have shown considerable strides in their efforts to smarten their utility network systems.

For instance, in the case of Japan, its ten major utilities have committed toward widespread smart meter rollouts between 2016 and 2024 that could possibly lead to installations of 78 million smart meters across residential and low-use customers. So far the number of smart meter installations has exceeded 10 million. Besides, the four major electric utilities, namely Tohoku Electric Power Co., TEPCO, Hokuriku Electric Power Co,. and Kyushu Electric Power Co. have installed 750,000 smart meters in commercial premises and plan to complete their rollouts by the end of 2016. TEPCO alone is expected to install 27 million smart meters by 2020. Behind this inimitable urgency is the government’s goal toward completing installation of smart meters and to liberalize its electricity retail by 2020.

In South Korea, KEPCO is expected to invest $155 million between 2015 and 2017 on developing smart grid into a business model and export them. This will include building technologies that will reduce spending on power whilst boost energy savings and efficiency. Besides, the Songdo IBD smart city project, which is 40 miles from Seoul and 7 miles from the Incheon International Airport, was completed in 2015 by Gale International and Korea’s POSCO E&C. Moreover, the demand-side management programs along with demand response (DR) are taken charge by Korea Power Exchange (KPX) and KEPCO.

Victoria in Australia has been the first in the race toward 100% smart meter rollout which was undertaken by SP AusNet and four other electricity distribution providers. South Australia’s power system will be reliable, even in situations where wind power generation hits more than 100% of the country’s demand, as long as either the Heywood interconnector is operational or sufficient amounts of synchronous generation is available in the country’s power grid system as indicated by the Australian Energy Market Operator (AEMO).

Significant developments could be observed even in the Southeast Asian region; for instance, AMI rollouts in the Philippines, smart-grid test bed investments in Thailand, and home energy management systems (HEMS) installations in Singapore.

Is it Bereft of Challenges?

The biggest challenge facing the growth potential of smart utility networks in APAC comes from a technology and regulatory standpoint. In the long run, it has been observed that commercial attractiveness, compatibility with existing technologies, regulatory developments, and investment frameworks make smart grid an evolving technology.

Across APAC, major uncertainty prevails around the standards, interoperability, and capability of the utilities for successful deployment of the new technologies. Besides, there is no clear decision taken on the communication protocol to be used, thereby making interoperability issue a major cause for concern. As AMI encompasses interaction among various systems that must be efficient for advanced applications to run correctly, adoption of common standards must be determined to avoid additional costs and investments and APAC being an emerging market would require more options to evaluate the right standard. Besides, energy storage technologies are still not mature and practical applications lack laboratory efficiencies. However, full commercialization of the market is quite an elusive task unless satisfactory levels of performance against required specifications of battery storage projects are guaranteed to end users.

However, such challenges can be addressed by individual countries. Taking Japan’s case, the Wi-SUN Alliance along with international partners including Silver Spring Networks and Cisco is working on a communication specification goal for smart grid. The goal is to get the global set of manufacturers to agree on common specifications concerning the communication equipment being built for smart grid purposes addressing interoperability issues.

When highlighting the technology and regulatory challenges, it is quite important to look into security challenges as well. From a security standpoint, with the gradual evolution of smart grid systems that leads to automation of different technologies, utilities become more vulnerable to cyber-attacks. Though this issue might still be premature to discuss at an APAC region level, it is imperative for countries in this region to simultaneously work on effectual cyber security program whilst planning their smart grid and smart city programs. For instance, companies such as HITACHI and A*STAR Research have already embarked on projects that work on solutions to strengthen the security of electricity supply in countries such as Singapore and Japan.

The Way Forward: Utility 2.0

Going forward, if smartening the utility network systems should move out of the drawing board, it is highly recommended that the government in every country must consider bringing in regulations that would drive utilities with a sense of urgency. Taking cues from Japan, creating consortiums is one of the ways to address these logistical challenges. Besides, with changing business landscapes utilities and energy regulators are left only with two strategic options. First option is for utilities to have a strong presence in sourcing, financing, and operation when providing distributed energy resources’ (DER) services to their customers becomes their key focus area. The other option is for them to completely focus on providing and maintaining the distribution grid network whilst leaving the DER services to be performed by competitive firms using largely decentralized digital technologies. Therefore, in this changing business environment, especially in Asia-Pacific, every country would require a strong set of regulations coupled with incentive-based policy support to drive change in this market.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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