IDC has released its “Utilities ICT Market Forecast and Analysis” report, which predicts IT spending within Australia’s utility sector will grow at 2.3% a year to $1.9 billion in 2015. "IT service providers are well positioned to capitalise on Smart Grid investments," says IDC’s David So. “The merger of the three NSW electricity distributors presents system integration and consulting opportunities for IT vendors.”
So says there are three industry changes in the electricity network distribution sector that are major catalysts for a new wave of ICT spending. “In addition to the merger of the NSW electricity distributors and the rollout of smart grids, the changes in the network pricing rules will not only control the rise in electricity prices but will also present business opportunities for ICT vendors".
IDC notes that the energy regulator is amending the network pricing rules such that it does not favour capital expenditure (capex) as a means for the electricity network distributors to generate their regulated revenue and drive up retail electricity prices. “The Australian Prime Minister in August 2012 blamed the State government for ‘gold-plating’ the networks with excess capacity expansion to increase the reliability of the networks, especially for peak demand.
"The regulator is starting to understand that the return on capital approach in determining revenue for the electricity distributors may not work well when retail electricity prices are rising so much. The amendments in this rule could potentially result in higher operating expenditure on cloud computing and also drive the formation of partnerships with mobile operators for the rollout of the smart grids," said So.
“Instead of increasing the capacity of electricity networks, IDC believes that rolling out the smart grids is the long-term solution to controlling the rise in electricity prices and this trend of ‘smart-plating’ the network rather than ‘gold-plating’ them. On this basis, IDC believes that ICT vendors can ride on this new wave of expansionary capex generated by the utility companies.”