Smart Grid, Smart City

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Smart Grid, Smart City

Grant Guidelines


The National Energy Efficiency Initiative


2

Contents





1.

Smart Grid, Smart City

................................
................................
............................

3

2.

Challenges and opportunity

................................
................................
...................

4

3.

Background

................................
................................
................................
.............

7

4.

Consultation

................................
................................
................................
............

8

5.

Objectives

................................
................................
................................
................

9

5.1

Regulation

................................
................................
................................
....

9

5.2

Standards

................................
................................
................................
...

10

5
.3

Measures of success

................................
................................
.................

10

6.

Outputs

................................
................................
................................
..................

11

7.

Timeframes

................................
................................
................................
............

12

8.

Eligi
bility and selection criteria

................................
................................
............

13

8.1

Eligibility criteria

................................
................................
........................

13

8.2

Selection criteria

................................
................................
........................

14

9.

Guiding principles

................................
................................
................................
.

16

9.1

Location

................................
................................
................................
......

16

9.2

Communications platform

................................
................................
.........

16

9.3

Security

................................
................................
................................
......

17

9.4

Intellectual property and the dissemination of findings

.........................

17

10.

Communication
and reporting

................................
................................
..............

18

11.

Confidentiality

................................
................................
................................
.......

19

12.

Funding

................................
................................
................................
..................

20

12.2

Cons
ortia contributions

................................
................................
............

20

12.3

Project budget

................................
................................
............................

21

12.4

Taxation and regulatory obligations

................................
.........................

21

12.5

Financial evaluation

................................
................................
...................

21

13.

Process

................................
................................
................................
..................

22

14.

Independent assessment panel and probity advisor

................................
..........

24

15.

Role of
Smart Grid, Smart City

participants

................................
........................

25



3

1.

Smart Grid, Smart City


In May 2009, the Australian Government announced it would provide up to $100 milli
on in
partnership with the energy sector to develop
a commercial
-
scale smart grid demonstration
project.
The new
National Energy Efficiency Initiative: Smart Grid, Smart City

will use 21st
century technology to assist Australia’s transition to a low carbon

economy by encouraging
a smarter and more efficient electricity network.


The
Smart Grid, Smart City

demonstration project will deploy Australia’s first fully
-
integrated
smart grid in an environment of sufficient scale to demonstrate best practice to enc
ourage
the broader industry adoption of smart grids across the country.


Smart grids combine advanced communication and metering infrastructure with existing
energy networks to enable a combination of grid
-
side and customer applications to deliver a
more e
fficient and robust network.


Grid
-
side applications and measures like fault detection, identification and restoration,
integrated voltage control and substation and feeder monitoring can increase system
reliability and performance, reduce line losses, an
d allow better integration of
distributed and
renewable energy
.


Consumer applications enabled by smart meters can assist users to understand and control
their energy use, reducing peak loads and delivering greenhouse gas savings. Through this
advanced te
chnology, smart grids can improve grid efficiency and reliability while allowing
the consumer to more actively manage their energy consumption.



4

2.

Challenges and opportunity


Australia is currently facing the competing pressures of meeting increased ener
gy demand
and reducing the impact of greenhouse gases. Existing electricity infrastructure requires
upgrades and redesign to facilitate the integration of distributed and renewable energy, and
to maintain high levels of security and reliability. In order t
o meet these and other
challenges, Australia will need to integrate sensor, metering, communication and
information
processing
technologies
into the
networks

to create an efficient ‘smart grid’.


The smart grid vision includes a suite of applications, eac
h at different stages of technical
and economic maturity. This includes grid
-
side applications, which reduce transmission and
distribution line losses, and assist in improving fault detection to reduce restoration times;

and
customer
-
side applications
,

whi
ch assist consumers to better understand and manage
their electricity usage.
A

proposed suite of
example
customer and grid
-
side applications
developed during the pre
-
deployment study

for
Smart Grid, Smart City

are briefly explained
below. It is expected th
at the majority of Australian Government funding for the initiative will
support these applications.


Beyond these expected applications and technologies, the
Australian Government strongly
encourages innovation in applications, and supports the inclusion

of promising and robust
measures, particularly on the customer
-
side, in order to gather information about their
performance. Technologies and measures that become available throughout the duration of
Smart Grid, Smart City

may be substituted or incorporat
ed as additional trials within the
project at a later date, if agreed through the process of a project review.



Customer applications


Customer applications include energy use information and management technologies
downstream of the meter across resident
ial and commercial customers, as well as the
pricing and billing arrangements they support.


Example components of customer applications include in
-
home displays and web
-
based
portals, home area network (HAN) clients, smart appliances and thermostats, tim
e
-
of
-
use
pricing and programs which enable customers to have better control over their electricity
consumption and expenditure.


Benefits of these systems include the potential to reduce peak loads resulting in lower
generation and infrastructure costs an
d reducing overall energy consumption.



Grid
-
side applications


During the pre
-
deployment study, a number of grid
-
side applications were identified. Key
applications arising from the consultations include:


Active voltage support and power factor correct
ion
,

including integrated volt
-
VAR
control (IVVC) and conservation voltage reduction (CVR) systems have been identified as
key grid
-
side enablers and applications within a smart grid. These applications make use of
greater control of grid voltage and power

factor. They include components such as
automated or remotely controlled capacitor banks and on
-
load transformer tap changers.
Potential benefits include reduced cost of operating expenses, asset maintenance, customer
savings, avoided line losses and redu
ced consumption with consequential emissions
abatement.


5


Distributed storage

relies on remotely
-
dispatched, on
-
site storage devices that can provide
electricity for residential or small commercial use during outages or reduce demand during
critical peak ti
mes. Distributed storage may also enhance the integration of distributed and
renewable generation sources in distribution networks. A number of storage technologies
are available including flywheel, batteries of different types, super
-
conducting magnetic
e
nergy storage, compressed air energy storage and super
-
capacitors.


Fault detection, isolation and restoration (FDIR)

comprises systems that reduce the
duration and/or scale of outages, and allow a degree of ‘self
-
healing’ through re
-
routing of
supply. In

particular the opportunity of FDIR efficiency gains are linked to components such
as sectionalisers, mid
-
circuit re
-
closers, smart relays and ties, and fault sensors. Benefits
include improved reliability from automated responses to some types of outages
and faster
scouting and repair for others.


Electric vehicle support

includes central dispatching systems to optimise the load created
by charging electric vehicles, as well as infrastructure to enable charging of batteries. The
key potential benefits of t
hese systems include: using the car battery for distributed storage,
integration of distributed energy and assistance in managing peak demand and associated
avoidance of transmission and distribution investment. While grid and customer
-
side
applications ar
e the focus of
Smart Grid, Smart City
there are also other potential societal
benefits from electric vehicles of a reduction in Australia’s reliance on petroleum fuels and a
reduction of emissions in Australia’s urban centres.


Substation and feeder monito
ring

provides information that can help manage outages
and optimise the nature and timing of maintenance. Technologically
-
advanced systems are
assisting transmission and distribution companies to avoid outages and lower maintenance
and inspection costs and

increasing the lifetime of major network assets.


Wide
-
area measurement (WAM)

provides real
-
time monitoring of high
-
voltage transmission
and distribution lines, using technologies such as phasor measurement units (PMUs).
Benefits of these systems include
increased transmission line capacity and the capability to
more effectively and efficiently identify catastrophic (but infrequent) large
-
scale outages.


Distributed generation support

comprises the protection, control and billing systems
needed to support
distributed generation, for example residential rooftop solar PV or
cogeneration at residential or commercial premises, including selling back excess power to
the grid in a way that supports grid capacity.


Smart metering infrastructure (SMI)

includes rem
otely controllable interval meters with bi
-
directional communication, including smart meters, communications network to support
appliance control and other customer applications, precise and accurate data interrogation,
‘back
-
office’ systems integration an
d operational integration. Benefits include operational
savings for distributors, such as automated, remote meter reading.
Smart meters are
considered an enabling technology for a number of smart grid applications and the
Smart
Grid, Smart City

demonstrati
on project should include a sufficient deployment of smart
meters so that advanced customer
-
side applications, and relevant grid
-
side technologies
may be demonstrated. The intention of the project is
not

to test the operational effectiveness
or functionali
ty of smart metering infrastructure technology; data to this effect will come from
the Ministerial Council on Energy’s smart meter rollout and planned and present pilots.






6



Opportunities


The
Smart Grid, Smart City

project provides an opportunity to de
monstrate the societal and
economic benefits of smart grids and assist with the identification of barriers to a broader
industry adoption across Australia. This will be achieved through deployment at commercial
scale of smart grid applications within a sin
gle distribution area. The project will also
demonstrate the interoperability of smart grids with other smart technology applications,
such as gas, water and communication technology.


The Australian Government has provided up to $100 million towards
Smart

Grid, Smart City
.
The project will leverage the experience and expertise of electricity market participants,
energy service providers, state, territory and local governments, industry experts and
community groups.


As a demonstration project, the valuable

lessons that emerge from
Smart Grid, Smart City

will be shared throughout the project and may provide evidence to support changes in
regulatory or market arrangements.


The project is expected to stimulate electricity utilities, energy service providers
and financial
institutions to test new business models within their own areas for delivering smart electricity
solutions in a financial environment where business risks are better understood.


It is also expected to provide valuable information to policy
and decision makers by
demonstrating the potential long
-
term system benefits of smart grid applications and energy
efficiency and conservation measures.


Householders and businesses should benefit through having greater visibility into, and
control over,
their energy usage.



7

3.

Background


Smart Grid, Smart City

builds on the Australian Government's investment in household
energy efficiency and renewable energy, including the
Energy Efficient Homes Package

announced in February 2009, which provides for th
e installation of insulation and solar hot
water systems; the new
Solar Credits

scheme, which supports home micro
-
generation; and
the
Solar Cities

program, which is trialling the integration of smart metering with cost
reflective energy pricing, solar tech
nologies and energy efficiency measures in seven
locations around Australia.


In April 2007, the Council of Australian Governments (COAG) endorsed a staged approach
for a national smart meter rollout where the benefits outweigh costs. Smart meters are key

enablers of many smart grid applications, which has led to the commitment of COAG and
the Ministerial Council on Energy to develop a nation framework to support the adoption,
use and further trialling of smart metering infrastructure. Key elements of this

work are being
delivered by the industry
-
led National Stakeholder Steering Committee on smart metering.


Smart Grid, Smart City
will build upon these and other initiatives in the energy sector and
leverage the infrastructure and lessons where appropriate
.


Smart Grid, Smart City
will also explore synergies with the Australian Government’s $43
billion investment in the National Broadband Network.


Smart Grid, Smart City

is intended to demonstrate a viable business model for the industry
-
led adoption of s
mart grids as well as reduce the risk and uncertainty for future investors in
smart grid infrastructure and technology.


It is anticipated that the first critical infrastructure components and market arrangements will
be in place in 2010

11 and it is exp
ected that outputs will be carefully monitored, analysed
and reported throughout the program.



8

4.

Consultation


The
Smart Grid, Smart City

grant guidelines build upon a pre
-
deployment study that
involved consultation with key stakeholders within the energ
y and communication sectors
and the wider community throughout July

September 2009.


The guidelines provide information on project eligibility, selection criteria, the assessment
process and the development of grant proposals under the
Smart Grid, Smart C
ity

demonstration project.


Draft guidelines were released in September 2009 to seek feedback and these guidelines
reflect comments received at that time.



9

5.

Objectives


The objectives of the
Smart Grid, Smart City

demonstration project are to:




deploy a

commercial
-
scale rollout that tests the business case for key applications
and technologies of the smart grid



build public and corporate awareness of the economic and environmental benefits of
smart grids and obtain buy
-
in from industry and customers



gath
er robust information and data to inform broader industry adoption of smart grid
applications across Australia



investigate synergies with other infrastructure (such as gas and water) and the
National Broadband Network.


Smart grid applications support gre
ater energy efficiency, a more reliable energy system,
and increased penetration of distributed forms of electricity, including intermittent and
renewable forms of energy such as wind and solar as well as embedded co
-
generation.


Applicants should develop

proposals that enable better integration of distributed and
renewable generation, demonstrate better reliability
-
cost outcomes for consumers, and
improve energy efficiency, supporting significant reductions in greenhouse gas emissions.


Smart Grid, Smart

City

should also improve and increase consumer choice and participation
in the electricity market and create incentives for consumers to contribute towards the
project’s objectives.


Smart Grid, Smart City

is also expected to explore the regulatory frame
work within which
smart grids will operate and the technological standards required to allow a secure, reliable
and interoperable network.



5.1

Regulation


Throughout the industry consultation phase of the pre
-
deployment study, a number of
regulatory issu
es arose as potential barriers to a wider adoption of smart grid technologies
and applications. One of the intentions of the
Smart Grid, Smart City

demonstration project
will be to provide appropriate information and lessons that will aim to inform broader

regulatory decision making processes. It should be noted, however, that
Smart Grid, Smart
City

is not a suitable project with which to evaluate specific regulatory rate case alternatives.


A regulatory working group will be established to identify the maj
or regulatory barriers that
would affect industry adoption across Australia and make recommendations concerning
current regulation to government, including to the Ministerial Council on Energy as
appropriate. This group will include representatives from th
e Department of Environment,
Heritage, Water and the Arts (DEWHA) and the Department of Resources, Energy and
Tourism (DRET); the lead proponent of
Smart Grid, Smart City

(the applicant); Energy
Networks Australia (ENA); the Australian Energy Market Commis
sion, Australian Energy
Regulator, Australian Energy Market Operator, Australian Communications & Media
Authority and state regulators, as relevant to their current responsibilities.







10


5.2

Standards


A potential barrier to a broader adoption of smart
grid technologies and applications in
Australia is the risk associated with installing new technologies without agreed standards.
Lack of standards increases the risk of a stranded asset, that is, where a utility deploys a
technology that is no longer supp
orted by the industry and hence requiring de
-
installation of
some applications prior to the end of their expected lifetime. Standards can also help to
reduce installation complexity, facilitate interoperability, and address security.
Interoperability can p
rovide third
-
parties, such as appliance manufacturers, with the
confidence and motivation to install smart grid equipment in their products. Finally, proven
and accepted industry standards also reduce utility and consumer risk of being locked into
one vend
or solution.


A standards working group will be created to help identify standards that may reduce the
potential risks. The working group will be supported by DEWHA and DRET, and will consist
of industry members, including consortium members, the National
Measurement Institute
and Standards Australia as appropriate.


The working group will consider the following issues:




what should be included in a smart grid standards framework?



what smart grid standards exist today?



what are critical gaps in standards?



are these challenges being addressed by another body?



what are the recommended processes and actions identified to address the gaps?



5.3

Measures of success


Successful achievement of the objectives will be determined by the extent to which:




a business
case is demonstrated that is accepted as robust and relevant for the
wider industry adoption of smart grid applications across Australia



regulatory and standards issues related to the wider rollout of smart grids are
clarified



the net benefits of smart gri
d applications are clarified and quantified.



11

6.

Outputs


Achieving the objectives of
Smart Grid, Smart City

will require the applicant to commit to the
following measures.




Deploy a live, integrated, commercial
-
scale smart grid of significant size and sc
ope.
The focus of the smart grid should be within a single distribution network.




Test a range of smart grid applications and measures (those which were identified
during the pre
-
deployment study are outlined in section 2 of these guidelines) at a
commerci
al scale or, where appropriate, at demonstration level. New smart grid
applications and technologies that become available throughout the life of
Smart
Grid, Smart City

may be incorporated at an appropriate scale into the demonstration
project if agreed th
rough the process of a project review.




Engage the local community and ensure that a sufficient number and diversity of
customers actively participate in the demonstration project to allow relevant and
statistically significant data to be obtained.




Facil
itate and encourage the dissemination of lessons from the
Smart Grid, Smart
City

to key industry stakeholders and the wider community.




Develop and maintain a database that contains all information required in order to
analyse and demonstrate the outcomes
of each deployed smart grid technology and
application. Data should be analysed, independently verified and regularly reported
to the Australian Government with regard to:

o

operational capacity of smart grid technologies

o

consumer energy consumption and beha
viour

o

impact of the project on the consortium businesses.




The database, along with reports and summaries should be readily available to key
industry stakeholders and the wider community. A key measure of success for
Smart
Grid, Smart City

is the extent to

which industry accepts the findings of the
demonstration project and pursues wider adoption of smart grid applications across
Australia. Applicants should also consider such communication and reporting
mechanisms as on
-
site education/research centres, mai
nstream advertising and
media campaigns, and peer
-
reviewed academic journal articles.




Actively participate in the regulatory and standards working groups.



12

7.

Timeframes


Applications for the grant will be accepted until 28 January 2010. After this time,

the
following
indicative

timeline will apply:




February

March 2010: Evaluation of grant applications / potential short
-
listing



April 2010: Successful applicant announced and funding agreement negotiations
commence



May 2010: Application feedback



June 2010
:
Smart Grid, Smart City

work commences.


In order to effectively demonstrate the impact of smart grid applications, the Australian
Government anticipates that information will be collected for a minimum of three years
following commencement of
Smart Grid,

Smart City
, that is, until

June 2013.



13

8.

Eligibility and selection criteria


Smart Grid, Smart City

is a competitive, merit
-
based grant. Proposals will be assessed
against the eligibility criteria and, if eligible, will then be considered and assessed a
gainst
the selection criteria. Upon submission of applications, an assessment process will take
place, culminating in the offer of funds to the successful
Smart Grid, Smart City

applicant.
More information on the assessment process can be found in section
11 of these guidelines.


Proposals must satisfy each eligibility criterion and should address each of the selection
criterion.


Accompanying notes will provide guidance on the structure of applications and the level of
information required.
The latest ver
sion of the accompanying notes will be available online
at
www.environment.gov.au/smartgrid

throughout the application period.



8.1

Eligibility criteria


To be eligible for consideration against the

selection criteria referred to below,
all
of the
following eligibility criteria
must
be met:




The lead proponent of the consortium proposed to deliver the
Smart Grid, Smart City

demonstration project (the ‘applicant’) must be a Distribution Network Servic
e
Provider which is a constitutional corporation.
1





The application must include an electricity retailer engagement plan and show
evidence of commitments from at least one electricity retailer to engage in the project
to enable effective recruitment of a
wide range of consumers.




The application must include a stakeholder engagement and education plan, which
outlines the approach to interacting with householders and the community. The plan
must detail proposed membership of a stakeholder engagement and edu
cation
group drawn from organisations such as local government, relevant community
groups, non
-
government organisations and consumer groups.




The application must
include

a plan to
ensure continuity of supply by using robust
security procedures including s
trategies for handling breaches or discovery of
weakness.




The application must include an integrated proposal that includes a commercial
-
scale demonstration of each of the following technologies and measures:

o

customer applications

o

active voltage support a
nd power factor correction

o

distributed storage

o

fault detection, isolation and restoration




The application must include a credible operational plan and cost breakdown, and
risk management plan.





The term 'constitutional corporation' means a trading, financial or foreign corporation within the meaning of s 51(xx) of the

Constitution.


14



The
application must include a commitment from the applicant
to make core lessons
and underlying raw data (except personal data protected by the
Privacy Act 1988
)
and regular summary analyses freely available
to the government. The applicant
must also agree to publicly disseminate information and data in a manner to

be
negotiated in finalisation of the funding agreement.




The application must include a data management plan, including details of the data
hosting, sharing and maintenance proposed, for a minimum period of five years from
the commencement of
Smart Grid,

Smart City
.




The application must include a commitment for the project management team to
regularly meet with DEWHA on
-
site and in Canberra. The applicant also needs to
commit to regular participation in the
regulatory and standards working groups and
th
e provision of reasonably requested information and data from the project, to
support the work of these groups.




The applicant must be financially viable and able to commit resources to the full
length of the project and demonstrate an exit strategy that w
ill ensure minimal
disruption to the electricity network and its customers.
T
he applicant must
demonstrate a commitment to perform all project obligations under the funding
agreement and agree to enter into agreements with each consortium member that
are s
atisfactory to DEWHA.



8.2

Selection criteria


Where applications meet all the eligibility criteria, they will be assessed against the following
selection criteria. The selection criteria are weighted and should be addressed in the context
of their impor
tance to the overall achievement of the project objectives.


An overriding criterion will be the extent to which each proposal demonstrates value for
money in aiding the Australian Government to achieve its poli
cy objectives. Value for money
will also be
assessed in terms of the proposed outputs in light of the overall project cost; the
contribution of funds from the applicant, consortium members and third parties; and the
volume of Australian Government funding sought for the proposal.


(a)

Applications,
approach and benefits (40 per cent)


The central focus of
Smart Grid, Smart City

is the smart grid application and
technology demonstration. Its major design elements include: t
he prioritisation of
applications and the variables that should be tested
; t
he
experimental design
principles required to inform national rollout
; t
he location characteristics, scale and
number of sites required for a valid and transferable test
; and a
n estimate of the time
required
.


The application and technology aspects of
Smart
Grid, Smart City

should prioritise
smart grid applications based on societal value and answer questions about
business cases and technical feasibility. Technologies should be readily obtainable
for the purpose of the demonstration and comply with available

standards where
relevant.


The technologies and applications expected to be tested and assessed as part of
Smart Grid, Smart City are:


15




customer applications



active voltage support and power factor correction



distributed storage



fault detection, identific
ation and response



electric vehicle support



substation and feeder monitoring



wide area measurement



distributed generation support.


The Australian Government expects
applications to demonstrate an innovative and
integrated approach, particularly on the cus
tomer
-
side, to include measures which
show promise for commercial deployment.


Applications will also be assessed against their approach to the adopted smart grid
communications platform(s). DEWHA has no preference as to the specific platform
utilised; how
ever, the platform(s) used must satisfy the principles set out in section
9

of these guidelines. Applications must provide detail of their approach to assessing
the reliability and security of the communication platform(s).


(b)

Operational plan and risk m
anagement (25 per cent)


Applicants will be required to provide robust project plans and demonstrate an
awareness of the risks involved in executing a commercial scale project. Included in
this criterion is the demonstrated commitment to and methods for:




retailer engagement plan



security procedures and plans for handing breach and discovery of weakness



stakeholder engagement and education plan.


The level of expertise and experience of the lead proponent for
Smart Grid, Smart
City

will also be assessed as
part of this criterion. It is strongly preferred that the
successful applicant (the proposed signatory to the funding agreement) underwrite
all consortium contributions (both cash and in
-
kind).


(c)

Dissemination of findings (10 per cent)


Applicants are r
equired to demonstrate in their applications their methodology for
sharing the
Smart Grid, Smart City

findings with other smart grid stakeholders
including informing industry business cases and assisting in increasing public
awareness. Further information
regarding the project
-
critical need for lessons with
the wider industry is provided in section
9

of these guidelines.


(d)

Interaction with Regulatory and Standards Working Groups (10 per cent)


The extent to which the applicants can demonstrate its abili
ty to support, inform and
ensure the success of the regulatory and standards working groups will be assessed.
Applicants should demonstrate in their applications an understanding of regulatory
and standards issues related to the broader adoption of smart g
rids and identify how
they will engage with the relevant working groups.




16






(e)

Applicant’s financial viability and consortium structure and governance model
(15 per cent)


Consideration will be given to the financial viability and level of financial c
ontribution
of the applicant and any proposed consortium members. Applicants should describe
in the applications the nature of any existing or proposed corporate relationships with
consortium members in order for DEWHA to assess how effectively the applica
nt
and the consortium members will be able to work together to achieve the project
outcomes.



9.

Guiding principles


Applicants are required to prepare and submit grant applications that address the selection
criteria and are designed to achieve the core

objectives of
Smart Grid, Smart City
. Some
guidance is provided below on the preferred location of
Smart Grid, Smart City

and on the
overriding principles upon which the grant applications will be assessed.



9.1

Location


Experimental design and location

selection should be optimised to produce credible results
that can inform broader industry
-
led adoption of smart grids in Australia. The location of
Smart Grid, Smart City

should provide a reasonable representation of the wider grid,
customers, geography
and climate of the remainder of the country.


The focus of
Smart Grid, Smart City

should be within a single distributor’s network and
provide a defined geographic focal point. The demonstration should include urban,
suburban, and rural areas and include an

appropriate diversity of network and customer
characteristics to ensure that applications are deployed at a scale that will provide
meaningful commercial data.



9.2

Communications platform


Grid wide two
-
way communication is the key enabler of the smart
grid and as such
proposals need to recognise the importance deploying a reliable, resilient and secure
communications platform in order to best demonstrate the benefits of smart grid
applications.


Applicants should demonstrate in their applications how th
e adopted communication
solution will be interoperable with a range of technologies and requirements throughout the
grid. Applicants should also demonstrate in their applications how they propose to ensure
the adopted communications platform can adapt, cos
t
-
effectively and with minimal
disruption, to technological change and new market dynamics.


In preparing their applications, applicants also need to carefully consider and outline
whether trials will be included to demonstrate potential synergies between
smart grid

17

infrastructure and the National Broadband Network (NBN). Further information relating to the
nature and timing of trials can be found in the accompanying notes.





The NBN is a $43 billion Australian Government initiative that will bring fibre
to the premises
to most Australian premises and will be the single largest nation building infrastructure
project in Australian history. It is anticipated that the NBN will facilitate the transition of a
number of industries (including energy, health and t
ransport) into a new digital era. The NBN
rollout has begun in Tasmania. The first connections to premises will be made by the end of
2009, and the first services will be available by July 2010.



9.3

Security


Applicants should demonstrate in their applic
ations an approach to network and
infrastructure security that will prevent broad based systemic failures in the grid in the event
of a security breach and provide protection to customers, utilities and third parties that may
be impacted by the
Smart Grid,

Smart City
demonstration.
Applications should include a
section on the technical approach to security. Security should be addressed in every phase
of the engineering lifecycle of the project, including design and procurement, installation and
commissionin
g, and the ability to provide ongoing maintenance and support. Cyber and
physical security solutions should be comprehensive and capable of being extended or
upgraded in response to changes to the threat or technological environment. Proposals
should also
outline additional methods, support or advice that will be sought to ensure
network security.



9.4

Intellectual property and the dissemination of findings


The key objective of
Smart Grid, Smart City

is to provide evidence for business cases for
industry
-
led rollout of smart grid applications across the country. As such, the main outputs
of the demonstration project will be data and information. DEWHA will require that data and
information generated throughout the life of the project that is relevant to ac
hieving the
objectives of
Smart Grid, Smart City

be made available to the public.


Specific intellectual property arrangements as they relate to specific technologies and
processes will be negotiated in finalisation of the funding agreement. All intellectu
al property
created before
Smart Grid, Smart City

will remain with the original owners.


Note that data containing personal information must be treated in accordance with the
requirements of the
Privacy Act 1988.

Under the funding agreement, the lead prop
onent will
be required to agree to being treated as a ‘contracted service provider’ under section 95B of
the Act. Each consortium member will also be required to agree to these requirements
under the relevant consortium agreements.




18

10.

Communication and

reporting


Smart Grid, Smart City

is a significant national program that aims to provide a platform for
future development in the energy industry. To ensure a strategic and consistent approach to
communicating the aims and outcomes of the
Smart Grid, Smar
t City

demonstration project,
the applicant will be required to establish a communication strategy consistent with the
following guidelines.


The strategy will ensure a partnership approach to communication between the Australian
Government and the consor
tium that will:




ensure the most effective use of available resources



enhance communication with, inform and motivate key stakeholders



raise awareness and demonstrate the benefits to all stakeholders



ensure stakeholders are aware of government leadersh
ip and support of industry
vision in the area of smart grids.


The communication strategy will identify the needs of, and propose methods of
communicating with, the following key stakeholders:


Non
-
consortium industry players (including retailers and distr
ibutors)


Communication with

and the participation of

non
-
consortium industry players will help
stimulate the market
-
led adoption of smart grid applications of greatest value across the
country.


Government and regulators


Communication with government wil
l ensure that the government’s policy objectives are
being achieved. Furthermore, engagement with regulators will help them to assess changes
to regulatory regimes.


Participants and the wider local community


Appropriate communication with
Smart Grid, Sma
rt City

customers and participants will
generate greater levels of participation and ensure quality of data generated by customer
trials. Furthermore, engaging the wider community will generate pull
-
through demand for
smart grid applications.


Internationa
l community


Communication with the international community will support the export of smart grid
knowledge and services. Furthermore, engagement with other regions currently trialling and
deploying smart grids (especially North America and Europe) will en
sure Australia adopts
and develops smart grid technologies and practices in line with best practice and
international standards.


Research community


Communication with the academic community will support continuing training and research
in smart grid appl
ications and practices.



19

11.

Confidentiality


Information supplied by applicants as part of the assessment process will be treated
sensitively by the relevant Australian Government departments and the relevant expert,
technical and financial panels. Appli
cants should identify any specific information which is to
be treated as confidential and provide legally justifiable reasons as to why it needs to remain
confidential.


DEWHA will only consider a request for confidentiality where:




the information to be
protected is identified in specific rather than global terms



the information is by its nature confidential



disclosure would cause detriment to the parties concerned.


DEWHA is subject to the legislative and administrative accountability and transparency
re
quirements of the Australian Government, including disclosures to the Parliament and its
Committees. DEWHA may disclose, or allow at any time the disclosure of, any information
contained in or relating to any application:




to its advisers or employees sole
ly in order to evaluate or otherwise assess the
application or to prepare and manage any resultant funding agreement




to its internal management personnel solely to enable effective management or
auditing of the assessment process




to the responsible Mini
sters




in response to a request by a House or a Committee of the Parliament of the
Commonwealth of Australia




within DEWHA, or with another agency, where this serves the Australian
Government’s legitimate interests




where the information is authorised or r
equired by law to be disclosed, noting that all
information submitted to the Australian Government is subject to the
Freedom of
Information Act 1982

and its requirements




where the information is in the public domain otherwise than by the Australian
Govern
ment’s disclosure

otherwise than due to a breach of the
relevant obligations
of confidentiality.


DEWHA will only keep information contained in, or obtained or generated in performing, any
funding agreement entered into with the successful applicant, confi
dential in accordance
with the terms of the funding agreement.




20

12.

Funding



12.1

Funding available for the
Smart Grid, Smart City

demonstration project


Australian Government funding available for the
Smart Grid, Smart City

demonstration
project will
be provided as a grant (consistent with the Commonwealth Grant Guidelines)
and will support the successful applicant to demonstrate, within one electricity network, the
benefits and barriers to the broader adoption of smart grids across Australia. A propor
tion of
the total funding is intended to expressly support monitoring and reporting throughout the
project, and to effectively administer the project.


Australian Government funding is not intended to support ‘business as usual’ activities,
however, in or
der to ensure the demonstration project represents the most advanced smart
grid applications applicants are encouraged to integrate within their proposals, and build
upon, currently planned activities where relevant.



12.2

Consortia contributions


The A
ustralian Government is seeking, through provision of this funding, to leverage the
best possible demonstration project, and will require contributions from consortium members
or third parties (other than the Australian Government) to the successful applic
ant and the
conduct of the project that:




assist developing technologies that provide maximum societal benefits



would not have taken place without
Smart Grid, Smart City



directly contribute towards the objectives of
Smart Grid, Smart City
.


All cash and i
n
-
kind contributions which support the objectives of
Smart Grid, Smart City

from the execution of the funding agreement onwards will be considered eligible. In
-
kind
contributions which relate to activities or investment occurring prior to the commencement
of
the project may also be included within the application, but only in instances where
additional information, results or intellectual property from the activity is made available for
the first time through
Smart Grid, Smart City
.


Applicants may also pr
opose as an eligible in
-
kind co
-
contribution the inclusion of additional
trials outside the network (by for example the involvement of a second Network Distribution
Service Provider), subject to data from the trials being integrated with and made available

through
Smart Grid, Smart City
.


The Australian Government is not seeking a specific level of co
-
contribution from the
applicant for
Smart Grid, Smart City
; however, the level of co
-
contribution proposed will be
considered during the assessment process in

determining value for money for the Australian
Government.


Applicants will be required to provide a comprehensive budget as outlined in section 12.3.
Applicants will need to demonstrate their ability to support financial costs that would not be
met throu
gh the payments of grant monies by the Australian Government. In order to
demonstrate their capacity to provide proposed co
-
contributions, applicants must include a
revenue and expenditure statement for the project period, clearly setting out the value and

source of all material financial and ‘in kind’ contributions. Applicants may wish to provide
letters of guarantee or evidence of investment capital arrangements to further substantiate

21

claims concerning their capacity to provide co
-
contributions. DEWHA ma
y, at its discretion,
also seek financial information about consortium members during the assessment process.



12.3

Project budget


Applicants are required to submit a GST
-
exclusive project budget. Project budgets should
include an assessment of total pr
oject costs and timeframes, the contribution of consortium
members, declaration of all other sources of funding for the project (or a similar project)
applied for or received and how the funds will be expended. Provision should also be made
in the budget f
or an independent audit at the conclusion of the project.


Applicants should note that if their application for the
Smart Grid, Smart City

demonstration
project is successful, grant progress payments will be paid in accordance with achievement
of agreed m
ilestones and relevant key performance indicators, which will be set out in the
funding agreement.



12.4

Taxation and regulatory obligations


Australian Government funding for
Smart Grid, Smart City

attracts the Goods and Services
Tax (GST). The Australi
an Government will compensate for the level of that tax in making
contribution payments. The
Smart Grid, Smart City
grant will also be considered income and
in most cases will be subject to income tax.


It is recommended that applicants seek professional a
dvice on their tax and regulatory
obligations.



12.5

Financial evaluation


An independent financial viability assessment may be undertaken during assessment of the
applications. Applicants should expect to provide sufficient information and documentation
to enable review of corporate governance and key financial ratios of the lead proponent and
consortium members, as well as the project budget and relevant financial statements.
Individually, these items provide unique indicators of future viability and are

flexible enough
to take account of the nature of the organisation. Collectively, they form a set of analytical
tools that assess both management and financial strength of the applicant and other
consortium members in the short and long term.



22

13.

Process


The
Smart Grid, Smart City

demonstration project will be selected through a competitive
process. Submitted applications will be assessed by an independent assessment panel,
which will provide recommendations to government, with the successful applicant e
xpected
to be announced in April 2010.


Implementation, monitoring and reporting will occur following the execution of the funding
agreement between the applicant and the Australian Government. It is expected that
implementation of the successful
Smart Gr
id, Smart City

will be completed by
2013
.
Monitoring and reporting will be expected to have taken place throughout the project.


The proposed process for selecting a preferred consortium for the
Smart Grid, Smart City

grant consists of the following phases
:


Pre
-
submission phase
(July


October 2009)


DEWHA engaged with industry through a workshop aimed at answering questions, clarifying
objectives and providing guidance on application development. An interactive web
-
based
process served to refine the draft

guidelines and submission documentation.


Grant application submission

(November 2009


January 2010)


During this phase, interested parties will be invited to prepare their grant applications
against the finalised grant guidelines and application support
ing material.
Smart Grid,
Smart City

applications close 28 January 2010.


Application assessment

(February


March 2010)


An independent panel of experts will assess applications for technical and business merit
and provide recommendations to government. D
EWHA will provide secretariat support
throughout this process.


Announcement of successful consortium
(April 2010)


The recommendations of the independent panel will inform the government decision on the
successful applicant. Funding negotiations will pr
oceed with the applicant, to be completed
by mid
-
2010. Details of the grant will be made available on DEWHA website following
execution of the funding agreement.


Project implementation, monitoring and reporting
(2010


2013)


Implementation of the
Smart G
rid, Smart City

demonstration project will be undertaken in
accordance with the funding agreement with DEWHA. Community engagement and
recruitment of households and businesses are expected to commence shortly after the
announcement of successful projects.
The rollout of smart grid technologies and
measurement of their impact is expected to run until June 2013 (although significant data is
anticipated to be available after two years).








23

Effective data collection and monitoring arrangements will be critic
al to the success of the
Smart Grid, Smart City

demonstration project. Relevant data will be collected and analysed
in order to inform assessments of the economic and environmental costs and benefits
associated with the
Smart Grid, Smart City

demonstration

project. Data will be collected for
periods before and during implementation of
Smart Grid, Smart City
.


24

14.

Independent assessment panel and probity advisor


An independent assessment panel will be appointed to assess applications. The panel will
make re
commendations to government regarding the assessment of the applications. The
panel will possess a range of relevant experiences and skills and will be independent of
government.


It is important that proposals are investment
-
ready and viable and that the

panel can make
judgments regarding the ‘business case’, with specific expertise relating to smart grid
technologies, energy efficiency measures and energy market issues to be provided to the
panel as required. Applicants, consortium members or their advis
ers may not approach the
independent assessment panel in relation to the development of their applications.


A probity advisor has been appointed for
Smart Grid, Smart City

to provide probity advice
before and during the selection process and to ensure th
at all applications are assessed
fairly and in accordance with the arrangements set out in these guidelines and their
accompanying documentation.



25

15.

Role of
Smart Grid, Smart City

participants


Smart Grid, Smart City consortium


The
Smart Grid, Smart Ci
ty

applicant will be responsible for carrying out the
Smart Grid,
Smart City

demonstration project.


This will include:




the development and execution of the project plan



collecting, maintaining and analysing data for the duration of the project



in conj
unction with the DEWHA, developing a communication strategy to ensure
optimal participation and understand of the project from key industry stakeholders
and the wider community.


Australian Government


DEWHA will manage the
Smart Grid, Smart City

funding a
greement and will be the primary
point of contact for the successful
Smart Grid, Smart City

applicant.



The Australian Government will decide the successful applicant to implement
Smart Grid,
Smart City
. The final decision will take account of the require
ments of these project
guidelines and will be fully documented, including reasons for the decision.


In deciding which
Smart Grid, Smart City

application is funded and what terms and
conditions, if any, are attached to the funding offer, the government wi
ll take account of the
advice of the independent panel arising from the assessment process and may take into
consideration other matters including using any relevant information obtained in relation to
the application (including information provided in the

application itself, otherwise through the
application process, or by independent inquiry).


26















































Image credits:

Front Cover (L
-
R)

Solar heating panel (J. Knowles) Woakwine Range Wind Farm (D. Markovic)
Measuring no
ise output of air conditioning units (ACT Environment Protection
Section)