IBISWorld Market Research
Transmission networks are essentially a series of highly regulated geographic monopolies, with regulators setting investment requirements and return
Melbourne, Australia (PRWEB) June 23, 2014
Electricity Transmission in Australia uses transmission networks to transport electricity at high voltage from electricity generators to distribution networks and directly to large industrial users. Transmission networks are essentially a series of highly regulated geographic monopolies, with regulators setting investment requirements and return. The Australian Energy Regulator (AER) controls most of the industry and sets revenue determinations for five-year periods. According to IBISWorld industry analyst Caroline Finch, “strong industry growth over the past five years, at an estimated compound annual rate of 6.0%, has been heavily influenced by expansionary price regimes entered into from 2007-08 onwards.”
Inputs to revenue determinations include forecast network expansion requirements, existing networks' maintenance needs and a sufficient equity return for industry participants to generate investment. Electricity transport demand has declined following changes in the type and location of generation, the rollout of energy efficiency programs and declining industrial demand. “The industry has been left with a higher asset base than required by current volumes,” says Finch.
The Electricity Transmission industry will be affected by a new cycle of five-year determinations by the AER in 2013-14. This will affect all jurisdictions except Western Australia and the Northern Territory. These new revenue determinations will reflect that electricity end use has fallen each year over the five years through 2013-14, while potential peak demand continues to grow. Regulators are expected to favour more-moderate capital expansion plans to adapt to the changing demand situation. Further, a new set of rules for the AER is forecast to limit permitted industry expansion in these determinations. The industry's market share concentration is high and stable, as industry assets are natural monopolies because the high cost of replicating infrastructure prohibits new entrants. Within each state, there is effectively only one service provider. The considerable state and territory government ownership in the industry is a further barrier to entry, which keeps concentration steady. The major players in the industry are Queensland Electricity Transmission Corporation Limited, TransGrid, SP AusNet, Electricity Networks Corporation, ElectraNet Pty Ltd and Transend Networks Pty Ltd.
For more information, visit IBISWorld’s Electricity Transmission report in Australia industry page.
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IBISWorld industry Report Key Topics
Firms in this industry operate high-voltage electric power transmission systems and control the transmission of electricity from generating plants to distribution networks or large industrial users. The transmission system includes lines and transformer stations.
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