Energy Australia's Intelligent Network project involves the building of an IP-based nervous system that sits behind the utility's electricity grid to aid the operation and monitoring of its equipment.
IBM has been engaged as a systems integrator, charged with implementing systems that aggregate the data Energy Australia collects in the field via thousands of network-connected sensors, and converting that data into information the utility's operations and field staff can use to make decisions.
Adrian Clark, manager of intelligent networks for Energy Australia told iTnews that IBM and the utility are "aligned" at a senior level around the concept of smart grids.
In mid-March, IBM Australia announced the "Smarter Planet" initiative - aimed at connecting data from areas outside of traditionally IT-centric organisations to enable a more efficient world.
Working on Energy Australia's Intelligent Network project will allow Big Blue to "put that think-tank into practice," Clark said.
Clark also hinted that IBM is also pitching for "future work in the pipeline around what we need in the back office."
The IBM deal comes at a crucial juncture of Energy Australia's three-year long, $170 million Intelligent Network program.
The utility has already rolled out a carrier-grade, IP MPLS transmission network across its grid that allows for two-way communication between smart sensors in the field and the feeding back of important data to the organisation's operations centre or field staff.
This saw some 800 kilometres of optical fibre rolled out between the 30,000 substations in Energy Australia's electricity network, connected via Alcatel-Lucent switches and routers.
In April, Energy Australia will begin deploying the smart sensors that connect with this network to monitor, control and automate the electricity grid.
These sensors bring back a "minute by minute" account of what is happening to the network at street level.
By the end of June 2009, Energy Australia will have completed a pilot to determine how to connect the "last mile" between the substation and the customer to gain an even more granular view of its network.
The utility is currently trialling WiMAX technology in an area that serves 80,000-100,000 customers in Newcastle. It is also trialling narrowband and broadband power line transmission technologies, standard 2G mobile networks and a wireless mesh network.
Clark said it will take another six to twelve months to make a decision on which "last mile" technology to apply.
Energy Australia is the first utility in the world that is "committed to getting a street level view" of its electricity network, Clark said.
"Ultimately we will be able to detect faults when they occur, and find and restore power much faster. It also prepares us to cope with a more energy-constrained future."