We need electricity networks to become trading platforms where consumers are the drivers of change

By AEMC Director, Ed Chan

Reforms to distribution system access and pricing arrangements can deliver significant benefits to all energy systems users. The AEMC’s networks team is working closely with communities and stakeholders to progress reforms to enable electricity networks to become grid-enabled trading platforms.

The year ahead will see a continuing focus on fundamentally reorienting the electricity network towards a platform that supports energy production, consumption, storage and trading. This builds on the AEMC’s recommendations made by our Grid of the future review, with the final report released this September. The increasing uptake of battery storage and electric vehicles will change the ways customers interact with the energy system – providing opportunities to re-consider current concepts of distribution system access and pricing to better reflect energy system users’ needs and expectations. As an example, instead of paying for energy consumed, customers would pay for access to the services they need from the network and be rewarded where they can provide services back to the grid.

The uptake of rooftop solar systems and new technology such as battery storage systems by Australian households is continuing to grow. This is fundamentally changing the way electricity networks are operated – from a centralised system to a decentralised system with two way flows.

Rooftop solar and battery storage systems, if effectively integrated into the electricity networks, can provide significant benefits to electricity users. Rooftop solar systems can help customers manage their electricity bills by generating low-cost renewable energy, while battery storage allows customers to store and potentially trade their surplus generation.

But the increasing uptake of these distributed energy resources is also creating challenges for the operation of electricity networks. Everyone in the electricity sector is working together to make sure the system remains secure and reliable while continuing to support the growth of new technology such as rooftop solar systems. At the same time there are market development questions to address around comprehensive introduction of cost-reflective customer reward pricing, network visibility of low voltage network constraints, changing technical network standards and compliance.

Our recent Grid of the future review set out a blueprint for integrating distributed energy resources into the electricity system in a way that benefits all customers.

Successfully implementing the blueprint will rely on collaboration across the energy industry. The Energy Security Board is helping to coordinate energy market bodies, while the Australian Renewable Energy Agency’s (ARENA’s) Distributed Energy Integration Program (DEIP) provides a platform to allow stakeholders to come together to tackle specific issues.

Starting the conversation on important reforms

For the AEMC’s part, we have formed the Distributed Energy Integration Program network access and pricing working group in partnership with Australian Council of Social Services (ACOSS), Australian Energy Regulator (AER), ARENA, Energy Consumers Australia (ECA), Energy Networks Australia (ENA) and Total Environmental Centre (TEC). This group is progressing key actions identified in our Grid of the future review.

Through a series of workshops, the working group will identify potential access and pricing options and consider the regulatory framework required to incentivise more equitable and efficient investment and operational outcomes for all electricity system users.

The first workshop was held in Melbourne last month and around 70 experts from retailers, network businesses, new energy suppliers, governments, consumer and environment groups, research institutions, and the energy market bodies attended. Workshop participants acknowledged the importance of arrangements that meet customers’ needs and considered potential alternative models for access and pricing, and explored the pros and cons. Using this feedback, we are now developing the models further, for discussion at the project’s second cross-industry workshop in March 2020.

Following the March 2020 workshop, we expect that stakeholders will submit rule change requests to the AEMC. We will consult widely through the rule change process, as we know this is a major change which needs stakeholders’ knowledge, expertise and support to get it right.

Understanding community preferences and expectations around Australia

In October 2019, the AEMC was invited to a community energy forum in Bendigo to discuss the region’s future energy plan, including the opportunities for integrating more distributed energy resources. The plan is being driven by the Central Victorian Greenhouse Alliance, a network of 13 local councils.

AEMC Commissioner Charles Popple (at right) at the Loddon Mallee Future Energy Forum in Bendigo with Greensync Head of Strategy Bruce Thompson, AEMC Director – Transmission and Distribution Networks Ed Chan and Pacific Hydro CEO Rachel Watson

 

Participating in forums like this helps the AEMC get a better understanding of regional communities’ views on the future power system. A key theme is that communities want to be able to generate their own renewable power locally and trade with their neighbours.

Communities also want to understand what regulatory or physical barriers may exist to a greater uptake of renewable energy and electric vehicles, including whether there are network constraints that are impacting on solar exports.

We’ll continue the conversation with the broader community, including regional areas, as we work on the regulatory changes to help open the way for more distributed energy resources and avoid the need for significant new network investment.

Creating greater awareness of the issue by sharing knowledge across the energy sector

Critical to the successful integration of distributed energy resources will be sharing knowledge and learnings across all the different parties involved in the program.

ARENA’s series of Insights Forums are underway to support this information exchange. At last month’s forum the AEMC joined a discussion panel on integrating distributing energy resources into the electricity system, along with representatives from the ENA, ACOSS, and the Australian National University.

Around 80 people participated in the forum which brought together a broad cross-section of stakeholders. The focus of the discussion was consumers – with consensus that developments relating to individual segments of the market must be viewed in terms of how they will ultimately benefit consumers. It was an opportunity for the AEMC to raise awareness of the work already underway on our Grid of the future reforms, plus the collaboration that will be needed in the extensive program of work to come.

More to come

Collaboration is the key to designing the grid of the future. The AEMC will continue the conversation on these important reforms to better understand community preferences and to develop a package of reforms that will transform the energy system – for the benefit of all users.

More information