Market Review: Open

Overview

The AEMC is undertaking a review into the regulatory arrangements frameworks for stand-alone power systems under the National Electricity Law (NEL), the National Energy Retail Law (NERL) and associated rules. 
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The AEMC is undertaking a review into the regulatory arrangements frameworks for stand-alone power systems under the National Electricity Law (NEL), the National Energy Retail Law (NERL) and associated rules. 

A stand-alone power system (SAPS) is an electricity supply arrangement that is not physically connected to the national grid. The term encompasses both microgrids, which supply electricity to multiple customers, and individual power systems, which supply electricity to a single customer. 

This review, requested by the COAG Energy Council, will look at the law and rule changes required to allow SAPS to be used where it is economically efficient to do so, while maintaining appropriate consumer protections and service standards. 

Draft Report

On 18 December 2018 the AEMC published a draft report for priority 1, setting out the AEMC’s analysis undertaken over the course of the review to date. It explains our developing views on mechanisms for transitioning customers to off-grid supply, the regulatory and commercial arrangements that would then apply on an ongoing basis, and the consumer protections that should be put in place.

The report includes two illustrative service delivery models as options for providing ongoing supply to off-grid customers after they have been transitioned away from grid supply. The AEMC welcomes stakeholder input on these options or proposals for any further options. Submissions are due by 5 February 2019.

Next steps

The terms of reference for the review sets out two priority areas of work:

  • Priority 1 is to develop a national framework to facilitate the transition of grid-connected customers to SAPS supply provided by the current Distribution Network Service Provider, as well as a mechanism for the transition of grid-connected customers to third party SAPS supply. 
  • Priority 2 is to develop a national framework for the ongoing regulation of third party SAPS.

Under the terms of reference, the AEMC is required to provide the COAG Energy Council with a final report for priority 1 by 31 May 2019, and a final report for priority 2 by 31 October 2019.

A separate consultation process will be undertaken for the further issues associated with priority 2, beginning in early 2019.

Related work

The Commission is concurrently working on updates to the regulatory framework for embedded networks, and the two workstreams will consider a number of related issues, particularly with regards to consumer protections. 

Background

The COAG Energy Council’s Energy Market Transformation work program, managed by the Energy Market Transformation Project Team (EMTPT), is considering the regulatory response to the emergence of SAPS as a viable and potentially prevalent option for providing electricity services to customers.

In general, SAPS are currently not captured under the national electricity frameworks.  SAPS are subject to jurisdictional legislative frameworks that vary in their comprehensiveness.  Queensland is currently the only state that applies the NERL retail protections to all off-grid electricity supply, and also applies the NERL distributor obligations to the 33 isolated systems run by Ergon Energy. 

While SAPS may provide benefits, regulation of these systems is justified for many of the same reasons as for standard supply from the national grid. Consequently there is now a need for more robust regulatory arrangements to be developed for SAPS.
 

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