Market Review: Open

Overview

On 19 December 2019 the AEMC published a draft report that advises on a draft package of proposed rule changes to enable distribution network businesses to supply their customers using stand-alone power systems (SAPS) where it is cheaper than maintaining a connection to the grid.
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On 19 December 2019 the AEMC published a draft report that advises on a draft package of proposed rule changes to enable distribution network businesses to supply their customers using stand-alone power systems (SAPS) where it is cheaper than maintaining a connection to the grid. 

SAPS – usually a combination of solar PV, batteries and a back-up generator – are increasingly allowing electricity services to be delivered through alternatives to grid connection at a lower cost and with improved reliability, which could be particularly beneficial for remote communities. Currently, SAPS are not captured under national regulatory frameworks or are subject to jurisdictional frameworks which vary in their coverage. 

To address these issues, the AEMC recommended new regulatory arrangements, as outlined in the final report for our Review of regulatory frameworks for stand-alone power systems - priority 1. These recommendations were considered and approved by the COAG Energy Council at its meeting on 22 November 2019.

Implementing these recommendations will require a package of rule changes, which is the focus of this current review. The changes will:

  • support efficient planning and investment outcomes in relation to SAPS
  • extend existing market arrangements to accommodate distributor-led SAPS, including the full-suite of energy-specific consumer protections
  • allow jurisdictions to participate in the national arrangements for distributor-led SAPS on an opt-in basis.

The AER has published an explanatory note concurrently with this report, which aims to provide distribution businesses with transparency of, and certainty around, the waiver application process set out in its ring-fencing guidelines and the suitability of this process in the context of SAPS.

In parallel, the COAG Energy Council’s Senior Committee of Officials has established a working group to progress recommendations from the Review of the regulatory framework for stand-alone power systems –priority 1 and Updating the regulatory framework for embedded networks. The AEMC will liaise closely with the working group to progress this work.

Workshop

The AEMC held a workshop in Brisbane on 29 January 2020 to seek feedback on a detailed package of proposed rules to enable distributors to supply customers using stand-alone power systems.

Next steps

The Commission plans to:

  • publish a final report by May 2020.
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Documentation