Market Review: Completed

Overview

On 22 August 2017 the AEMC published a final report on the Distribution Market Model project. The report sets out a vision for a competitive ‘distribution market’ which enables consumers to get the most value out of their rooftop solar panels, batteries and other distributed energy resources as we move to a lower emissions future.
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On 22 August 2017 the AEMC published a final report on the Distribution Market Model project. The report sets out a vision for a competitive ‘distribution market’ which enables consumers to get the most value out of their rooftop solar panels, batteries and other distributed energy resources as we move to a lower emissions future.

Distributed energy resources include a range of technologies, such as battery storage, electric vehicles and smart household appliances like refrigerators and dishwashers, which are connected to the electricity distribution network.

These resources can provide services to different parts of the electricity market. For example they can:

  • help consumers reduce electricity bills
  • help electricity networks manage peaks in demand
  • compete in the wholesale electricity market by exporting electricity
  • help consumers trade energy with their neighbours

Currently consumers may be able to benefit from only one or two of these revenue streams at a time. The report sets out a future where consumers can buy and sell energy and related services at the distribution level in a more dynamic way – choosing from all the various revenue streams – in response to price signals and their own preferences.

To achieve this vision, some essential changes to energy markets are already underway. This includes the introduction of a competitive market for smart meters and the move to cost reflective tariffs, which provide consumers with more accurate price signals on investing in, and using, distributed energy resources.

But it is a longer term vision and the AEMC has also identified the need for a number of ‘enablers’.

In particular, there needs to be better co-ordination between distribution level markets and the wholesale market to broaden the opportunities for distributed energy resources. This is currently being looked at in the AEMC’s Reliability Frameworks Review but the creation of a distribution level market will also be key part of that co-ordination in the longer term.

To underpin a competitive distribution market, the AEMC has made a number of findings for implementation including

  • understanding the level of control network businesses need to have over distributed energy resources to maintain system safety, reliability and security
  • obtaining more dynamic information about congestion and technical issues on networks, at more localised levels, so all market participants can spot opportunities and make better decisions on how to invest in, and operate, distributed energy resources
  • considering if the current access model for distributed energy resources to use the network is appropriate, if networks become congested as more resources connect
  • establishing more transparent and standardised processes for connecting distributed energy resources, to avoid onerous technical requirements which can increase costs, or loose requirements which can create safety issues
  • developing fit-for-purpose Australian Standards for distributed energy resources, which could include setting up an electricity sector-specific body to develop those standards. 
The AEMC's annual review of electricity network regulation provides a platform for the AEMC to continue to explore the development of a competitive distribution market. The next annual report is due in July 2018.
 
Project history and timeline

The AEMC published an approach paper in December 2016, which set out the scope and context for the project, the AEMC’s analysis of the technical opportunities and challenges presented by distributed energy resources, and a framework for how the opportunities and challenges of an increased uptake of distributed energy resources would be assessed through this project. Stakeholder submissions on the approach paper are available below. 

A draft report was published in June 2017, setting out the Commission’s draft findings. An audiocast presentation of the draft report is available here.  Stakeholder submissions on the draft report are available below. 

Background

The purpose of the Distribution Market Model project is to explore how the operation and regulation of electricity distribution networks may need to change in the future to accommodate an increased uptake of distributed energy resources such as rooftop solar systems, battery storage and electric vehicles. 
 
These distributed energy resources present both opportunities and challenges, as distribution networks shift from facilitating one-way flows to more dynamic, two-way flows of electricity.  
 
This project forms part of the AEMC’s technology work program, which explores the flexibility and resilience of energy market arrangements in responding to technological change. The AEMC needs to have a strong understanding of new market dynamics to inform its consideration of rule change requests and market development advice to governments. 

 

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