The AEMC has released a Consultation Paper on a proposal from the City of Sydney, Total Environment Centre and the Property Council of Australia to introduce a new payment from distribution networks to encourage local generation (also known as embedded or distributed generation) as an alternative to further investment in the network. Examples of local generation include solar panels and gas cogeneration units.

The rule request would require network businesses to:

  • calculate the long-term benefits that embedded generators provide in terms of deferring or down-sizing network investment or reducing operating costs; and
  • pay all types of embedded generators a Local Generation Network Credit (LGNC) that reflects those estimated long-term benefits (netting off any additional costs).

The AEMC will investigate whether the current rules are effective in reflecting the network benefits provided by local generation or if a new mechanism is required.

The AEMC is seeking  feedback on a range of issues to help assess the benefits and costs of the design and implementation of LGNCs - or an alternative mechanism - in terms  of the long term interests of consumers. These issues are outlined in the Consultation Paper. Submissions on the paper are due by 4 February 2016.

Recognising the complexity of these issues, the AEMC has extended the rule change process so that we can undertake additional consultation through a series of public workshops between February and April 2016, which will provide a further avenue for stakeholder input and engagement.

For information contact: Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817