The AEMC is a member of the Queensland Government’s stakeholder reference group for the Daintree electricity supply study. Government and community representatives are looking at options for stand-alone power systems which are capable of preserving environmental and cultural priorities in the region. AEMC Director, Andrew Truswell, leads our stand-alone power systems project which is changing the rules so new technology options can be expanded to reduce costs and increase power supply reliability for people in regional and remote areas.

By Andrew Truswell, Director - Transmission and Distribution Networks

Later this week the AEMC will release terms of reference for the next stage of its off-grid reform program for regional Australians. Our stand-alone power systems team is already working with governments around the country to deliver better power services to those living at the end of the line, at a lower cost for everyone.

Supporting the Daintree electricity supply study stakeholder reference group: From the Queensland Department of Natural Resources, Mines and Energy, Catherine Cussen, Executive Director Analytics, Regulation and Commercial, Mitchel McCrystal, Director Regional Queensland Team, and Mahealani Delaney, Graduate Policy Officer with Andrew Truswell, AEMC Director (second from right).

New technology such as solar and batteries – what we call distributed energy resources - is making it possible to supply customers at the end of the line in cheaper and better ways. So consumers can benefit from this progress in the market we are implementing changes which enable network businesses to provide stand-alone power systems (SAPS) as a cheaper alternative to maintaining or replacing grid connections. These network business customers will get to keep the same protections, reliability standards and access to competitive deals that they have today.

A SAPS is an electricity supply arrangement that is not physically connected to the national grid. Falling costs of new technology are increasingly allowing electricity services to be delivered by off-grid alternatives which are lower cost, lower emissions and more reliable. This is especially the case for customers living at the fringes of the grid, or in bushfire prone areas where the cost of supplying and maintaining grid connected services can cost much more than city services in areas of high population.

Network costs are higher where there is poor access, significant vegetation to manage or frequent storms, and expensive network equipment can be needed to mitigate risks from bushfires. SAPS solutions may allow distributors to reduce these costs and those savings over time will mean lower network charges for all customers.

This work forms part of the AEMC’s strategic priority area on the digitalisation of energy supply, which focuses on reform to help customers to take advantage of emerging technologies.

In practice, this will support the development and delivery of innovative generation technologies and information/data management systems to provide for the remote management of customer electricity supply though technologies like SAPS.

Next steps for distributor-led provision of stand-alone power systems

This year our Review of the regulatory framework for stand-alone power systems – priority 1 set out a package of recommendations, including changes to the energy laws, to allow distributors to provide energy services using SAPS. This week we release terms of reference for the next stage of implementing this reform and we’ll be collaborating with stakeholders to develop draft rules that will be submitted to governments and introduced once law changes have been made.

In practice, the changes now underway will mean that energy network operators can identify customers that might benefit from being on a stand-alone power system and then work with them to develop the best solution for their local area. The first groups in line for change are most likely to be customers at the very end of country grids who experience regular and extended blackouts and brownouts because they live in places where maintaining and replacing networks is most expensive. After consultation, networks would install systems at no cost to consumers and would continue to be responsible for maintenance. These customers would continue to receive bills from their retailer as they always have. The only difference is that they would likely benefit from a noticeably more reliable service.

Next steps for community-led provision of stand-alone power systems

The AEMC has already started consultation on a specific framework for third-party provision of SAPS, recognising the importance of areas such as licensing, consumer protections and access to retail competition. However, how those principles are applied for third-party SAPS in practice is likely to vary, depending on:

• the size of the system (for example, only large systems are likely to be able to support retail competition and justify the costs of economic regulation) and
• whether it is regulated under national or jurisdictional rules (noting that regulation of third party SAPS is currently the responsibility of jurisdictions).

We are exploring a more flexible framework capable of accommodating a broader range of providers and circumstances that could be associated with third party systems. In contrast to priority 1, customers will generally be making a choice to transition to third-party provision or to move to premises supplied by a third-party system. Additionally, service providers themselves are likely to be much smaller and less well resourced than distribution businesses in the NEM would be, and may operate under a variety of ownership structures and operating models.

COAG Energy Council officials’ working group

In parallel, the COAG Energy Council’s senior committee of officials has established a working group to progress these recommendations, along with those recommendations made as part of Updating the Regulatory Framework for Embedded Networks. In the months ahead our team at the AEMC will liaise closely with the committee to progress this work.

This work is an important step in accommodating SAPS in national regulatory frameworks or making it possible for consumer opportunities and protections to be more consistently addressed within individual jurisdictional frameworks where this is more appropriate.

AEMC Stand-alone power system work program details

Review	Workstream description
Review of the regulatory framework for stand-alone power systems	30 May 2019 - final report priority 1 – covering distributor-led provision of stand-alone power systems. 27 June 2019 – draft report priority 2 – covering third party provision of stand-alone power systems including community groups, local councils, developers, or market participants. By 31 October 2019 – final report priority 2
Updating the regulatory framework for distributor-led stand-alone power systems	Developing detailed package of changes to the rules to allow the use of stand-alone power systems (SAPS) by distributors 19 September – terms of reference on AEMC website December 2019 – draft report February 2020 – webcast forum May 2020 – final rule package due to the COAG Energy Council