AEMC warns distributors to start investing in grid of the future

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The Australian Energy Market Commission (AEMC) has warned distribution networks that rooftop solar penetration has reached a tipping point and they need to make a choice: spend billions on substations, poles and wires, or start delivering the grid of the future.

In a new report, the AEMC has called on distribution network businesses to lead implementation of major reforms urgently to open the way for renewable energy and avoid the need for significant new network investment.

The report, Integrating distributed energy resources for the grid of the future, was published as part of the AEMC’s 2019 Economic regulatory framework review.

Releasing the report, AEMC Chairman John Pierce said networks were increasingly cutting solar PV flows off from the grid because of the power system’s inability to connect new technologies.

“We need electricity networks to become trading platforms where consumers are the drivers of change,” Mr Pierce said.

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“We are already seeing more take-up of distributed energy resources like batteries, electric vehicles and smart appliances. They can smooth peak demand on the grid and help stabilise the power system – making the most of all the energy in the system, wherever it’s produced or stored.

“A grid-enabled trading platform will open up a whole new world of opportunities for households and businesses – providing payments for services like frequency control and network support to make the power system stronger and enable higher levels of domestic demand response.

“But escalating penetration of rooftop solar; industry-wide failure to comprehensively introduce cost-reflective customer reward pricing; lack of network visibility of low voltage network constraints; and inadequate technical network standards and compliance; are combining to reduce system security and efficiency.”

The AEMC distributed energy resources blueprint identifies initiatives that can be implemented, starting immediately and sharpens focus on reforms already underway that need to pick up speed. There are 10 key actions to deliver distribution networks that will work for the future through an integrated program with all the market bodies and the Energy Security Board.

“There are serious choices to be made. To keep building traditional infrastructure and passing on those costs to consumers or get on with the job of implementing reforms to increase access to the network for new solar connections; to improve reliability and security while that happens; and to avoid gold-plating,” Mr Pierce said.

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“Consumers are already doing their part and investing in their own rooftop energy generation but distribution networks are not moving quickly enough to realise the value of those investments.

“Where new rules are required to accelerate change we will push ahead with proposals for new distribution network pricing, access and connection arrangements if proponents don’t start that process themselves by early next year. We won’t stand by and allow the current situation to continue.

“Failure to act now would mean either fewer people are able to export solar to the grid, or all consumers will pay more to build new substations and poles and wires that are rarely needed.”

Energy Networks CEO Andrew Dillon has described the AEMC’s urgency on distributors as hypocritical.

Mr Dillon said, “Bit rich to be told ‘distribution networks are not moving quickly enough’ by the AMEC – the body whose rulings ensured we are having a super-slow rollout of smart meters across most of the NEM”.

Visit the Grid of the future microsite for more information.