Thrashing out public and industry submissions to the AEMC rule change

An Australian Energy Market Commission (AEMC) draft has stimulated a cyclone of debate. The draft rule change — Access, pricing and incentive arrangements for distributed energy resources — aims to facilitate more distributed rooftop solar to be connected to and participate in the National Electricity Market (NEM) by incentivising network distribution service providers (DNSPs) to improve network capacity and control mechanisms needed to manage a high distributed-energy environment. It recognises the need for a dual distribution highway that efficiently transports electrons between customers and the network, and acknowledges that this has become a service provided to rooftop solar owners by the distribution networks.

More than 40 industry submissions to the proposal were received by the AEMC on or near its closing date of 27th May, along with more than 100 submissions from individuals. 

They were published last week, and dipping randomly into their arguments provides many insights into how the proposed rule changes could be improved and the potential for unintended consequences of the changes as they stand.

One of the components of the rule changes is that it would give network service providers the option to develop two-way pricing that rewards owners of distributed energy resources for exporting power to the grid when extra energy is needed, and charging them a fee for exporting at times when the system is already well served.

This change in particular has been widely labeled a “solar tax”. The possibility of such a levy is raised by the Clean Energy Council (CEC) as part of its submission.

What the solar-industry representative body thinks

The CEC argues, not necessarily against such charges, but against the uncertainty that it would generate if, according to regulated process, the details of the charges were not decided on and released until the next round of Tariff Structure Statements (TSSs).

TSSs are the proposals and justifications submitted to the Australian Energy Regulator by each DNSP in the NEM, to set their tariffs for providing network services in the coming years. The next round is due to take place at different times in each state, between 2024 and 2026.

The CEC says in this respect the AEMC’s Draft Determination leaves solar customers and suppliers in three to five years of limbo.

Without knowing when and to whom, and under what conditions the charges will apply, “solar designers and retailers would be unable to provide customers with a reliable estimate of the likely return on investment (ROI) of DER investments, and how the ROI might be affected by sizing of the solar array and energy storage system”. 

This could put the brakes on confidence in rooftop PV as an investment.

Informed critics of the rule change have their say

Other industry players, such as Professor Bruce Mountain, Director of the Victoria Energy Policy Centre, and a vocal critic of the rule change, argued to pv magazine in print last month that, “Connecting solar to the grid costs two-thirds of nothing … There is no cost rationale” for imposing a tariff.

Taking another tack, in a submission made jointly with Ellen Roberts of Solar Citizens, Dan Cass of The Australia Institute, John Grimes of the Smart Energy Council, and others, Mountain argues that DNSPs must provide transparent reporting on “voltage issues, hosting capacity, network congestion and the impact of Virtual Power Plants (VPPs) and other DER integration trials”, before limits are set on solar exports, or export tariffs are applied.

Also in favour of getting the tariff ducks in a row, is one of the arguments made by Solar Analytics (which develops and supplies intelligent rooftop solar and energy management solutions for households and businesses). That is: “the draft rule should include a requirement for tangible incentive arrangements” for DNSPs to provide improved services to solar owners, “prior to the imposition of any positive export charges”.

The solar-household perspective

An individual submission from Simone Fox simply says, “I do not support the proposal to charge households with rooftop solar to export to the grid. It is not as if we have a choice as to who we are connected to. The suppliers are monopolies …”

Another individual, Peter Barnes, writes that Australians “have been encouraged to spend a lot of our money on rooftop solar to export to a grid operator at a rate of 30% of what the operator charges their customers .. financial responsibility for the grid rests with the industry and government — not the consumer… I am one of many thousands of people in Australia that are very angry about this proposal and I call on the industry to establish community grid scale batteries to absorb the excess supply”.

Passion, sometimes pragmatism and a great deal of expertise have gone into the formulting the draft changes and into submissions which the AEMC will consider in preparation for a final determination on the rule change in July.

Read our article on what’s commonly lost amid outrage against the perceived solar tax, and our interview with Bryn Williams, Network Strategy Manager at SA Power Networks — one of the instigators of the rule change — for a nuanced impression of what’s at stake, the motivations and the potential solutions that will facilitate more inclusive access to a smoothly running grid at the network level.