We appreciate the opportunity to make a submission to the Australian Energy Market Commission (AEMC) on their draft determination on access, pricing and incentive arrangements for distributed energy resources.
Today there are almost 3 million consumers with rooftop solar installed in their homes, connected to the electricity distribution network. This is expected to double to 6 million in the next decade, which could represent approximately 50-60% of Australian homes.
We are also seeing consumers increase the capacity of their systems, as the costs of solar have fallen.
This scale of current and expected consumer investment in solar creates the opportunity to go beyond today’s simple feed-in tariffs, and uncontrolled generation, to more fully rewarding consumers for making this generation available in locations and at times when it has the most value as part of the electricity system.
There will be a need for additional capacity on the electricity distribution network to accommodate greater levels of solar generation. At any given time the capacity of the electricity distribution network is fixed. Just as additional investment was required to meet the demand on the hottest days that grew rapidly with the use of air-conditioners in homes, so too will electricity distribution network capacity need to be sized to meet the maximum generation at any one time. The expected growth in generation located in the electricity distribution network – whether that be rooftop solar or solar installations in schools, hospitals or local shopping centres – all requires more investment in capacity. All other things being equal, that additional capacity will be less, where generation can be stored rather than simply being exported into the electricity distribution network at maximum levels that are dictated by weather conditions.
In the absence of the rule change, the additional investment in electricity distribution network capacity would need to be recovered from all consumers based on the amount (and timing) of electricity supplied to them from centralised generation. Clearly this creates an inequity for those Australians that cannot access either rooftop solar (or home energy storage) – noting that some 35% of Australians on average are renters, and some 30% do not live in detached housing. If the many consumers who are locked out of solar are faced with rising electricity distribution network costs, it is reasonable to expect that in their engagement with electricity distribution networks and the Australian Energy Regulator (AER) on revenue determinations they could argue for limited or no additional investment in capacity. The result would be a continuation of what is currently being experienced, with electricity distribution networks imposing limits on the export of solar generation, and under-utilised rooftop solar generation capacity.
Energy Consumers Australia supports the draft determination as it provides a sustainable solution that:
- enables the electricity distribution network capacity to expand in response to the demands of consumers who are investing in solar, with the costs of providing the export service paid for by those who use it;
- potentially increases the financial returns to consumers with solar because the installed solar capacity is being fully utilised when it has its greatest value; and
- creates incentives for managing generation through smart controls, home energy storage or local energy storage (as a service) solutions.
Read the full submission here.