The Australian Energy Market Commission (AEMC) has made a draft rule to encourage innovation and competition in ‘behind the meter’ batteries by limiting network businesses’ ability to own and control these assets.
Under the draft rule, distribution network businesses would be restricted from earning regulated returns on distributed energy resources installed behind the meter.
Distribution businesses would still be able to access the services these resources can provide to help run the network more efficiently – but they would need to buy these services from the consumer or the consumer’s energy service provider.
The draft rule has been made in response to rule change requests from the COAG Energy Council and the Australian Energy Council to support the development of a competitive market in behind the meter energy resources as the electricity system transforms.
More consumers are now buying and selling power, and the uptake of distributed energy resources, such as battery storage, rooftop solar and smart home systems, is accelerating. Many of these technologies are capable of providing multiple value streams, but not simultaneously. For example, they can:
- Help consumers reduce electricity bills
- Help electricity networks manage peaks in demand
- Compete in the wholesale electricity market by exporting electricity
- Provide services that help make the system secure, such as frequency control
By allowing consumers, rather than networks, to choose how they want to use their batteries and other distributed energy resources, the draft rule addresses the risk of distribution businesses favouring network benefits at the expense of maximising benefits for the electricity system as a whole.
Specifically, the draft rule:
- Restricts distribution network service providers’ ability to earn regulated returns on assets located behind the meter, on the consumer’s side of the connection point
- Updates the framework setting out how the Australian Energy Regulator (AER) should determine which network services are regulated, and which are open to markets
- Requires the AER to publish a distribution service classification guideline setting out its approach to classifying distribution services
The AEMC has extended the consultation period on the draft determination to nine weeks to allow stakeholders to consider the draft rule in detail and provide feedback. Submissions are due on 31 October 2017.
The AEMC is also holding a public forum in Sydney in late September 2017.