The Australian Market Energy Commission (AEMC) has made a final rule in support of a competitive market in ‘behind the meter’ batteries and other distributed energy resources by limiting distribution network businesses’ ability to own and control these assets.

Under the final rule, distribution network businesses will be restricted from earning regulated returns on distributed energy resources installed behind the meter. Distribution businesses will still be able to access these resources to help run the network more efficiently, but they will need to buy these services from the consumer or the consumer’s energy service provider.

More competition encourages innovation in high-tech energy options for consumers, while also allowing households and businesses to have greater control over how their energy assets are used.

This final 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 final 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 final 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

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