The Australian Energy Market Commission (AEMC) has made a final rule to make it easier for Australians entering the battery and hybrid systems market, aiming to increase competition and drive down costs.
For residential and small business customers with batteries, the new rules will create opportunities to earn more revenue from home batteries, because now customers can sign up with new aggregator businesses who will pay them for discharging power from batteries at certain times.
AEMC Chair, Anna Collyer, said, “Currently, some retailers are doing exactly this, by acting as aggregators in conducting virtual power plant trials and paying individual home battery owners hundreds of dollars to access their battery.
“This is an added income stream that could help small battery owners pay off their batteries sooner. We also see this reform opening up opportunities for more competition and innovative products.”
Under the new rule, energy storage participants will continue to negotiate transmission services and charges, as they currently do.
New participant category for storage and hybrids
AEMC has created one single category for storage and hybrids to register and participate in the national electricity market (NEM), called the Integrated Resource Provider (IRP).
This makes it easier for anyone who provides storage or a combination of energy services to enter the market.
“For large batteries the rule will cut red tape, reduce costs and logistical hurdles to participate in the market. Batteries will no longer need to register twice, to both draw energy from the grid and send it out, as they currently do,” Ms Collyer said.
Aggregators registered in the IRP will now be able to provide services to the market from generation and load, helping to keep the energy system secure.
Ms Collyer, said, “We’ve created more flexibility for hybrid energy facilities to manage electricity flows behind a connection point. This means that excess energy is not cut off and can be stored and released into the network later, when it’s needed.
“So now, for a hybrid with an industrial load such as a manufacturing plant and a solar farm, if there is congestion on the network and as long as the load is scheduled, the solar farm doesn’t have to be constrained.
“Instead, it can use the energy from the solar plant to run the manufacturing plant.”
Ms Collyer said that this means the operator is not exposed to the spot market price to purchase energy from the grid, and that the energy being created by the solar plant is not being wasted, with some stakeholders claiming this could reduce their energy costs by around 15 per cent.
The Clean Energy Council Director of Energy Transformation, Christiaan Zuur, said, “While the AEMC has made several positive changes for storage, the renewable energy industry is disappointed that it has rejected the Australian Energy Market Operator’s proposal to exempt pumped hydro and batteries from paying network charges.
“Batteries and pumped hydro will now be placed at a commercial disadvantage to coal and gas generators, who do not face network charges. This undermines the efforts of state and territory governments to decarbonise the power system.
“We are pleased to see that the AEMC has made a few changes to help address some of the concerns raised by industry, such as trying to exclude existing storage units from facing new charges, and stating that all new negotiated charges must be consistent across existing and new storage providers.
“However, the devil will be in the application, and we will be observing how the network businesses apply these rules in practice.”
The Clean Energy Council also acknowledges that the AEMC has left the door open to another rule change to address these issues.
No plans to move goal posts on network charges
The reform maintains the existing framework to allow large grid-connected storage to choose between connecting under a negotiated agreement or the prescribed service.
“We’re not moving the goal posts on network charges,” Ms Collyer said.
“Energy storage participants will continue to negotiate their transmission services and charges. Our intention is for existing network agreements to remain unchanged.
“So, for example if storage is currently paying zero charges, the intention is that should continue to be the case.”
Ms Collyer said that the AEMC was aware that some stakeholders supported an exemption from network charges for storage, and that it was not suggesting that storage should automatically be paying network charges. The AEMC agreed that the rules on prescribed transmission services are not designed for price responsive loads.
“However, reforms to network charges for price responsive load involve other issues we need to consider that are broader than this rule change,” Ms Collyer said.
“These issues require further stakeholder engagement and consideration of how all participants, not just storage, will play in the market.
“We need to work through how it aligns with broader reform work including the Energy Security Board’s proposed congestion management model.”
Ms Collyer said that if the AEMC receives a rule change request from stakeholders, it will be prioritised, and that network price signals should be considered as the energy market transitions to a more price responsive load and to a more dynamic environment.