The Australian Energy Regulator (AER) is aiming to stimulate the neighborhood battery market, by releasing a new updated ring-fencing guideline. 

The Electricity Distribution Ring-fencing Guideline provides the regulatory frameworks and controls that will support two key emerging markets in Australia’s transitioning energy sector, the deployment of batteries, including community-scale batteries, and regulated Standalone Power Systems (SAPS).

Ring-fencing separates monopoly network services from competitive energy services to deliver competition in energy services, and better outcomes and more choice for consumers.

AER Chair, Clare Savage, said the updated guideline establishes a level playing field for growth and innovation in batteries that are important to supporting the energy transition.

“Community batteries are on the rise as regional towns and local government areas seek to power their communities from renewable energy,” Ms Savage said.

“Our role is to ensure consumers are better off in this transition.

“The battery market is relatively new, and all providers should have the confidence and certainty that they can compete on a level playing field to offer energy services.

“Without changes to our ring-fencing guideline, network businesses may unfairly compete in this market, which could damage it in its early formation.”

Ms Savage said the AER recognises that network companies may have an important role in this emerging market, and that the updated guideline includes a new, streamlined waiver process for eligible projects that address the risks to market competition and will speed up community battery deployment in the market.

“Through our guideline we will create an environment where consumer demand and competition will drive market innovation,” Ms Savage said.

Ms Savage said the AER’s ring-fencing reforms also support the new rule to allow network businesses to move customers from a grid connection to a regulated SAPS, improving connection and reliability for customers, particularly those in remote areas.

“SAPS are fast becoming a cheaper option than waiting for the replacement of old distribution lines,” Ms Savage said.

“The good news is that our updated guideline paves the way for faster deployment of regulated SAPS, as it allows network distribution companies to have a greater role in providing these standalone generation services.

“Our decision supports a network business’ choice to move a customer to a regulated SAPS where this is demonstrated to be a lower cost, more reliable outcome for all consumers.”

The ring-fencing guideline was developed through consultation with the regulated network businesses, retailers, and consumer groups.

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