An energy industry workshop has seen over 40 stakeholders from industry, government and market bodies discuss key issues around stand-alone power systems (SAPS).

The workshop, held jointly by the Australian Energy Regulator (AER) and the Australian Energy Market Commission (AEMC), discussed the AEMC’s draft report and draft proposed rules for stand-alone power systems. 

The reforms will enable distribution network businesses to supply customers with stand-alone power systems where it is cheaper than maintaining a grid connection.

A stand-alone power system can be a microgrid or an individual power system – typically a combination of solar, PV, batteries and a backup generator.

The workshop was well attended by jurisdictional government officials, market bodies and industry participants, especially distribution businesses and third parties interested in providing products and services to support stand-alone power systems.

As well as giving an overview of the draft report, AEMC staff discussed:

  • Network planning and service classification
  • The settlement model
  • The SAPS settlement price

In addition, the AER discussed the interaction of ring-fencing and the proposed regulatory framework for distributor-led SAPS.

The workshop discussion included an overview of the AER’s Explanatory Note which provides guidance on how future ring-fencing waiver applications might be assessed in relation to distributor-led SAPS and enforcement of any waiver conditions.

Key issues participants raised at the workshop included:

  • The need for distributors to demonstrate to the AER that ring fencing waivers and exemptions would provide a benefit to consumers. An example might be if no competitive providers could be identified for all or some of the required services.
  • The ability for the market to deliver third-party services efficiently given it may take some time for markets to develop this capacity to support the delivery of SAPS.
  • General support for a pragmatic approach to ring-fencing waivers in instances where distributors are unable to seek third-party providers to provide emergency response, such as when there is bushfire damage to network assets.
  • A need to clarify how costs of SAPS will be allocated internally for distribution businesses in cases where waivers are granted to allow distributors to provide generation services.
  • A general view that retailers would be able to continue to serve SAPS customers under the proposed settlement arrangements. Some though, suggested the proposed approach would not facilitate tariffs that reflected underlying SAPS costs.
  • The need for stakeholder feedback on the approach to technical and performance standards presented in the draft report.

The Commission is seeking stakeholder views on the issues raised during the workshop and on the draft report. The slides from the workshop can be found on the project page. Submissions due by 13 February 2020.

Stakeholders may also provide feedback on the AER’s explanatory note in their submissions. A final report on the proposed package of rules for distributor-led SAPS will be published by May 2020.  

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