New energy regulations will enable customers living in remote areas to access off-grid energy without losing consumer protections, retail deals or reliability.
The new rules, devised by the Australian Energy Market Commission (AEMC), aim to support eligible customers in accessing their electricity network.
Homes and businesses in bushfire, cyclone or flood-prone areas and weak parts of the grid will also benefit under the rules, announced on 28 May 2020.
This major national reform means that energy distribution businesses can take advantage of improved renewable technologies to choose stand-alone power systems when it’s cheaper than using poles and wires to supply their customers via the grid.
AEMC Chair, John Pierce, said the new rules helped to ensure that energy rules keep pace with technologies that allow better energy options, give people at the edge of the grid a more reliable service, help lower emissions and bring whole-of-system costs down.
“Stand-alone power systems, which are usually a combination of solar, batteries and a back-up generator, are getting cheaper and more sophisticated. In contrast, supplying customers using poles and wires in remote areas can be very costly,” Mr Pierce said.
“Network costs can increase further when there are issues with poor access and managing vegetation, or the need to use more expensive equipment (such as insulated overhead conductors or underground cable) to manage things like bushfire risk.
“Stand-alone systems give electricity networks more options – and that’s good for customers.”
While the total number of customers eligible for stand-alone power systems will be relatively small, the cost savings to networks will be relatively large, because getting power to this group is disproportionately expensive.
Changing the rules will bring costs down across the board because network costs make up around half of the average electricity bill. Importantly, checks and balances will still be in place, so customers are not disadvantaged.
These include making sure customers can still access competitive energy retail deals and that they have the same consumer protections, such as access to hardship provisions and ombudsman dispute resolution.
“Until now, there has been no national approach to stand-alone power systems, which have largely come under different state and territory legislation,” Mr Pierce said.
States and territories will still need to adapt their regulations so the new rules can operate, but it’s possible some of this work could be done in parallel.
While the rules announced today apply to stand-alone power systems led by distribution network businesses, the AEMC has also produced recommendations on how to regulate stand-alone systems run by non-distribution network businesses.
Examples include local councils, community groups, developers and other third parties. These recommendations have been sent to the COAG Energy Council for consideration.
Read the final report on Updating the regulatory frameworks for distributor-led stand-alone power systems here.