The Australian Energy Market Commission has released its draft determination on how to integrate more small-scale solar power systems, support home battery uptake and address solar energy “traffic jams” in the grid.
Australia’s grid infrastructure was originally designed to cater to one-way electricity traffic flows – into premises. The rise of solar energy has seen increasing amounts flowing out from premises, and this is causing some headaches that will increase over time if left unaddressed. While still uncommon, in particularly extreme cases the situation has already resulted in new solar owners in some areas being zero export limited.
Another issue is when so much solar electricity is being generated and self-consumed it results in grid demand being low enough to threaten grid stability. This recently happened in South Australia and the Australian Electricity Market Operator (AEMO) was forced to jump in, instructing ElectraNet to stabilise the grid. This was achieved by 12,000 solar power systems being temporarily switched off remotely.
AEMC Chief Executive Benn Barr says Australia’s electricity sector can be decarbonised faster and more cheaply if more small solar customers can be connected – and if it’s made worthwhile for them to install solar batteries. However, this will require changes to how the power system operates.
Solar Export Charges And Incentives
The AEMC has concocted a reform package it says will make room for more solar and promote battery uptake. Among its contents:
- Changing distribution networks’ existing incentives to provide services that help solar owners export power to the grid.
- Allowing networks more pricing options such as rewarding solar and battery owners for sending power to the grid when it’s needed and charging for exports when there is a high level of congestion, encouraging greater solar energy self-consumption.
- Allowing each network to customise price options to suit their circumstances, customer base and applicable regulations.
- New safeguards ensuring consumers and governments have a “strong say” in how the reforms occur and in pricing.
The AEMC stresses it is not proposing all owners of grid-connected solar panels should start paying export charges. And while existing solar owners may be “grandfathered” under current arrangements, the AEMC also wants to avoid a ” first-come, best dressed system” as that will limit the capacity for more adding more solar power to the grid.
“Letting networks give customer incentives to use the system better means supply and demand on the grid can be smoothed out over the course of the day,” said Mr. Barr. “It helps address large amounts of solar being exported in the middle of the day when it benefits the system least.”
The AEMC provides a few examples of how some of this may work in practice, including solar households choosing an option such as free export up to a certain limit or a fee-based premium service guaranteeing export during busy times.
Incentives for solar battery uptake could include subsidised energy storage systems releasing energy into the grid at times of high demand; e.g., becoming part of a virtual power plant (VPP).
How This Came About
It was back in 2017 when the AEMC first somewhat timidly questioned a clause in the National Electricity Rules prohibiting a Distribution Network Service Provider (DNSP) from charging solar power system owners for use of the distribution system for the export of electricity. This was met by a strong negative reaction.
Then in 2020, the AEMC called for submissions on proposed changes to the Rules after rule change requests from several parties that included allowing for export charges. The AEMC was to have published its draft determination late last year, but this was deferred until yesterday given the level of feedback it received.
The AEMC is now inviting submissions on the draft determination, with the feedback period open until May 13 before a final decision is made in June. State governments will then develop plans to be submitted to the Australian Energy Regulator, which will make a final decision on NSW, ACT, NT and Tasmania’s proposals in 2024, followed by QLD and SA’s in 2025 and Victoria’s in 20261.
“We have to start planning for a different future now because there is still a lot of work to do and change will take time,” said Mr. Barr.” If we start now, with the right caveats and protections in place, we will avoid costly crisis solutions further down the track.”
Related links:
UPDATE: Finn’s take on the AEMC’s draft determination can be found here.
Footnotes
- Western Australia isn’t part of this as WA isn’t subject to the National Electricity Rules. Western Australia also isn’t part of the National Electricity Market (NEM) ↩
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My understanding is that the AEMC, in their megalomaniac grab for power, intend to seize control of the WA grids.
CEO AEMC protecting the Big network providers at a time when promotion of solar to prevent climate change is critical.
A positive step is Battery subsidies rather than placing a charge on Solar Panel owners.
In the likely event this domination philosophy is allowed, all private domestic renewable providers should be placed on nett metering instead of the current (very) gross method as at present.
In simple terms all power produced is credited against any power drawn during the shutdown period and with the remainder only then subject to any sanctions allowed.
Another alternative approach is for new installs to be configured to automatically and ,without interruption, change over to island mode when oversupply is happening and back to grid source when appropriate.
In Queensland we are on net meteriing, and always have been as far as I know. What my system produces in total is NOT what gets sent to the grid, it’s reduced by whatever number of kwh I’ve been able to self-consume before sending whats left to the grid.
The vast majority of solar PV systems in Australia are net metered. Gross metering is fairly rare now, really it’s only a small number of older legacy systems.
Why is everyone upset over the fact they won’t be getting the same generous return on their investment in solar PV that they’ve become accustomed to? .
Its always been obvious that as the amount of electricity generated by renewables increases , then FIT rates for householders are more likely to fall than rise.
Installation of smart meters along with a TOU charging methodology is essential if the AEMC proposals (assuming they are agreed upon) are to be fully adopted. The impact on existing solar PV owners will vary from state to state due partly to grid considerations and partly to differences between retailers in their pricing strategies and market offers.
The AEMC also proposes a ‘grand-fathering’ process for existing installations, to avoid causing financial difficulties for those households who purchased systems in good faith at some earlier time.
Because the information needed to calculate the payback period for different size PV systems with some accuracy is readily available, the length of the grandfathering period will vary for each household . e.g. if you purchased a 6.66 Kw system in QLD one year prior to the introduction of the new pricing regime, then your particular grandfather period will be around 3 years, because your payback period at the time of installation would have been around 4 years.
So the overall effects of the proposed changes will differ quite markedly between individual households, including even between nearby neighbours; for quite a number of reasons.
This handy infographics download link at: https://www.aemc.gov.au/sites/default/files/2021-03/ERC0309%20-%20draft%20-%20infographic.pdf
give a good overview of the changes proposed.
This other AEMC link at: https://www.aemc.gov.au/news-centre/media-releases/responding-big-changes-national-electricity-market
explains why such extensive change in the way energy markets currently operate is urgently needed.
There’s another set of problems unique to large scale solar PV and other renewables.. Many operators in that market segment will have long-term contracts say for 20-25 years, each of which was negotiated at different points in time.
Larger operators could well have a number of projects partially completed and now amping up progressively, others which are fully completed, and some which have only been recently approved, along with a mixture of both wind turbine and solar installations in each of those cases; all of which can be further mingled with partnership agreements of all kinds with local communities and various others.
You’ll find some more detailed information at
https://www.aemc.gov.au/rule-changes/access-pricing-and-incentive-arrangements-distributed-energy-resources along with some identification of the issues that need to be sorted out.
What the AEMC is trying hard to do is to get early discussion and problem solving out of the way AND implemented for some of the initial key obstacles they foresee as early as possible (even as early as July 2021).
If this isn’t done quickly enough then the prospect of achieving any meaningful reduction in emissions by 2025 becomes very remote.
To illustrate one or two existing problems, not only do many households still have older ‘dumb’ meters that will need replacement, some Australian households without solar PV already have quarterly electricity bills, including fixed charges well over $1000 at times This article at the ABC at:
https://www.abc.net.au/news/2021-03-26/low-income-families-welcome-solar-export-fee-proposal/100029636
highlights the plight of a lower income family of 2 adults and 2 children whose recent quarterly electricity bill including fixed charges was over $1300. That works out at $100 a week.
Add on some other basic things such as food, mortgage repayments, car running expenses, school fees and textbooks, shoes and clothing for the 4 people, household supplies such as cleaning equipment, items like lawnmowers and other general property maintenance equipment; and you can begin to see why some families are really struggling to reach a basic standard of living, and being forced by circumstances to make some undesirable decisions such as cancelling their home insurance and/or private health fund cover.
A similar family in the same age group that’s still renting their accommodation are even worse off.
It seems clear to me that that the consequences of past overall inaction on climate change especially in the area of electricity generation which is a major influence on emission and atmospheric pollution levels; are now beginning to be felt.
I’m not at all confident though that our present political leadership will take any significant climate related action at all, let alone to the extent that’s now needed.
They have more than enough on their mind at the moment in attempting to deal with what I describe as a ‘Hell hath no fury like a woman scorned’ situation. .
“Cancelling private health fund cover, undesirable”! Um, no, on the contrary very sensible. Add private school fees to that too.
This seems fundamentally wrong. If there is over supply at times, surely a better solution is to encourage the grid to invest in storage, so they can sell it back to consumers when demand exceed supply. At the same time, encourage PV system owners to invest in storage systems too, so the responsibility of storing excess cleanly-produced energy is spread.
What if we had a system that actually encouraged batteries… 1. Pay me a reasonable rate for export. Here in Perth they recently reduced our export rate from a piffling 7c to an even more piffling 3c per unit. If they allowed me to import overnight into a battery and export at peak hour at a realistic rate, maybe I would go looking for a nice cheap battery system. And that’s without even factoring in solar…
I live alone,use about 2.5kw a day and have a 6.6kw panels. If I’m going to be changed to export what’s to stop me from running a few leads over the fence to neighbours and coming to an arrangement with them for daylight use only
I live in SA and have an 8.1kw system with Tesla battery. With these proposed changes I wonder if I have my system set to optimal performance.
The first solar power of the day powers my home, and any excess charges the battery and then when the battery is at 100% the excess goes to the grid. Then at a point later in the morning the export is capped due to SA government restrictions until a point in the afternoon when the export is no longer greater than the cap. Ideally I would prefer to charge the battery during the capped period in the middle of the day when solar production is at maximum. This would also fit better with excess supplying peak demand times and limiting at low demand times on the power network. I asked Tesla and they said that I may be able to use the settings designed for setting up the battery for different tariff time periods but that was all. Has anybody got a way to do what I want to do?
Better still, rather than fixed times, it would be good to have flexibility to easily change when the battery charges if the battery is low.
If your Tesla battery is low switching it to backup only will charge it from the grid if you are not producing power from your rooftop panels.
We have a 3.5Kw system, we do not have a battery system as yet. living in QLD most of the power we produce goes to the grid where we get a low return on the power we export, most of the power we use is late in the evening at a time when the sun has gone down. If Batteries could be subsidized then I would look at installing a 6.6Kw system with a battery back up and save some of the power we produce for our own consumption. The government does not seem to be putting much emphasis on helping struggling families install battery systems. I can only see benefits if every home had solar and a battery system installed. Our government is looking after the coal barons making sure they make their profits. Bugger climate change, just keep the profits flowing.
Is the likely drastic changes to network loading that increasing numbers of EVs coming into use will make being considered in any of this?
It does not take a lot of Tesla superchargers running at full tilt to use a lot of that “excess” solar AND to melt the exiting distribution infrastructure.
The maximum supercharger rate of 250kW means it is the equivalent of 20 to 30 houses, so as the number of cars increases, it is going to add some serious load to the system.
Also concerns me that we may have to build these massive car parks for all the EVs to sit in while they charge.
OK to much solar from my sytem at the wrong time.
Why arnt energy companies or government installing suburb based batteries to suck up the excess in day and put back into community at night.
The power lines transmition losses to region areas are huge.
Regional or suburb based batteries would lower power needed from distant power stations.
I would install a battery myself if I could sell power through vpp for maybe 80% of commerial rate. Rather than 9c/kw.
An electric car is also an option.
we pensioners 70rys odd , in a village of some 100 do wish to protest against the proposed solar charge for sending to the grid.
We especially & strongly protest we are in many an instance unable to pay for the electricity we use ,especially in the raining time we have just had here in Old. the solar panels do help us a lot to reduce our electricity costs..