Australian regulator imposes “tough new obligations” on networks

The Australian Energy Market Commission (AEMC) has announced its energy reform package after delays following a backlash from consumers.

While the Commission announced the reforms under the banner “making more sun for everyone”, the process and the final outcome encountered some stormy weather. 

In particular, the Commission laid out its plans to ensure network operators were driving towards ‘smart’ grids, making them accountable for the transition from ‘traditional’ generation to solar and battery-friendly systems.

The reforms also included handing the Australian Energy Regulator (AER) greater authority to develop a governance framework for the networks to export services and customers and report back to the regulator. 

Consumer power

Having issued a draft of the proposed reforms in March 2020 which implied that consumers could be charged for exporting rooftop-generated energy back to the grid, the AEMC faced a backlash from consumers who felt they were being unfairly penalised having installed solar panels in good faith.

As a result, the final reforms appear to have softened the position, with the removal of network companies’ ability to impose blanket bans or financial penalties for customers putting solar energy back to the grid. 

Instead, options such as consumers paying an upfront cost in return for higher export tariffs during times of increased demand, or limiting the amount of energy exported, have been suggested.

In short

The key reforms demonstrate AEMC’s drive for a ‘smart solar’ solution across the country. The core of the reforms include:

  • Obligations on power network businesses to support two-way energy flow including: a performance framework, mandatory reporting on how they are delivering on expectations to deliver more solar and removing blanket export bans
  • Network companies offering a range of options – including a basic free service – to encourage solar owners to limit solar waste, save money and benefit the grid
  • Guaranteed free options to apply until 2041 when changes may be made, if required
  • Those choosing paid plans could earn more for solar export at some times and less at others, but with greater opportunities to earn and save
  • AER retains oversight, with all new network plans to be scrutinised and signed off as being in consumers’ interest – networks would have to consult widely, test and trial options before being put forward for approval
  • No new pricing plans for existing customers before July 2025, providing greater customer certainty

While acknowledging that Australia has the fastest global growth in solar take-up, it also recognises the need for regulation to ensure the grid can handle the volume of potential generation. 

Commenting on the new reforms, AEMC Chair Anna Collyer stated: “These new measures to drive smart solar are fundamental to enabling a modern electricity grid that delivers out to 2030 and beyond. They represent a profound change to the way poles and wires businesses must think about how they manage their network and turn the current one-way street delivering power to people’s homes into a two-way super-highway where energy flows in both directions.” 

She added: “Power network companies will need to deliver services to support solar – and they’ll be judged on their performance on how much solar exports they allow into the grid.”