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City of Sydney in new push to make rules fairer for sharing energy

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The City of Sydney is making a second attempt to try and convince Australia’s energy rule maker to encourage decentralised energy – such as solar and battery storage – by removing some of the market barriers and making the rules fairer.

City of Sydney had joined forces with the Total Environment Centre and the Property Council of Australia to argue that local generators should attack allow lower network charges, in a move that could have saved billions in network costs and make the grid more resilient.

But in a ruling that dumbfounded the proponents and its supporters, the proposal was rejected by the Australian Energy Market Commission. Networks and large generation interests had argued against the change.

smart gridThe AEMC and other regulators have been cited as one of the principal barriers to modernising Australia’s energy system because of their attachment to the “old way” of running electricity markets and the influence over the regulators and rule makers by incumbent business interests.

However, since the South Australian blackout highlighted the ageing nature of Australia’s grid – both in its hardware and the way it is operated – new pressure has come on the regulators and rule makers, and the AEMC in particular, to modernise their approach.

Currently, consumers who buy electricity from a local generator, such as a rooftop solar system on a roof across the street, pay the same network charges as a consumer buying electricity from a coal generator hundreds of kilometres away.

“It’s time Australia’s energy regulators caught up with changing technologies and customer preferences,”  Lord Mayor Clover Moore said in a statement.

“Our population is growing, especially in the capital cities and urban centres. As demand for electricity grows and our infrastructure continues to age, we should be doing all we can to ensure catastrophes such as we recently saw in South Australia don’t happen again.

“I was dumbfounded by the Australian Energy Market Commission’s dismissal of our proposal on cost grounds, particularly when modelling from the Institute of Sustainable Futures showed a proposal similar to this could save more than $1 billion by 2050.

Jay Rutovitz, from the Institute of Sustainable Futures, described the modelling and the decision of the AEMC as “laughable” and staggering, while the TEC’s Mark Byrne said the ruling  would likely cause prosumers to reduce their use of the grid, to look at private wires and microgrids, and potentially to disconnect.

Energy experts, including the head of Australia’s largest electricity generator, AGL Energy, have admitted that the best way to provide electricity security is to introduce local generation, which would normally be renewables, in the form of mini grids, or micro grids.

Many network operators and consumer groups also argue that these are cheaper, more efficient and more secure.

“We’re doing what we can,” Moore said. “We’ve put more than half a megawatt of solar panels on our building roofs – equivalent to more than 200 household solar PV systems, switched on a trigeneration plant at Town Hall House and we’re also installing a low-carbon cogeneration plant at the Ian Thorpe Aquatic Centre in Ultimo.

“As we recently saw in South Australia, cities like Sydney cannot be too reliant on centralised energy networks. We need decentralised alternative options.

“Our current regulatory regime was designed for the 20th century, where one-way centralised energy supply was the only way to go.

“Currently decentralised energy projects are not able to access funding for the value they provide to the network. This makes them more costly to get off the ground.

“If networks don’t develop fair, efficient pricing for local generation, consumers will increasingly avoid the network by locating generation off-the-grid – increasing prices for the customers who remain and have to pay for the poles and wires already installed.”

Moore said it was “not credible” to argue, as the Commission has, that existing mechanisms, specifically network support payments by the energy utilities, are working to support local energy generation – these payments amount to less than 0.03 per cent of total network expenditure.

“Unfortunately, the Commission has decided it cannot consider climate change because it is not part of the National Electricity Objective – which means they are not planning for the electricity grid of the future as we move to zero emissions by 2050.”

“We need to include climate change in the National Electricity Objective so climate policy and energy markets start working together.”  

  • Mark Roest

    It really sounds like they just don’t want to — as in, they’ll need to be dragged kicking and screaming into the future or out of office, in order to avoid consumers having to gamble with their service levels.

    • Jonathan Prendergast

      I have had little to do with AEMC over the years, but I am getting the impression they are resisting change rather than accepting then embracing it

  • Miles Harding

    “Unfortunately, the Commission has decided it cannot consider climate
    change because it is not part of the National Electricity Objective”

    This can’t be wise or prudent. The sort of weather (mini-tornadoes) that took out South Australia’s grid is part of the general prediction of extreme weather events that are associated with global warming.

    Why is it that I detect the meddling hands of fossil fuelled dinosaurs here?

    • Greg Hudson

      FF meddling was the first thing I thought of too… Corruption rules !!!

    • Chris Fraser

      Maybe they have been captured, only took 20 years …

  • Kenshō

    “TEC’s Mark Byrne said the ruling would likely cause prosumers to reduce their use of the grid, to look at private wires and microgrids, and potentially to disconnect.”

    What’s happening is incredulous folk are underestimating the sheer scale of conservatism, attachment, desire and addiction of rule makers. Attempting to resume rational evidence based discussions could be premature. As Elisabeth Kübler-Ross highlighted, change goes more along the lines of the five stages of grief which are “denial, anger, bargaining, depression and acceptance.” I think the best way forward is building microgrids and nanogrids, giving evidence, creating proof of concept of a theme of people leaving the old grid, then this “abandonment” will likely move the discussion out of “denial” and along the rest of the grief process.

  • Kenshō

    Analogy:
    Lets imagine a romantic relationship which isn’t working. He’s controlling the finances and her behaviour, is drinking himself into oblivion, not recognising her contributions in the relationship. She says “you never give any genuine attention to our relationship, there’s no intimacy or togetherness, if you don’t make effort I’ll leave you.” He says, “you can’t leave me, you couldn’t make it on your own, you won’t leave me and you’ve got nowhere to go”.
    When these women leave, the men eventually go through a grief process of “denial, anger, bargaining, depression and acceptance”. The woman goes off to find another man or determines to be independent and direct her energies to other pursuits like her career. The men who are left, have the opportunity to try to find and rely on another woman who will put up with the old relationship or he accepts change, bringing a better relationship to the next woman. The first woman has to actually leave.
    As above so below. Applies to the grid.

    • Chris Fraser

      Good analogy. I guess when she leaves there’ll be no spark in the relationship. Boom-Tish !

  • Jonathan Prendergast

    Agree with CoS that local energy is the answer to issues in SA, not more expensive inter connectors and transmission lines