The Australian Energy Regulator is seeking feedback on a proposal by distribution network company Ausgrid to conduct a pilot that promises to extend the benefits of solar to customers in areas where equitable access is limited and prime rooftop real estate untapped.
The proposed Community Power Network pilot would involve incentivising the rollout of solar across commercial and industrial rooftops, excess production from which could be stored in neighbourhood batteries and discharged strategically to cut costs for all on the local grid.
On paper this seems like a great idea. As Ausgrid CEO Marc England put it in a statement on Wednesday, it addresses two key issues currently holding back a more equitable transition and cheaper prices.
“If you live in an apartment, or rent, or do not have the money to spend on your own electricity assets, then currently you struggle to access the benefits of solar and storage,” he said.
“Commercial and industrial businesses also struggle to get value from filling their roofs with solar and selling surpluses into the grid because current wholesale prices are driving the price of energy below costs.
“This trial sees the cost savings go back to the local community and encourages private investment in rooftop solar by creating value for locally generated energy.”
Where it gets complicated is that Ausgrid is restricted from running such a trial by ring-fencing rules, put in place to prevent regulated monopolies like network companies from further dominating what should be competitive markets.
In the current state of rapid transition, however, the AER has been waiving some ring-fencing rules to allow for testing of new products, services, and business models in a way it says can foster innovation while protecting – and ultimately benefitting – consumers.
To this end, the AER said on Wednesday that Ausgrid’s application to run the Community Power Network pilot is the first trial application under the policy-led “sandboxing” approach launched by the regulator in February.
Not everyone agrees with this approach – it will be well worth keeping an eye on the submissions that are made during the period of public consultation. But for now, this is where Australia’s peculiar energy market situation finds us.
In its application for a waiver to conduct the pilot, Ausgrid says solar would be incentivised through tariffs via customers’ retailers, in most cases, or via direct Power Purchase Agreements for some large commercial systems installed for the primary purpose of feeding the pilot.
Surplus solar would then be stored in local batteries – owned and operated by Ausgrid in this case – and discharged during the evening peak, flattening local demand on the grid. In addition, batteries would be used during the day to manage short-term network fluctuations.
“This will result in a smoother load profile, improving grid utilisation as electrification grows, and ultimately lowering the costs of the network on a per unit basis for all customers,” the application says.
“The batteries will be metered so energy flows can be captured and assigned financially as part of the process. We estimate a typical community could deliver at least 30% of their total energy needs locally, with the rest coming from the grid as it does today.
Ausgrid says the batteries will generate revenue by discharging during peak price periods and participating in commercial energy trading. Keeping supply close to demand would also see a lower network charge for electricity generated and consumed within the community.
“All resulting benefits – network savings, trading revenue, and wholesale arbitrage – will be pooled by the Community Power Network,” Ausgrid says.
“The costs of running the pilot will be subtracted from these benefits, after which the remaining profits will be added to a dividend pool that is distributed equitably to all customers in the local community, regardless of whether they own their own solar and battery.
“Ausgrid will only receive a return on Community Power Network assets equivalent to regulated levels … [and] is committed to running the trial in the most efficient manner possible and ensuring value is provided to customers.
“Should the concept prove successful,” it adds, “other ownership methods will be explored.”
In a statement on Wednesday welcoming the AER’s consultation on the pilot, Ausgrid says the two sites identified to host it are Mascot-Botany in Sydney and Charmhaven on the state’s Central Coast.
“In Mascot alone, there is 112MW of untapped rooftop solar potential, which is enough to power the equivalent of 23,000 homes,” England said.
“With approximately 68% of residents living in apartments and 50% renting in Mascot – it is ideal for testing equitable solar access models for those who can’t access or afford solar or behind-the-meter batteries.”
He says the trial could offer a number of other benefits including job creation.
“The pilot will create jobs for solar installers, which is positive for licenced electricians and Accredited Service Providers,” England said.
“It will also demonstrate the potential, when urban areas take on some of the heavy lifting currently going on in the outback, that we have to de-risk the need for as much expensive high voltage transmission.”
See also: Gridlocked: The ridiculous rules that trap farmers and their solar systems behind their own fences
