Networks say battery storage ring-fencing proposals “ludicrous”

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Fight looms between retailers and networks over right to install solar and battery storage in homes, businesses. Spark Infrastructure says proposed rules “ludicrous”.

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A bitter fight between network operators and the major retailers over who should be able to provide solar and battery storage installations to consumers promises to escalate, with major implications for the business models of the incumbent utilities and their customers.

The turf war between the networks and the retailers is all about who should gain the right to the “behind the meter” market, to deliver products to households and businesses. Origin Energy and AGL Energy have both conceded this is key to the future of their retailer models.

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The networks are also keen to play in that market, seeing it as vital to their ability to extract full value from the huge grid assets they have accumulated. Many major networks have rolled out trials in solar and battery storage, saying they could deliver major savings and efficiency on grid upgrades, but they have had to get special exemptions to do so.

The retailers are keen to keep the networks out of the behind the meter market, arguing that if they were allowed to use the power of the regulatory assets then others would not compete. They are supported by many in the solar industry who fear networks will use their vast employee numbers to shut them out of the market.

The networks, however, are livid over draft regulations released last week by the Australian Energy Regulator on the ring-fencing guidelines which are supposed to define the rules by which the networks can play in the market.

“We just think that is a ludicrous position to be in,” said Spark Infrastructure CEO Rick Francis in a call with analysts on Monday. He was particularly angry about proposals that networks would have to duplicate all their services in a new company, right down to depots.

Francis said the rules would be bad news for consumers, because it would mean higher costs. “We would be strongly challenging those guidelines,” he said.

Spark Infrastructure owns 49 per cent stakes in South Australian Power Network, which provides the monopoly distribution network in that state, the CitiPower and Powercor networks in Victoria, and recently bought a 15 per cent stake in Transgrid, the NSW-based high voltage network provider.

The ring-fencing guidelines are seen by some as critical to the future of the energy market in Australia. Many agree that most savings can be achieved by marrying retail operations with network capabilities, because of the savings this can deliver to both.

But in Australia, the vertical integration has occurred by marrying retailers and generators, which some argue gives a perverse outcome. Both sides of the energy industry exercise a huge amount of market power, the networks through the monopoly control of their assets, and the “gen-tailers” through their own market power, and consumers have been squeezed by both.

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8 Comments
  1. Chris Fraser 3 years ago

    The retailers and networks should be seeking different things. Perhaps Retailers need to save consumers from peak time of use tariffs and more lately, peak kilowatts. Networks need stability and network services to avoid huge grid investments. But can they get batteries into private homes and make it worthwhile for consumers ?

    • Chris B 3 years ago

      Retailers are forced to sell for a flat rate, but buy at a highly variable and increasingly rigged and colluded market rate. They want as much fixed cost behind the meter storage and generation as they can get.

  2. Brunel 3 years ago

    What a lie. The networks want voters to pay higher prices not lower.

  3. Brian Innes 3 years ago

    There are multiple stacked benefits derived from batteries. If someone has a monoploy control over the rights to one of these (aka electricity network services) then you have a market problem, as they can drive a price advantage others can not.

    If the networks are able to create an open market in their networks so all non network solutions can compete and gain access to their monopoly rents – then let them in I say (but not till then).. It would be a very big data solution if they can get there.. Many many hubs..

  4. Mike Dill 3 years ago

    Spark Infrastructure is right to be scared. Behind the meter batteries are coming, and will cause a great deal of pain to the networks. Some will go off-grid, and many will opt for peak usage tariffs and time-of-use, and cover those situations with one day of storage.
    I will have the peak-shaving batteries installed by the end of this year, leaving open the future option of going all the way in the future.

  5. trackdaze 3 years ago

    Due to their monopoly positions, Networks are the reason why costs have increased so rapidly in the last ten years.

    Network operators best defence was and is to make the unit cost of moving a unit of energy across its network cheaper. To date they appear to have failed misserably.

  6. Miles Harding 3 years ago

    If they were at all intersted in fairness and transparency the answer would be “anybody who meets the technical requirements” can install solar and batteries.

    It is essential that all elements of the energy market be
    a) open
    b) transparent
    c) fair

    I feel that these vertically integrated business must be broken up into independent generation, transmission and retail businesses. Further to this, the collusion implicit in these entities must be disabled by forcing all arrangements to be public, uniform and universally accessible to all entrants.
    (The ring fencing guidelines probably don’t go far enough to force collusive back room deals out into the open)

    The generators shall be only be generators, the transmission network shall only be a transmission network and the retailers shall only be billing and packaging entities that are free to invent creative arrangements to confuse their customers, similar to the mobile phone retailers.

    Behind the meter equipment shall only be subject to necessary technical requirements and not locked into collusive arrangements preferred by the existing players.

    This is a world where the market partipants are severely penalised for getting it wrong and modestly rewarded for getting it right. Public utilities are not the place to expect stellar returns. It is essential that the network be operated for the common good and that the current profiteering be eradicated.

  7. Daniel 3 years ago

    Every person who has owned a battery charger, plugs the charger into an AC socket and then charges their boat or vehicle battery if needed. If the consumer wishes to buy technology to redeploy electricity, the consumer has always decided when and how and who to consult. That’s what a free and competitive market is. I personally would rather give my business to the local small businesses in my town. Big business should definitely not further leverage their interests at the expense of small businesses.

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