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Regulator says Australia facing “prosumer” energy revolution

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Australian Energy Regulator says network models need to be changed to allow great access for customers to participate in the market. If barriers remain, it warns that pro-sumers – those generating and storing their own energy – will “walk away” from the grid.

The Australian Energy Regulator says the energy market faces a revolution in coming years from the rise of the “prosumer” – customers with the ability to generate and store their own electricity.

And it warns that unless models are changed to allow these prosumers to fully participate in the market, and if networks continue to impose barriers, then many consumers will simply walk away from the grid, with disastrous consequences for others.

“The electricity industry certainly is changing. In fact it is not much of a stretch to say that the next couple of decades will witness something of a revolution in the way small customers interact with the electricity industry,” Michelle Groves, the chief executive of the AER, said in a speech earlier this week.

“In the future there will be more scope for even the smallest energy users to become active participants in the energy market.”

But Groves added it was important for the network businesses to embrace the changes underway in the energy sector. “If the networks attempt to create barriers to new, competing technologies by limiting access to their ‘platform’, there is a risk that a significant number of consumers will ‘walk away’ from the network.

“This would have major consequences for many consumers and for the efficient operation of energy markets. The hope is that network businesses re-define the services they provide to adapt to the new market, which will benefit end-users and transform the industry.”

The speech by Groves is important because regulators in Australia – both federal and state-based – have been accused of acting mostly in the interests of the incumbent, and often state owned, utilities. Nigel Morris outlines ways in which utilities have acted against solar here. And consumers and installers are responding with their own guerrilla tactics.

But there is now growing recognition of the power of these new technologies, and their ability to deliver cheaper services than those delivered only by centralised generation through costly networks. That, in turn, has underpinned predictions of a massive change in the way the markets operate.

The CSIRO Future Grid scenarios predicted half of all electricity would be produced – and stored – on site. But if the networks did not adapt, then up to one third of consumers could leave the grid – with serious social consequences. As RenewEconomy has highlighted, and again yesterday, some consumers and installers are finding ingenious ways to work around the tariff structures imposed by utilities to dissuade the use of solar.

Groves’ speech is the first to recognise that this is a primary concerns, and not use the regulatory platform to try and demonise these technologies.

Groves says the changes are being driven not just by the availability of cheaper technologies such as solar and batteries, but also improvements in IT and communications.

This means that prosumers can switch from net consumption from the grid to net production.

We have seen over a million households install roof-top solar PV in the last few years,” she says.

“Further, customer investment in smart appliances and battery storage could substantially shift the amount customers withdraw from or inject into the network from one moment to the next.”

off-gridFar from being a drag on network investment and a burden on other consumers – as solar households are often painted by conservative politicians, Groves says prosumers will increase the resilience of networks, increase their use (presumably through charging electric vehicles), and help increase choice around consumption and production.

Groves said that ideally, ‘prosumers’ would be willing and able to directly or indirectly respond to local market conditions, so that they make efficient decisions as to the best time to use their electric appliances, charge and discharge their electric vehicles or have knowledge of their local conditions inform their investment decisions.

“Perhaps the most significant benefit from increasing the integration of small customers into the electricity market is that it will lead to a range of new services. In fact, it may mean a host of yet unknown services that will deliver real value to consumers and society more generally.”

   

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  • barrie harrop

    The day home storage reaches 3–4 year payback ,a massive trend will be off-grid at a domestic level.

  • It’s a bit of a worry when the regulator uses turns of phrase such as “IF the networks attempt to create barriers” and “the HOPE is that network businesses re-define the services they provide” as if she was a passive observer, but I guess we have to take hope from others such as “there WILL be more scope for even the smallest energy users to become active participants in the energy market” even if the scope could include “on an unequal playing field” (my words not Ms Grove’s)

  • Maurice Oldis

    We have some of the dearest energy in the world-average U.S charge is 12c/kwhr.
    consumers are being fleeced and will walk in droves-and the incumbents deserve it!!!

  • Tim Buckley

    Great to see at least one of Australian electricity sector leaders talking sense. Groves better be careful or Abbot will find some pretence to sack her – he runs a fact free government after all! In my mind, the electricity grid transmission and utility incumbents have three years to get ready – because by 2018 Tesla batteries from Nevada will combine with SMA Solar inverters, home energy management systems and iPhones, flooding the Australian residential market as a key global priority.
    Why Australia first? The highest peak retail electricity prices in the world coupled with one of the highest solar radiation rates. Add in the ability for owner-occupiers to do a mortgage redraw at a 5% cost of capital to fund the entire project and this is a no-brainer. The number of solar households will double by 2020 to 2.6 million, and the solar installers will be busy retrofitting houses that currently have 1-3kW systems to take them up to 3-5kW sizes that cover East and West facing sides of the house to maximise coverage. This will see a quadrupling of Australia’s distributed solar by 2020, particularly when commercial and industrial customers work out a way to stop being nailed by their electricity suppliers with the multitude of fixed charges.

  • Rob G

    You have to wonder why the big three continue seeking government muscle to ‘force’ people into coal fire power. Always looking for new ways to keep the dinosaur alive. The time is now, to face the facts that people want no part of dirty energy generation. It’s a bit like forcing people to keep using their landline phone instead of letting them have an iphone.

  • Alan Baird

    We need to ban those new lithium cells. Too damn cheap and easy to go off-grid. Things are changing too damn fast.