Market Review: Completed
Overview
In July 2017 the AEMC published the first edition of the annual Electricity networks economic regulatory framework review report. The report considers how the economic regulatory framework can best support the continual evolution of electricity networks to facilitate consumer choices and the uptake of distributed energy resources like solar PV, battery storage and ‘smart’ household appliances that respond to changes in electricity prices.
The report found that:
- more consumers are adopting distributed energy resources as these technologies become cheaper and better. As a result, networks will increasingly need to support two-way flows of electricity as well as integrating a range of other decentralised energy resources into their operations.
- the entry of new technologies and business models into the market indicates the framework is allowing the continual evolution of electricity networks
- there are a number of examples where network businesses have used incentives under the current regulatory framework for non-network solutions, as an alternative to building more poles and wires.
The report also sets out aspects of the regulatory framework may need to be assessed moving forward so that it remains fit for purpose and network businesses can adapt as the electricity market transforms. Key areas for future monitoring and analysis, using this report as a baseline, are:
- implementation of network pricing reform
- networks’ incentives to deliver services at the lowest possible cost
- development of a competitive ‘distribution market’, as outlined in our June 2017 Distribution Market Model report.