As part of our broader review of the regulatory frameworks for stand-alone power systems, the AEMC today published a consultation paper on developing a national framework for regulating stand-alone power systems provided by local councils, community groups, developers or other third parties.

A stand-alone power system is an electricity supply arrangement that is not physically connected to the national grid. The term encompasses both microgrids, which supply electricity to multiple customers, and individual power systems, which relate only to single customers. Changes in technology mean that stand-alone systems are becoming an increasingly viable option for electricity consumers, particularly where the costs of providing of a grid-connected service might be high.

In general, stand-alone power systems are currently not captured under the national electricity frameworks. They are instead subject to jurisdictional legislative frameworks that vary in their comprehensiveness. The consultation paper considers the extent to which stand-alone power systems should be regulated, and how any regulation should be applied, including:

• whether national or jurisdictional arrangements would be more appropriate
• whether microgrid operators should be obliged to offer to supply or connect customers, and give access to anyone else wanting to use their grid, for example generators and retailers
• registration and licensing arrangements for stand-alone power system providers
• economic regulation, including pricing
• consumer protections, including for vulnerable customers
• reliability standards 
• technical and safety standards 
• whether regulations should apply to both individual power systems and microgrids, and whether there should be any differences between microgrids of different sizes.

Submissions on the consultation paper are due by 29 March 2019.

Media: Prudence Anderson, Communication Director, (02) 8296 7817; 0404 821 935

Background

Under the terms of reference provided by the COAG Energy Council, the Commission is considering reforms to the regulatory framework for stand-alone power systems. We are focussing on two priority areas:

• Priority 1 is currently considering how to enable distribution network businesses to provide stand-alone power systems to their existing customers where it is economically efficient, for example in remote locations, while maintaining appropriate consumer protections and service standards.
• Priority 2 is considering a national framework for regulating standalone power systems provided by parties other than local distribution network businesses.

The AEMC published a draft report and recommendations for priority 1 in December 2018. A final report for priority 1 is due by 31 May 2019.

We are due to publish a draft report for priority 2 by 31 June 2019, and a final report for priority 2 by 31 October 2019.

We are concurrently working on updates to the regulatory framework for embedded networks, and the two workstreams will consider a number of related issues, particularly with regards to consumer protections.