New technology would be used to provide better, cheaper power services to remote consumers under reforms set out by the Australian Energy Market Commission (AEMC).

The Commission is recommending a range of regulatory changes to enable distribution network businesses to supply their customers with stand-alone power systems where it is cheaper than maintaining a connection to the grid.

The reforms would provide consumers with the same protections, reliability standards and access to competitive retail offers via their retailer of choice as those connected to the grid.

A stand-alone power system – usually a combination of solar PV, batteries and a back-up generator – would be installed by their distribution network but would not be physically connected to the national grid. 

AEMC Chief Executive Mrs Anne Pearson said the changes would enable those living in locations where power supply is unreliable, or subject to frequent or extended blackouts, to have better quality services and would reduce costs for all energy consumers by avoiding expensive investment in poles and wires where customer numbers are limited.

“New technology using distributed energy resources is making it possible to supply customers at the end of the line in a cheaper and better way,” Mrs Pearson said.

“The old-fashioned way of centralised generation being distributed by stringing poles and wires to the remote corners of Australia is giving way to solar and battery systems where energy is generated closer to where it is used.

“These reforms mean that people living at the end of the line will get a better quality service with the same protections without paying any more.

“Ultimately, reducing the need for poles and wires to service remote consumers reduces the network costs which make up around 50 per cent of the average electricity bill. It also reduces bushfire risk and the visual impacts of power lines.”

While consumers can currently go “off-grid” they do so at their own expense and in most cases have very limited consumer protections. The AEMC reforms recommend that the COAG Energy Council require distribution networks to identify the opportunities for stand-alone systems and work with their customers where a transition to a stand-alone power system makes sense.

Trials of stand-alone power systems are currently underway in several states including NSW, Queensland and Western Australia.

Note: The recommendations apply to the national electricity market which covers South Australia, Tasmania, Victoria, New South Wales, the Australian Capital Territory and Queensland. Some of the recommendations also apply in the Northern Territory, which has adopted parts of the national rules.

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

STAND-ALONE POWER SYSTEMS: CASE STUDIES

Ravensthorpe, Western Australia – Western Power

In 2016 Western Power installed six individual power systems on a number of rural farms in the Ravensthorpe area as part of a 12 month pilot of stand-alone power systems technology. The systems were located in areas with medium to high bushfire risk and with heightened reliability issues.

The results of the trial have been positive with customers experiencing significantly fewer power interruptions than customers on the network in the same area – that is, around five hours of power outages in a year, compared to 70 hours of power outages each year on the network. The stand-alone power systems proved robust in extreme weather events, and more than 90 per cent of electricity has been generated from solar PV.  

The Western Power trial is now being extended to over 60 sites in Western Power’s network.

Bulahdelah, NSW – Essential Energy

In 2018 Essential Energy installed a stand-alone power system at one of two properties located at the end of a 5.5 km spur line on the boundaries of the Myall Lakes National Park near Bulahdelah. The spur line traverses a high bushfire risk zone through densely vegetated national park with poor vehicle access. This makes fault and emergency responses both time-consuming and potentially dangerous.

Over the past nine years, the property has experienced more than 25 outages with a combined outage time of over 70 hours. In the same period, Essential Energy has spent over $100,000 in network refurbishment and over $150,000 in vegetation management. Essential Energy receives a little over $1,000 per annum in revenue from the two customers connected to the spur.

The results will inform Essential Energy’s ongoing approach to Standalone Power System adoption.

Esperance, Western Australia – Horizon Power

Following the catastrophic Esperance bushfires in 2016, Horizon Power purchased five stand-alone power systems as an alternative to rebuilding some feeders that had been destroyed. After significant upgrades to ensure the systems met the necessary utility-grade safety and engineering standards, these units have now successfully operated for three years.  

Following further trials of different technology combinations in other locations including Exmouth and Hopetoun during 2017 and 2018, Horizon Power has started work on a large scale deployment to provide 13 stand-alone power systems for 14 fringe-of-grid properties (one system will service two properties) in Esperance that are currently serviced by 54km of aging powerlines. The systems will be fully operational - improving both safety and reliability - and the powerlines decommissioned later this year.

Crotty Dam, Tasmania – TasNetworks

In 2014 TasNetworks commissioned a stand-alone power system to supply customers at Crotty Dam. The Crotty Dam sites were previously supplied power via a 12.7km distribution spur line.
Advances in technology meant that the installation of a stand-alone power system became a more cost effective alternative to continuing to maintain the existing spur line. The spur line was subsequently decommissioned in 2015, avoiding the ongoing heavy vegetation cuts and asset replacement costs.

Boulia and Dajarra, Qld – Energy Queensland

The remote township of Boulia (population 300) in far western Queensland, 300km south of Mount Isa, is supplied by an isolated microgrid. It is one of 33 microgrids operated by Energy Queensland to provide electricity to remote communities located throughout western Queensland, the Gulf of Carpentaria, Cape York and the Torres Strait.

The AEMC contrasted the experience of Boulia’s microgrid energy consumers with that of Dajarra (population 200), mid way between Mount Isa and Boulia. Dajarra is connected to Mount Isa by a 130 km power line. In discussions with the AEMC team, local residents highlighted the significantly better reliability outcomes experienced in Boulia compared to the grid connection at Dajarra. 

BACKGROUND

What is a stand-alone power system?

A stand-alone power system is an electricity supply arrangement that is not physically connected to the national grid. The term encompasses both microgrids and individual power systems:

• Microgrids: any system supplying multiple customers not physically connected to the grid. Includes anything from a large town to two farms connected to each other. Generation sources typically include solar PV, wind turbines and small scale gas generators and diesel engines. 
• Individual power systems: a system supplying an individual customer not connected to the national grid or a microgrid. Typically includes a combination of solar PV, batteries and a backup generator.

Why is the AEMC doing this review?

Stand-alone power systems are generally not captured under the national electricity frameworks. Regulated distribution network service providers are currently prohibited from offering them to customers in most states and territories. If customers obtain their own supply using a stand-alone power system, those systems are subject to jurisdictional legislative frameworks that vary in their comprehensiveness.  

Under the terms of reference for the review provided by the COAG Energy Council, the Commission is considering two priority areas:

• Priority 1 (this report) has focussed on the development of a national framework for customers that move from grid-connected supply to stand alone power systems provided by existing distribution network service providers.
• Priority 2 is considering regulatory frameworks for the provision of stand-alone power systems by parties other than distribution network service providers. A final report for priority 2 is due by 31 October 2019.

We are concurrently working on updates to the regulatory framework for embedded networks, with a final report due in June 2019. The two workstreams will consider a number of related issues, particularly with regards to consumer protections.

Who are the market bodies?

AEMC - Australian Energy Market Commission is the rule maker, market developer and expert adviser to governments. It protects consumers and achieves the right trade-off between cost, reliability and security.

AEMO - Australian Energy Market Operator is the electricity and gas systems and market operator. It works with industry to keep the lights on.

AER - Australian Energy Regulator is the economic regulator in charge of rules compliance. It polices the system and monitors the market.