Ausgrid’s Solar Pilot Aims to Transform Energy Networks

Australia’s largest electricity network operator, Ausgrid, is embarking on a groundbreaking initiative that could reshape the operational framework of energy networks, potentially accelerating the transition to clean energy. The new Community Power Network (CPN) pilot aims to extend beyond the conventional ‘poles and wires’ function of networks, demonstrating how they can directly contribute to lowering energy bills, ensuring fair access to solar power, and expediting decarbonisation efforts.

If the pilot proves successful, it could signify a pivotal moment, showcasing that regulated networks, traditionally confined to specific roles, can also serve as catalysts for innovation and equity within the energy sector.

Unlocking Solar Potential for Communities

The CPN pilot, currently open for public consultation, seeks to harness the untapped potential of commercial rooftop solar and distribute its advantages across entire communities, including renters, apartment residents, and those unable to afford solar panels. Ausgrid’s CEO, Marc England, shared insights on the SwitchedOn Australia podcast, emphasising that the trial is aimed at reducing costs, enhancing equity, and lowering emissions, potentially paving the way for a new energy paradigm in Australia.

“Our studies indicate that if we could cover warehouse roofs with solar panels, we could significantly reduce electricity costs for nearby residents,” England explained. “This would allow for a more equitable distribution of energy benefits and promote decarbonisation.”

The pilot will be conducted in two distinct locations: Mascot-Botany in Sydney and Charmhaven on the Central Coast. These areas were selected to evaluate different community profiles, with Charmhaven being predominantly residential, while Mascot-Botany features a mix of social housing, renters, and large warehouses.

In Mascot alone, Ausgrid has identified an impressive 112 megawatts (MW) of untapped rooftop solar potential, sufficient to power 23,000 homes. Given that 68% of Mascot residents live in apartments and 50% are renters, the suburb presents an ideal environment for testing equitable solar access.

The pilot is projected to yield $22.9 million in energy cost savings over five years, translating to approximately $150–$200 in savings per household annually for the 32,000 customers in both pilot areas.

Encouraging Private Investment and Innovation

To facilitate the project, Ausgrid will conduct a reverse auction for solar installers, fostering competition for contracts and encouraging private investment. The most cost-effective bids will be selected for the initiative.

“We will be installing batteries in both suburbs of varying sizes, sometimes on-site at warehouses and sometimes within the network, to ensure that all surplus solar energy generated from rooftops is fed into the network and redistributed to customers during peak demand in the evenings,” England stated.

However, Ausgrid requires regulatory approval to pursue this project. Current ring-fencing regulations prevent distribution network service providers (DNSPs) from engaging in competitive markets such as solar generation, storage, or electric vehicle (EV) charging. The AER’s regulatory sandbox mechanism is the only way for pilots like CPN to progress, but they often face significant opposition from industry stakeholders concerned about the potential monopoly power of networks.

England contends that the existing boundaries for networks are outdated and hinder innovation at a time when the energy system requires fresh solutions. “If we’re permitted to operate in the sandbox, it allows us to transcend the current limitations and test new hypotheses,” he remarked.

Expanding the Role of Networks

Ausgrid’s ambitions extend beyond merely increasing solar capacity. England envisions networks taking a more prominent role in community-scale battery systems and kerbside EV charging, areas currently restricted by regulations. While some oppose this idea, England argues that DNSPs are uniquely positioned to deliver such infrastructure cost-effectively, leveraging the existing poles, wires, and substations they manage.

“We could deploy 11,000 EV chargers over the next five years at a minimal cost, as we can implement them at scale using existing infrastructure,” he explained.

England also expressed scepticism regarding the federal government’s new Cheaper Home Batteries scheme, which has seen a surge in installations since its launch on July 1. He believes that the focus on household batteries may overlook renters and apartment residents—approximately one-third of Australians—and argues that community-scale storage can provide greater benefits at a lower cost.

“The cost of a five-megawatt community battery that offers storage as a service to customers and saves them $200 on their bills is about half the societal cost of a home battery, yet it achieves the same outcome,” he noted.

Localising Energy Supply

At the core of England’s vision is the concept of localising energy supply. Ausgrid’s studies suggest that if fully utilised, its existing network rooftops could generate enough electricity to meet its entire annual demand. By localising supply in this manner, England argues, the need for costly new high-voltage transmission lines and large-scale regional wind or solar projects would be significantly reduced.

“This is the future we are exploring,” he stated. “It would mitigate the risks associated with the construction of large-scale wind farms during this energy transition and lower costs for consumers.” Ausgrid anticipates that the CPN pilot could reduce peak demand in trial areas by as much as 30%, enhancing network efficiency and lowering long-term costs for all customers.

Critics, however, warn that allowing DNSPs to extend beyond their traditional roles could exacerbate their monopoly power. Stephanie Bashir, CEO of Nexa Advisory, cautioned that publicly funded community batteries operated by networks might reinforce DNSP dominance rather than provide genuine community benefits.

“There is a significant risk that by granting networks a class waiver, community batteries may not fulfil the policy objectives of the federal government’s programme and fail to deliver comprehensive benefits to Australian customers or their communities,” Bashir wrote in Renew Economy.

In response, England maintains that while Ausgrid operates as a monopoly, it is a regulated entity designed to serve the public interest. “We must ensure that distributors are not perceived as entities to be constrained or restricted, as they can play a vital role in reducing energy costs,” he asserted.

“As a regulated monopoly, we exist for the benefit of everyone, and we believe there are alternative solutions that warrant deeper consideration.”

“I’m astonished by the opportunities that are being overlooked.”

For more insights, listen to the full interview with Marc England on the SwitchedOn Australia podcast.