Retailers Challenge Ausgrid’s Rooftop Solar and Battery Initiative

Retailers, consultants, and community groups are voicing significant concerns regarding Ausgrid’s plan to become an owner-operator of distributed energy assets, calling for substantial revisions to the proposal.

Last month, the Australian Energy Regulator (AER) sought public feedback on the five-year Community Power Network pilot, which aims to incentivise the installation of solar panels on commercial and industrial rooftops. Ausgrid intends to achieve this by offering enhanced feed-in tariffs and acting as an installer of last resort, while also storing any surplus energy in its own batteries to help reduce local grid costs.

Ambitious Intentions, Mixed Reactions

Ausgrid’s initiative aims to harness unused rooftops on various buildings, including apartments and warehouses, to generate renewable energy, a concept that has received praise. However, the specifics of the $110-180 million trial have raised eyebrows, becoming a focal point in the ongoing conflict between network operators and retailers, as well as sparking concerns among community advocates about potential monopolistic practices.

In a recent interview on Renew Economy’s SwitchedOn Australia podcast, Ausgrid CEO Marc England advocated for the project, expressing a desire to “swim out of regulatory lanes.”

Retailers Raise Alarm

Major retailers, particularly those who stand to lose from these changes, have been vocal about their apprehensions. AGL, for example, has detailed its concerns in a comprehensive 49-page report, highlighting various issues with the current pilot design, including insufficient data on its impact on consumer bills. AGL also pointed out that Ausgrid has the second-lowest uptake of rooftop solar in the National Electricity Market (NEM), questioning its capability to propose effective decongestion strategies.

The Australian Energy Council, representing energy retailers, echoed these sentiments, stating that the Community Power Network should be consumer-led. They argued that Ausgrid’s approach could overshadow other market-driven solutions, as the scale of its investment and the automatic opt-in for customers may deter interest in alternative options.

Regulatory Challenges Ahead

Ausgrid’s push into competitive markets has raised alarms, particularly regarding its need for a waiver from ring-fencing rules that currently prevent it from owning both the distribution network and electricity generation/storage. The company also seeks to pass on $72.8 million of the trial’s costs to its customers.

The AER has been granting waivers to certain ring-fencing rules to encourage innovation while safeguarding consumer interests. Distributors have long claimed they possess spare capacity that could be utilised more efficiently for renewable energy deployment compared to constructing new transmission lines.

Concerns Over Market Competition

However, as monopolies, DNSPs like Ausgrid have already begun to stir discontent as they explore ways to expand their operations into competitive markets. They are now permitted to manage government-funded community batteries, provided that the wholesale energy market participation is leased to a retailer. Additionally, they have sought waivers to trial DSNP-owned electric vehicle charging stations.

Nexa Advisory’s submission criticises the proposal for lacking evidence to support its claimed costs and benefits, suggesting that the trial does not introduce anything novel, as DNSPs are already allowed to own community batteries and the concept of orchestration via virtual power plants is well established.

Community Concerns and Suggestions

Solar Citizens have expressed worries that Ausgrid’s plan continues to frame rooftop solar as a challenge rather than a solution. They argue that the Community Power Network trial could enhance network productivity by up to 40% through better integration of solar and batteries, questioning why Ausgrid has not implemented these strategies already.

They advocate for the removal of export limits to enable solar owners to share more clean energy with their communities and suggest the establishment of Dynamic Operating Envelopes (DOEs) to ensure fair distribution of hosting capacity among customers, thereby supporting grid stability and future-proofing the network.

Spatial Energy Planning Proposal

Despite the criticisms, one aspect of Ausgrid’s plan has garnered positive feedback: the proposal for a spatial energy plan in the two locations earmarked for the Community Power Network. This initiative aims to map current and projected energy use, allowing local councils to better anticipate demand and strategically site substations and storage hubs.

However, concerns remain that DNSPs are not sharing this crucial data with councils in a useful manner. Solar Citizens have called for Ausgrid to support local councils by providing spatial energy mapping data and making it publicly accessible to foster market competition.