Property Council chief executive Peter Verwer

8 July 2013 — The proponents of a rule change to how embedded generation is connected to the grid have welcomed the Australian Energy Market Commission’s draft rule determination, but say more is needed to be done to provide customers with greater connection rights.

The draft rule, released on June 27, was in response to a rule change request put forward by the Property Council of Australia, ClimateWorks and Seed Advisory.

At present there is a large gap in the rules regarding access to the grid. For small systems (under 10 kilowatts for homes and 24kW for small business) there is a very simple access system – think connecting residential solar panels – and large system over 30 megawatts are considered power stations.

Between 10kW and 30MW the rules are ill-defined and causing huge problems for embedded generation projects like co- and trigeneration systems in commercial buildings, industrial spaces and precincts.

Read our story Trigen and connection to the grid: decision due soon

PCA chief executive officer Peter Verwer said businesses were currently waiting up to three years to connect co- and trigen systems to the grid while incurring enormous costs.

“In the absence of clear rights and conditions, businesses can negotiate endlessly with monopoly distribution companies,” he said. “Many give up when presented with this daunting reality, which is a wasted opportunity for enhancing cleaner energy.”

He said the AEMC’s draft rule would provide more certainty regarding connections.

“The proposed solutions in the AEMC’s draft should assist to deliver connections within four to six months,” he said.

Features of the proposed connection process in the AEMC’s draft determination include:

  • Better certainty on timeframes, with maximum limits at each stage
  • Enquiry forms to be created and published by electricity distributors
  • Information packs to be provided by electricity distributors
  • Location specific network information for customers by distributors
  • Expert appraisal process for technical disputes with an independent engineer
  • A register of compliant equipment to be published and maintained by distributors to assist customers early in their projects to decide on relevant, proven equipment
  • Allowing for the development of a national technical standard(s), which the proponents say will provide the foundation for a future automatic right of connection to the grid

In the proposal to the AEMC, the proponents had suggested:

  • Providing an automatic right of connection to the grid and standard access terms
  • Enabling embedded generators a right to export electricity to the grid
  • Allowing distributors to charge an optional fee-for-service to promote collaboration with proponents during the connection process
  • Obliging distributors to publish annual network reports identifying where capacity is limited

Mr Verwer said that while the reforms were welcome, more could still be done, “especially to provide customers with greater connection rights and allocating electricity network upgrade costs more equitably”.

Improvements suggested by the proponents to the AEMC’s draft determination and connection process include:

Maximum timeframes to be better aligned to commercial development timeframes

 A Property Council spokesman said that while the timeframes the commission came up with were “a vast improvement”, they could be a little shorter to fit in with the reality of development projects.

“Even shorter timeframes will assist developers and project proponents fit in with their project timelines,” he said.

Improved definition of the agreed project based on performance criteria, not equipment specific criteria or left to distributors’ discretion

The Property Council spokesman said that distributors had a lot of discretion and could reject projects based on their own preferences, regardless of whether a system was safe or reliable. He said the Property Council had been made aware of numerous situations in which distributor discretion had hindered projects being put forward, and that an objective definition of an agreed project was needed.

Government and industry to develop an automatic access standard(s)

Even though they haven’t supported an automatic right of access in their draft determination, AEMC has said that they support and recognise that future standards are a good idea, the Property Council spokesman said. This recognition and work by industry and government will facilitate automatic access standards in the future, he said.

Spreading network augmentation costs fairly amongst customers

At present, if a project proponent wants to connect to the grid but there is no capacity to do so, they must bear the costs involved in upgrading the grid infrastructure, even though present and future connections will benefit from these upgrades. The Property Council spokesman said that the cost of upgrading the grid infrastructure could “make or break” a project, and that the “free rider” problem needed to be dealt with effectively.

“All customers should pay fairly for network infrastructure,” he said. “The unlucky few are paying for the upgrade.

“Energy infrastructure is underfunded. Governments are relying on private sector stepping in, but the benefits go to more than the people paying for the upgrades.”

Greater customer export rights

The Property Council spokesman said that some proponents, even if successful in getting a connection, have clauses that say they can’t export electricity to the grid.

“We’ve got to improve the current situation where there’s too much discretion left with distributors as to who can export,” he said.

Organisations with an interest in co/trigeneration and other embedded generation technologies are encouraged to provide their views on the proposals in the AEMC’s draft determination. Submissions are open until 8 August 2013.