Photo by Michael Coghlan

Imagine investing in solar energy for your home and then, without warning and on orders from the national system operator, your solar energy is diverted. Your system automatically switches to using energy from the mains, which you have to pay for.

This is the current situation in South Australia where solar households are losing out through a new regulated solar cut-off mechanism.

Solar can be cut-off in two ways upon an order from the Australian Energy Market Operator (AEMO). SA Power Networks can increase voltages above 257 volts at some substations to cause solar inverters to cutoff, and/or households with solar installed since September 2020 have an “agent” that cuts off their solar.

AEMO’s rationale for this “emergency backstop” cut-off measure, only to be used in rare circumstances, is that system security is at risk and will remain so until the second interconnector between SA and NSW is completed in 2024.

One problem lies in there being no social licence sought or given for the solar cut-offs.

AEMO bypassed the standard rule change process in the National Electricity Market and pursued regulation change through the SA government, which consulted on the regulation for roughly two weeks, with no cost/benefit analysis or detailed examination of options.

Household solar was cut-off for the first time in Adelaide on 14 March 2021, with about 10,000 households (40 megawatts) cut off through voltage rise and about 2500 households (10MW) cut off under the new regulations that allow “agents” to cut solar exports. The cut-off occurred for about one hour during scheduled maintenance of the SA-Victorian interconnector when there was low demand and high solar generation.

The cost of the solar cut-off to households was trivial, perhaps $1 each, but in other matters of system security and reliability (such as through the Reliability and Emergency Reserve Trader (RERT) scheme), participants are compensated when they are shut down.   

Setting a poor example, there’s a risk that other appliances in homes including airconditioners, hot water heaters, pool pumps or electric vehicle (EV) chargers could also be switched off under a new demand response standard being considered by state energy ministers, including a consultation being conducted by the South Australian Department of Energy and Mining.

Australian households do not need centralised regulator control and cut-off of their solar and other appliances.

Instead, there is a smart solution available known as dynamic operating envelopes (DOEs). DOEs or dynamic connections allow changes to solar exports (or imports) on a five-minute basis within the limits of the local network or the overall system. DOEs are being trialled in South Australia from July 2021 and could be operating there.

Dynamic operating envelopes give homeowners and businesses the agency to determine how they manage their energy use within the physical limits of the electricity system. Building owners need to be able to manage their appliances, solar, batteries, etcetera, in ways that suit their needs, preferably within a system that incentivises demand response.

More generally, we need fresh thinking about how the electricity system can be operated more dynamically as we inevitably move to majority inverter-based generators.

The electricity system can be likened to a lumbering diesel semi-trailer. We need to transition to a clean, manoeuvrable e-bike renewable energy system. With inverter-based systems, smart power electronics and smart power system controls, we can create a new grid paradigm, with millions of generators and loads orchestrated flexibly and automatically.

Creating the electricity system of the future requires engineering, information technology and artificial intelligence investment and expertise from AEMO, distribution network companies, industry, building owners and consumer stakeholders.

The pay-off will be avoiding unnecessary or costly impositions on household and business distributed energy resources while speeding up the energy transition for everyone’s benefit.

See the full briefing note from IEEFA, Blunt Instrument: Uncompensated Solar Cut-Off Isn’t the Only Solution to the Minimum Demand “Problem


Gabrielle Kuiper is a guest contributor for the Institute for Energy Economics and Financial Analysis (IEEFA). The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

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