Energy Market Transformation

The Energy Market Transformation work program, which commenced in early 2016, aims to ensure regulatory frameworks are fit for purpose to cope with the effects of emerging technologies and to enable consumers to benefit from innovative services while mitigating any risks. It aims to ensure regulatory frameworks are flexible enough to support a successful transition of the electricity market to a future characterized by more and increasingly decentralized supply options.

Further information on the key work streams identified in the work program is outlined below. The attached table also provides information on the status of various projects. 

At its August 2016 meeting, the Energy Council agreed to release three consultation papers seeking feedback on issues relating to stand-alone systems, consumer protections and registration systems for battery storage. For more information on these consultation papers click here.

Enhanced Competition and Innovation

This work stream is looking at barriers which may prevent development of competitive markets in services delivered by emerging technologies (such as battery storage); or which may prevent investment by regulated network providers in innovative technologies that could improve the efficiency of the regulated service. This work stream includes:

  • Ring-fencing review – Energy Council input into the ring-fencing guideline review which the Australian Energy Regulator is conducting in 2016. This process will update the guidelines for how electricity networks should separate any business activities in the competitive service markets, so they are not able to gain any unfair advantage.

  • Competition in services – Development of a rule change for consideration by the Energy Council in mid-2016, which considers changes that could facilitate greater competition in relation to services provided by emerging technologies such as battery storage behind the meter. The rule change will consider recommendations in the Australian Energy Market Commission’s (AEMC) review on battery storage and how processes such as service classification could be improved.

  • Stand-alone systems/Micro-grids – Development of a consultation paper seeking stakeholder feedback in the second half of 2016 on the merits of developing a national framework for stand-alone systems and key issues which could be considered as part of that framework. This would include the types of systems which could be included, what the framework could cover and the role of market institutions. This work also relates to the work already underway by the Commonwealth on non-interconnected systems i.e. Western Australia and the Northern Territory.

  • Battery Registration – In May 2017, Energy Council officials released a consultation paper on a draft cost benefit analysis of a national battery storage register.  For more information on this consultation, click here.

  • Standards development for batteries – Working with Standards Australia to develop a roadmap for completion in September 2016 which identifies standards which are needed to facilitate the safe installation, connection, maintenance, operation, and disposal of batteries.

  • Consideration of other barriers –Analysis by officials of whether networks are placing any unnecessary barriers in the way of alternative service markets developing through issues like connection arrangements.

Efficient Investment and Operation of Electricity Infrastructure

This work stream assesses the flexibility of existing network regulatory arrangements, particularly the economic framework, to support the delivery of the National Electricity Objective as it shifts from a centralised system to a more decentralised one.  

This work stream includes:

  • AEMC monitoring – Tasking the AEMC to monitor and report annually on technology trends and changes in market conditions which will provide an early indication of any emerging risks to the effective operation of the economic regulatory framework.

  • Incentive frameworks – The first phase of work, is to undertake research, in the context of the evolving market, on the merits of different network investment incentive approaches and alternative regulatory models that might be options , in the event that AEMC monitoring finds major reforms are needed.

Empowering Consumers

This work stream will review what consumer protections should apply to customers who use emerging technologies, such as batteries and PV, to provide alternative supply arrangements.

This work stream includes:

  • Public consultation – Development of a consultation paper seeking stakeholder feedback on appropriate protections for consumers who invest in emerging technologies to obtain all or part of their energy supply. It will consider consumer protections for alternate energy supply arrangements including those that fall outside the National Energy Customer Framework noting that some emerging technologies are presently addressed under the Australian Consumer Law and local Fair Trading schemes.

This work builds on previous advice provided to Ministers in July 2015, which highlighted that different protections apply depending on how the service is provided (including whether it is a lease or power purchase agreement).

Ongoing Power System Security

This work stream is focused on consideration of the work AEMO is doing on whether current arrangements for managing power system security are adequate to integrate large volumes of intermittent generation.

  • AEMO review of current arrangement – AEMO is preparing advice for Energy Ministers on power system security and possible policy responses in light of growing penetration of renewable energy and the operational challenges this is creating in states like South Australia.

  • Monitoring of Optional Firm Access –Relates to a recent Energy Council tasking of the AEMC to monitor the need for Optional Firm Access (OFA).

Council Priority Issue: