Why we need to use the system smarter

It’s a new world. Change is coming fast to the power system and this will affect every single Australian during the next few years. We are now moving toward a network-wide future of cheaper energy and action that also lowers carbon emissions. At the same time, we need to keep power affordable, sustainable and secure as we implement a new way of operating the power system to deal with energy flowing both to – and from – consumers.

The system needs to evolve to allow power to flow both ways. As more consumers want to buy and sell more solar and other renewable power to and from the grid, we have imposed tough new obligations on power companies so they will make their networks smarter and more efficient. This will limit solar waste and benefit both the grid and consumers. It will also make room for more solar from Australia’s growing PV base and precipitate smarter investment. These essential reforms will also help decarbonise the economy, pave the way for increased battery uptake and investment, maintain the value of solar investments and lay the foundations for a renewable energy future.  

Increasingly more households are not able to export their solar energy because of daytime ‘traffic jams’ on the network. This has meant some people who had energy they wanted to sell to the grid couldn’t get access because too many other people wanted to do the same thing at the same time.

To prevent these traffic jams and avoid the system reaching its technical limits, we are requiring networks to change the way the grid operates so that is genuinely a two-way system in which customer solar and /or battery exports are just as important as power sent to your house from old-world large-scale generators.

This is just one of many innovations currently underway including:

  • Better, more affordable battery storage - The use of utility-scale energy storage, in addition to consumer-owned batteries, to act as a ‘solar soak’ to use excess distributed PV generation. Being developed by the a number of parties in the energy sector.
  • Technical standards - Improving performance standards so all distributed energy resources  installed can keep operating through disturbances. Changes to the rules now being implemented.
  • Load shifting - making the existing grid work harder and smarter by spreading the grid demand for exports through incentives to avoid peak times. Under these most recent smart solar reforms, distributed energy owners will be able to earn more when demand is high and supply is lower but earn less when the grid is most congested. This will depend on the circumstances of their individual network and won’t be compulsory. Smart solar reforms to change the energy rules developed by the AEMC

Aside from costing more both individually and collectively and slowing down decarbonisation of the energy sector, failing to invest in such changes would threaten the security of our electricity, making outages more frequent and impacting business and consumers. This is a result not just of network connections, but also the types of energy being generated and sent out through the towers, poles and wires to our homes and businesses.

The AEMC smart solar reforms

The rules governing the National Electricity Market (NEM) were changed in August 2021 as a result of the final determination of the Australian Energy Market Commission to get more small scale solar into the grid and support the growth of batteries and electric vehicles.

These reforms provide a long-term, sustainable pathway for the future of our electricity grid. They place new obligations on power network companies to make their networks ‘smarter’. This means they will become accountable for getting their systems solar- and battery-friendly so everyone can benefit from this leap forward in technology.

At the same time, reforms will pave the way for solar owners to be rewarded for managing their energy in ways that minimise solar wastage, put downward pressure on prices and substantially help to decarbonise our economy. This is a long-term sustainable plan to help us navigate a new energy future.


    The call for reform 

    The AEMC first identified the need for reform in 2019. We flagged that the rules must keep pace with the amount of distributed energy coming into the system and could better support integrating these new technologies so that all electricity users can benefit from them. Since then, we have been collaborating extensively as part of the Distributed Energy Integration Program about the issues facing the system and how we could adapt. Community groups have recognised the need for change and formally asked us to change the energy rules. The final reforms adopted were in response to rule change requests initiated by groups including the Total Environment CentreSt Vincent de Paul Society of VictoriaAustralian Council of Social Services and SA Power Networks.

    Smart solar: the reforms at a glance

    • New obligations on power network businesses to support energy flowing both ways. Includes a performance framework, mandatory reporting on how they are delivering on expectations to deliver more solar and removing blanket export bans.
    • Power network companies will be able to offer a range of options – including a basic free service – to encourage solar owners to limit solar waste, save money and benefit the grid. Those choosing paid plans could earn more for solar export at some times and less at others but they’ll have more opportunities to earn and save.
    • Australian Energy Regulator has oversight. All new network plans will be scrutinised and signed off as being in consumers’ interest. Networks would have to consult widely and test and trial the options they put forward.
    • No new pricing plans for existing customers before July 2025 giving customers more certainty.

    These changes to the energy rules will embed distributed energy into the power system to benefit all energy consumers – from existing and new renewables customers to customers who are yet to make that investment and customers who are not able to access distributed energy resources.

    By changing the incentives in the system, over time more new customers with distributed energy will be able to connect to the grid and existing customers can access the grid to export if they choose. All this will be done so that all energy users benefit from distributed energy resources – whether they have them or not.

      Why we need to act now

      It will take time to implement the smart solar reforms, so planning ahead means we can prepare in an orderly way and give everyone time to have their input into the plans to be developed by networks, adjust to any change and make sure transition plans are in place. We want to avoid everyone paying more for crisis solutions further down the track.

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