CEC: AEMC “handballs” microgrid regulation to states

microgrid

The Clean Energy Council has accused the Australian Energy Market Commission (AEMC) of “handballing difficult microgrid regulations to the states” in its draft report into regulating microgrids.

The AEMC is currently undertaking a review into the regulatory arrangements frameworks for stand-alone power systems, as requested by the COAG Energy Council.

The review looks at the law and rule changes required to allow local distribution network service providers to use stand-alone power systems (SAPS) where it is economically efficient to do so. The first priority was to develop a national framework to facilitate the transition of grid-connected customers to SAPS provided by the current distribution network service provider, and the second priority is to develop a national framework for the ongoing regulation of third-party SAPS.

The draft report sets out the Commission’s initial views on a regulatory framework that would require community groups, local councils, developers and other third party providers of stand-alone power systems to comply with jurisdictional regulations on reliability, safety and consumer protections, based on nationally agreed principles. Currently, if customers obtain their own supply using a stand-alone power system, those systems are subject to jurisdictional legislative frameworks that vary in their comprehensiveness.

Related article: AEMC recommends small business install SAPs for regional customers

The AEMC is recommending a tiered framework to allow for appropriate consumer protections to be provided in a proportionate manner while avoiding unnecessary costs, rather than a one-size-fits-all approach.

The CEC says a single regulatory framework covering the entire spectrum of stand-alone power systems was always going to be a challenge, dealing with this complexity by proposing three regulatory frameworks.

At the big end of the microgrid spectrum is what the AEMC refers to as ‘Category 1 microgrids’, which supply a city or a large town and are big enough to support retail competition. Category 1 microgrids will be subject to the National Electricity Law and Rules.

Related article: ARENA launches DER integration program

At the small end of the spectrum are ‘Category 3 microgrids’, which supply only a few customers or where energy is sold to one customer. Category 3 microgrids will be required to meet basic consumer protections and technical standards determined largely by the states and territories.

“It is the ‘Category 2 microgrids’ that will present a challenge for policy makers and regulators,” the CEC says.

“These are microgrids that range in size from a few customers to several hundred in a small town. They will generally be vertically integrated. Regulations will need to be flexible and fit-for-purpose.

“The AEMC has handballed this challenging task to states and territories, which it considers will be best suited for this task.”

Read the full draft report here.