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Australia’s electricity system is undergoing the most remarkable transformation. We have embraced rooftop solar so enthusiastically that we have the highest penetration of residential rooftop solar in the world, with more than 2.1 million Australian solar homes.

It will be challenging to integrate that much solar generation onto the grid as electricity distribution networks were not originally designed for it. We therefore need to change the way we manage solar and battery systems and how they interact with the grid. We’ll need new rules to mandate technological capability and new markets to make best use of the capabilities already at our disposal.

The Clean Energy Council has produced a report The Distributed Energy Resources Revolution: A Roadmap for Australia's Enormous Rooftop Solar and Battery Potential to address the challenges that distribution network service providers, regulators, governments and policy makers will face as we make the transition to a distributed energy resources future.

The report includes a number of recommendations to help facilitate the enormous potential for distributed energy resources:

Distribution network service providers

  • Distribution network service providers (DNSPs) should require inverters to have Volt-Watt and Volt-var response capability as a condition of grid connection for new DER systems.
  • DNSPs that have already adopted static zero-export limitations should invest in network intelligence and move toward dynamic export limitations so that they can utilise DER on their networks more effectively.
  • The CEC supports the development of multi-sided trading platforms as a means of enhancing system optimisation and customer benefits of DER uptake.
  • DSNPs should move toward more cost-reflective network tariffs, which could include time-of-use or demand-based charging.
  • Connection agreements should allow for the dynamic engagement of DER in the power system, and energy customers should have a right to initiate a review of their connection agreement and the opportunity to receive a better deal.


  • Volt-Watt and Volt-var response should be a mandatory requirement in the Australian standard for inverters (AS 4777.2).
  • Common standards, protocols and application programming interfaces (APIs) for communication with and between DER are being developed and should be supported and adopted.

Australian Energy Regulator

  • The Australian Energy Regulator should recognise the customer value and the important role of dynamic network intelligence for managing high levels of DER on the grid and should approve expenditure required by networks to enable this.

State and territory governments

  • Government rebate programs for batteries should include virtual power plant (VPP) capability requirements in their eligibility criteria.
  • State and territory licensing and other regulatory frameworks should be developed and strengthened to ensure that microgrids can proceed with protections for customers in place and barriers to community energy projects are removed.
  • State and territory governments should review their planning and development approvals systems to remove any barriers to developers of new suburbs aiming for very high DER penetration and minimal grid impacts using grid-connected microgrids and embedded networks.

Policy makers

  • Policy makers should establish market frameworks that will enable DER to supply new energy services. This could include new markets to support grid function, system optimisation (avoiding unnecessary investments) and system balance.
  • The Australian Energy Market Operator (AEMO) and the Australian Energy Market Commission (AEMC) should consider how aggregation of DER can be optimised using a single asset classification. Third-party aggregators should be able to provide wholesale demand response, export and frequency control ancillary services (FCAS) under a single classification.
  • DER should have the same market access as utility-scale assets. Where this market access is prevented by regulatory barriers, this should be reviewed by AEMO and/or the AEMC.
  • Policy makers should adopt alternative network revenue models and tariff structures and supporting retailer reforms that would enable increased grid-enabled value exchanges such as peer-to-peer (P2P) trading, network service provision by DER and VPP activity.
  • Policy makers should ensure that the distribution market operator (DMO) role (which would be a commercial role) is separated from the distribution system operator (DSO) role in electricity distribution market reform options being considered.