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AEMC handballs difficult microgrid regulations to the states

The most challenging areas of microgrid regulation will remain with states and territories if the pragmatic recommendations of the Australian Energy Market Commission (AEMC) Draft report into regulating microgrids are adopted.

The most challenging areas of microgrid regulation will remain with states and territories if the pragmatic recommendations of the Australian Energy Market Commission (AEMC) Draft report into regulating microgrids are adopted.

A single regulatory framework covering the entire spectrum of stand-alone power systems was always going to be a challenge. The AEMC has dealt with that complexity by proposing three regulatory frameworks, depending on the size of the system being regulated.

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.

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. Where the customer bought the system outright and there is no sale of energy, there will be no additional energy-specific regulations beyond those relating to safety.

It is the “Category 2 microgrids” that will present a challenge for policy makers and regulators. 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.