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Key reforms unlocking Australia’s renewable energy potential

As the Clean Energy Council’s recently released report Clean Energy Australia 2021 showed, 2020 was another record-breaking year for the Australian renewable energy industry. However, as the level of clean energy in Australia has grown in recent years, it has become increasingly clear that the current system is no longer fit for purpose.

Rules and regulations that were designed to distribute electricity from large centralised generators are now wholly unsuitable for an energy system that increasingly relies on electricity from wind and solar farms and rooftop solar systems.

These problems have been recognised by Australia’s energy market regulators, who are working on a number of key reforms that will fundamentally alter the way electricity is produced and distributed in Australia.

Upon completion, these reforms should deliver an energy system and set of rules that better support Australia’s energy future, where large-scale renewable energy and storage is supported by an extensive network of rooftop solar installations and a growing suite of distributed energy resources (DER) technologies.

Fundamental change

The most important reform taking place this year, and potentially in the history of the Australian electricity market, is the Energy Security Board’s (ESB) post-2025 market design. This review, which was commissioned by the COAG Energy Council in March 2019, is an all-encompassing examination of the National Electricity Market (NEM). It will redesign the market to ensure that the transition from fossil fuel to renewable generation is done in a managed and streamlined way that delivers the best outcomes for Australian energy consumers and provides confidence for clean energy investors.

In January 2021, the ESB released a directions paper outlining the reforms that it will pursue as part of the post-2025 market design. These include:

  • managing the entry of new resources into the market and the orderly exit of fossil fuel generation
  • developing fit-for-purpose essential system services and scheduling and ahead markets
  • incorporating the integration of DER and establishing a two-sided market with associated scheduling, technical, regulatory and consumer protection reforms
  • developing the transmission grid and access to support investment and reduce overall costs.

Many of these reforms are the same as those that the renewable energy industry has been calling for for several years. If they are fully implemented, they will go a long way towards resolving persistent challenges related to grid connection, network congestion and regulatory and policy uncertainty.

In addition, the reforms should help to create a mutually beneficial value structure for DER technologies that eases the strain on the distribution network, better compensates consumers and encourages the continued uptake of existing DER technologies and the future adoption of new ones.

The ESB is expected to deliver its final recommendations on the post-2025 market design in mid-2021, and the Australian energy sector is eagerly awaiting its release to see exactly what Australia’s future energy system will look like.

Reforming for a DER-led future

In addition to the work being done by the ESB on DER reform, the market bodies and distribution network service providers (DNSPs) have been undertaking a considerable amount of work to improve the integration of DER.

One such change is the potential for technical standards for new connections of solar PV, batteries and energy-exporting electric vehicles to be implemented through the National Electricity Rules. This will result in technical standards and processes – such as the recently published inverter standard AS/NZS 4777.2 and the Australian Energy Market Operator’s test procedure for short duration under voltage ride through – being incorporated into grid-connection agreements and enforced by DNSPs.

There are also many additional proposals from DNSPs and the market bodies in development, including new export limits, remote control of DER, charges for exports, new technology requirements and new tariff structures. Alongside the market bodies and DNSPs, the CEC is working with a coalition of consumer and industry groups to end unpopular grid-connection rules, such as static zero export limits, and ensure that more intelligent, dynamic approaches are introduced transparently and with the support of consumers and industry.

Reform ineffective without compliance

The CEC is also working to ensure that the burgeoning DER industry meets the expectations of Australian consumers. Considering the growing importance of rooftop solar and household batteries in Australia’s future energy mix, it is crucial that the industry maintains the trust of consumers and governments. The CEC has an important role to play in this area by continually working to lift the bar on quality and compliance within the industry.

As part of our Accredited Installer program, the CEC provides installers with all the latest industry developments through its continuous professional development (CPD) program. This requires accredited installers and designers to continually learn about the industry and upskill as standards and guidelines change. The CPD program is supplemented by a large range of other resources – including Toolbox Talk videos and Installer Night events – to provide additional guidance and information on the latest industry developments and updates.

The CEC also continues to introduce innovative new tools to further improve the quality and compliance of rooftop solar installations. These include the recently released commissioning checklist, which assists installers in ensuring that their installations pass commissioning tests and comply with all the relevant guidelines and requirements, and an upcoming digital platform that will help installers meet all their obligations relating to documentation and maintain a record of their installations.

For the few installers who don’t adhere to guidelines and standards, the CEC has a robust disciplinary process. In 2020, this resulted in more than 13,000 demerit points being handed out for non-compliant installations, 150 suspensions issued and the cancellation of accreditation for 47 installers.

Listen to Industry

The importance of reform to the future of Australia’s electricity system can’t be understated, so it is critically important that we take the time to get it right. Thankfully, they are separate from the ongoing madness afflicting energy policy, meaning that those with expertise, rather than political agendas, are responsible for plotting out Australia’s energy future.

Leaving reform to the market bodies working in consultation with industry is an increasingly novel way of working in the Australian energy industry, but it will result in far better outcomes for everyone.

By allowing those with intimate knowledge of the sector to lead the reform process, we can avoid the distortions and unintended consequences that have restricted the industry in recent years, clearing the way for a sustained acceleration of Australia’s renewable energy transition.