Despite all the talk of the difficulties and costs of managing increasing amounts of rooftop solar on the grid, distribution network companies are currently using only around 1% of their total expenditure to provide consumer export services throughout the year.
This surprisingly small number comes from the Australian Energy Regulator’s second annual report into the performance of distribution network service providers (DNSPs) in delivering export services to the grid, published on Thursday.
The report, based on the 2023-24 operational and performance data of the 14 DNSPs on the National Electricity Market (NEM), analyses the performance of networks in providing services for embedded generators, like residential solar and batteries, to export their electricity.
It’s full of interesting statistics, including that in the 2023-24 financial year, more than 10% of energy delivered by DNSPs was sourced from network customers with small-scale consumer energy resources (CER) – largely rooftop solar.
The report also finds that 27% of all NEM network customers now use export services, up from 25% in 2022-23, while 4% of customers have home batteries. More than 16% of new rooftop solar installations included a battery over that time.
But it is this finding – “DNSPs continued to use only a small proportion (about 1%) of their total expenditure to provide export services throughout the year” – that catches the eye.
It has been argued for years, now, that non-solar households are subsidising the network cost of accommodating rooftop PV – an argument that helped inform the Australian Energy Market Commission’s decision to allow networks to charge for solar exports to the distribution system.
Why do they believe there is a cross-subsidy? Victoria University’s Bruce Mountain asked this question back in 2021, and answered it thusly:
“This is not entirely clear to me – they provide no substantive evidence of this – but the gist of it seems to be that they believe meaningful amounts of expenditure are being incurred to accommodate the exports of households with rooftop PV and that this expenditure is not being recovered from those households.”
More than three years later, and with two-way export tariffs coming (properly) into play in New South Wales in 2025, the AER report suggests there is still no meaningful amount of expenditure being incurred to accommodate rooftop solar – even as more customers than ever are exporting.
This could be because networks are not spending on accommodating rooftop solar, but rather relying on export limits and other methods of curtailment to manage increasing amounts of distributed PV on their grids.
As the AER report explains, DNSPs impose rooftop solar export limitations to ensure that any energy exported is within the network’s hosting capacity.
“Distribution networks have an intrinsic level of capacity to host a certain level of consumer energy resource exports within operational limits,” the report says.
“This is because network assets constructed for consumption services have the capacity to support some reverse power flow without additional investment.”
To manage this, the report continues, rooftop solar curtailment is sometimes necessary, usually set in place in the form of export limits – either static or flexible, voltage-response curtailment, and – in the case of emergency – the big solar button.
The report notes that the total amount of energy curtailed per customer by a DNSP would be a valuable metric for measuring export service performance – but, in general, DNSPs do not currently calculate these estimates.
For now, the best the regulator can do to get a handle on rooftop solar curtailment is to use a number of indirect metrics, summarised in the table below.
The most telling is the number of customers currently on a static export limit, usually set at around 5kW.
Another telling metric in how few customers around the NEM are on flexible exports, which – as Gabrielle Kuiper explains in an IEEFA briefing note published just this week, have been a huge success in South Australia, where they have been in place since 2023.
In South Australia, flexible exports have worked to double the amount of solar a household can export to the grid to 10kW in return for allowing the network to lower those export limits “periodically” to manage grid stability.
And Kuiper says the evidence shows that, even in rooftop solar saturated South Australia, very little network directed curtailment is being used.
“SA Power Networks modelling shows flexible exports will likely be set below the doubled 10kW limit only 2% of the time or approximately 50 daylight hours per year,” she says.
“This is extraordinary, especially given about half of households already have rooftop solar installed in the SA Power Networks area, and at times rooftop solar supplies more than the state’s total electricity demand.”
Kuiper says the extra energy can be used to partially displace large generators in wholesale supply, support local networks, and to stabilise the grid, unlocking an estimated $A5.08 billion in net benefits for all consumers to 2042, according to a Deloitte cost-benefit analysis.
On the other hand, the IEEFA report estimates that the delays to implementing flexible exports outside of SA has cost households installing new solar systems and those with existing 8-15kW solar systems a combined $35 million in 2023.
Which brings us back to network expenditure. According to the AER report, expenditure on enabling export services is “not a measure of export service performance,” but does indicate constraints relating to exports and DNSP activity to address or prevent export-related constraints.
Not surprisingly, the chart below on the 2023-24 expenditure reveals SA Power Networks as the DNSP to spend the most on providing better export services.
How can other DNSPs imrove? The report says consumers should expect to see the following outcomes of a “prudent DNSP” providing export services:
– An efficient level of export curtailment, although there may be cases where it is prudent to prevent constraints before they emerge.
– Prudent expenditure on solutions to prevent or rectify emerging or actual constraints. Depending on the cost and nature of the solutions, we would expect to see a business case for this expenditure as part of the DNSP’s DER integration plans and investment proposals, consistent with AER guidance.
– Evidence that implemented solutions yield their projected benefits (within a reasonable margin of error). For example, if a DNSP justifies expenditure on the basis that it would prevent or reduce export curtailment against a counterfactual, we would expect to see this benefit in the data.
If export customers had been given static export limits to manage a constraint, and that constraint was then removed, the DNSP would endeavour to remove the legacy limit.
Sophie is editor of One Step Off The Grid and deputy editor of its sister site, Renew Economy. Sophie has been writing about clean energy for more than a decade.
