Windfall for households with rooftop solar! Thus reads the headline of the Herald Sun’s hot take on the long-awaited final report from the Energy Security Board on the redesign of National Electricity Market and the critical reforms that will underpin it.
It’s a hope-filled sentiment at a time when the future introduction of solar export tariffs looms over investors in residential solar systems like a dark rain cloud. But is it accurate?
The trilogy of weighty reports produced by the ESB, and publicised by the Morrison government through a kaleidoscopic media filter on Thursday, certainly paint an optimistic picture for the future of distributed energy resources, or DER.
The focus has been on the proposed frameworks that would reward owners of rooftop solar, battery storage and EVs for their flexible demand and generation – more money for the solar they export to the grid, if they export it at a time when it’s needed by the grid, for example.
And rightly so. After all, “the largest generator in the [National Electricity Market] is now owned collectively by customers – and sits on their rooftops,” the report (Part A) says. “A considered and coordinated approach is necessary to support effective integration.”
But while the ESB is strong on the potential benefits of the DER and flexible demand – including modelling that values the successful integration and harnessing of DER at $6.3 billion – it does little to pave the way to this pot of gold.
Rather, the ESB’s DER Integration Plan sets out a bunch of critical reforms – albeit well recognised and in some cases already underway – which will fall mostly to the states and various regulatory bodies to nut out while they play catch up with accelerating DER uptake and technological evolution.
In the report’s own words, this is a plan “to integrate the necessary evolution of roles and responsibilities of actors across the system into a suite of technical, market and regulatory reforms from now until 2025.
“Recognising the different stages in the elements of reform, the Plan sets out activities across new and existing workstreams, including contributions from market and industry bodies.”
So after two years, what the ESB is saying is there is a lot of super complicated work ahead before we can hope to get anywhere near vision of rooftop solar-driven energy democracy that former Australian Energy Market Operator boss Audrey Zibelman described in 2019. And somebody else had better get on and do it.
To its credit, what the plan does achieve that hasn’t been done before – at least not at a nationally coordinate level – is to set some target dates for some of the more pressing reforms required to get the ball rolling on DER in Grid 2.0.
Or, in report speak, “The Plan sequences key dependencies to ensure these reforms are introduced quickly, and timed to address urgent needs associated with the rapid take-up of DER. It highlights where interim measures may be introduced to support the industry through the reform process.”
One example is the the recommendation for the first steps towards phasing in of dynamic operating envelopes as “the long-term feature of the NEM DER ecosystem,” including “mandatory compliance for new solar PV and storage systems by 2025.”
This just leaves DNSPs and the AER and the AEMC and inverter and meter companies to work out exactly what “mandatory compliance” with DOEs entails, and how to police it.
It’s a similar story on the recommendations around AEMO gaining better “visibility” of the DER installed on the grid. It’s one thing to aim to do that, and quite another to get metering companies, DNSPs and consumers all on the same page.
This is not to criticise the ESB. All of this is enormously complicated and it does help to have it all set out in a plan. And to this end, the response from industry has been very positive. The question is, was it worth the two-year wait?
Ultimately, the feedback on the ESB’s recommended DER reforms, in and of themselves, has been: we absolutely agree with the substance, but we’re not really any clearer on how – or when – these reforms will all come about and how to make sure the right parties get the right benefits.
“The ESB’s proposed reforms to system strength and a roadmap for distributed energy resources reform are welcome, and the industry looks forward to working with market bodies and governments to progress these overdue and important reforms,” said the Clean Energy Council CEO Kane Thornton.
But some industry groups were less complimentary when weighing up the ESB’s report as a whole, including its controversial recommendations for a capacity market and for a congestion management model (you can read about these here and here).
“These are the worst possible policies at the worst possible time,” said Smart Energy Council chief John Grimes.
“The latest United Nations climate report has provided the starkest warning yet that we must stop funding coal projects and instead dramatically increase support for solar and the Morrison government is heading in the exact opposite direction.
“The Morrison government has no climate policy, no electric vehicle policy and the same emissions reduction target that it had under the Abbott government in 2015.”
“Angus Taylor should stop verballing state and territory energy ministers and instead work with them to build a strong, smart energy economy,” Grimes said.
Solar Citizens energy strategist Stephanie Gray said the Morrison government’s “spin machine” was working in overdrive to sell the ESB report.
“Slugging taxpayers to pay to keep coal-fired power stations running for longer is in the interest of big fossil fuel companies, not consumers,” Gray said.
“While the Morrison government touts ‘technology not taxes’, under their leadership solar households will be charged for exporting clean energy to the grid while also having to fork out to keep big coal running.”