Review of regulatory framework for flexible export limit implementation

  • Accepting submissions
Sector: 
Status: 
Date initiated: 
19 October 2022
Effective date: 
19 October 2022
Contact: 
General enquiries - Networks policy NetworkPolicy@aer.gov.au
AER reference: 
AER213647

Overview

The AER is undertaking a review to assess whether the current regulatory framework is appropriate for the implementation of flexible export limits by distribution network service providers (DNSPs).

Flexible export limits (as opposed to static limits) can allow for more electricity to be exported onto the grid by consumers, providing the opportunity for consumers to achieve greater value from their energy resource investments (such as rooftop solar and batteries).

This paper is the first step of what is anticipated to be an iterative process with regards to flexible export limits, given the rapid pace of change in the consumer energy resources sector.

The review forms part of the Energy Security Board's (ESB) Consumer Energy Resources implementation plan to effectively integrate consumer energy resources into the National Electricity Market (NEM). This review of the regulatory framework for flexible export limits is supported by the ESB, the Australian Energy Market Commission (AEMC), and the Australian Energy Market Operator (AEMO).

There are several concurrent processes underway that overlap with the AER’s review of the regulatory framework for flexible export limits, including the AEMC’s review of consumer energy resources technical standards, and the ESB’s interoperability policy directions paper.

A joint forum on the AER’s flexible export limits issues paper, the Energy Security Board’s interoperability policy directions paper, and the Australian Energy Market Commission’s CER technical standards review, was held on 24 October 2022.


Have your say

We are seeking written submissions on the flexible export limits issues paper to assist us in our decision-making. An online feedback session was held on Tuesday 15 November 2022 at 10am AEDT. Written submissions close 9 December 2022.


Background

The uptake of consumer energy resources, such as rooftop solar and batteries, is rapidly accelerating across global energy markets. Australia is leading this transition with the highest level in the world of rooftop solar penetration. This gives rise to a more decentralised electricity system, with consumers actively managing their own power, and provides opportunities and risks for the transition to a two-sided market. The implementation of flexible export limits can allow for more consumers to achieve greater value from their investments by increasing how much energy can be exported into the electricity grid at certain times, as well as offering an option for managing distribution network congestion. This review seeks to assist the ESB to ensure the existing regulatory frameworks for DNSPs provide effective guardrails to support further rollout of flexible export limits in a manner that protects and promotes the long-term interests of consumers.

The need for this work was identified in the ESB's final advice to Energy Ministers in July 2021 as part of its Post 2025 market design reforms. In October 2021, National Cabinet endorsed the reforms set out in the final advice. The advice provided recommendations across 4 key reform pathways to support a transitioning energy market, from one underpinned largely by coal fired generation to a market with more variable renewable energy.

One key pathway is ‘People’s generation – rooftop solar and other distributed energy resources’ which aims to effectively integrate consumer energy resources into the NEM. The review of the regulatory framework for flexible export limit implementation is one of many projects being progressed under this pathway. The ESB is coordinating the activities under this reform pathway through the Consumer Energy Resources Implementation Plan, which provides a three-year roadmap setting out the technical, regulatory and market reforms required to integrate CER.