Consumers to benefit as AER supports emerging technologies

The Australian Energy Regulator (AER) is paving the way for a competitive neighbourhood battery market to support the energy transition to renewables, following the release today of its Electricity Distribution Ring-fencing Guideline.

Ring-fencing separates monopoly network services from competitive energy services to deliver competition in energy services, and better outcomes and more choice for consumers.

The AER’s updated ringfencing guideline provides the regulatory frameworks and controls that will support two key emerging markets in Australia’s transitioning energy sector, the deployment of batteries, including community-scale batteries, and regulated Stand-Alone Power Systems (SAPS).

Providing a level playing field for batteries

AER Chair Clare Savage said the updated guideline establishes a level playing field for growth and innovation in batteries, that are important to supporting the energy transition.

“Community batteries are on the rise as regional towns and local government areas seek to power their communities from renewable energy,” Ms Savage said.

“Our role is to ensure consumers are better off in this transition.

“The battery market is relatively new, and all providers should have the confidence and certainty that they can compete on a level playing field to offer energy services.

“Without changes to our ring-fencing guideline, network businesses may unfairly compete in this market, which could damage it in its early formation,” she said. 

“At the same time, we recognise that network companies may have an important role in this emerging market. Our updated guideline includes a new, streamlined waiver process for eligible projects that address the risks to market competition and will speed up community battery deployment in the market.

“Through our guideline we will create an environment where consumer demand and competition will drive market innovation,” Ms Savage said.

More flexibility to improve affordability and reliability for customers

Ms Savage said the AER’s ring-fencing reforms also support the new rule to allow network businesses to move customers from a grid connection to a regulated Stand-alone Power System (SAPS), improving connection and reliability for customers, particularly those in remote areas.

‘SAPS are fast becoming a cheaper option than waiting for the replacement of old distribution lines,” Ms Savage said.

“The good news is that our updated guideline paves the way for faster deployment of regulated SAPS, as it allows network distribution companies to have a greater role in providing these stand-alone generation services.

“Our decision supports a network business’ choice to move a customer to a regulated SAPS where this is demonstrated to be a lower cost, more reliable outcome for all consumers.”

The ringfencing guideline was developed through consultation with the regulated network businesses, retailers, and consumer groups.

Issued date: 
3 November 2021
AER reference: 
NR 34/21
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