Change to rules needed 

The Property Council, together with the City of Sydney and the Total Environment Centre recently proposed a rule change to the National Electricity Rules in July 2015 through a submission to the Australian Energy Market Commission (AEMC).

The rule change requires distribution network providers to pay a Local Generation Network Credits (LGNCs) to embedded generators. The LGNC would be calculated from the estimated long term cost savings that the embedded generators provide to the network, and would be set at zero where there was no benefit. 

The Australian Energy Market Commission held several stakeholder engagement sessions and commissioned some research to underpin the draft determination that was released in late September. 

However, the research commissioned by the AEMC disregarded the several outcomes of the consultation. For example, the Institute of Sustainable Futures (ISF) recommended a lower limit on generators of 10kW as well as excluding existing generators from the payments based on extensive research. Without these limits, the LGNC would not be cost effective. The Property Council, City of Sydney and the Total Environment Centre all agreed to these limits. 

The AEMC also failed to include any other form of generation aside from solar in their modelling. The ISF’s modelling included photovoltaics, wind power, cogeneration, hydro and bioenergy all of which would contribute to make LGNCs more worthwhile.

The AEMC’s draft ruling rejects the proposal to introduce LGNC and as an alternative suggests a “preferred rule” which requires Distribution Network Service Providers to publish a system limitation report on an annual basis. This information is already largely available through the network opportunity maps and mandating its release by network providers will do little more than increase their reporting burden.

We have urged the AEMC to reconsider this position and continue to engage with stakeholders to address this current failure in the energy market.