Investigating local network charges and local electricity trading

This project is supporting studies, consultations and virtual trials to inform the development of alternative charging methods for local renewable energy projects and potential changes to electricity market rules.

Lead organisation:
Institute for Sustainable Futures, University of Technology, Sydney
Project partners:
Moira Shire Council , Swan Hill Rural City Council , Byron Shire Council , Willoughby City Council , City of Sydney , Wannon Water , Ergon Energy , Powercor Australia Ltd , AGL Energy Ltd , Total Environment Centre , NSW Government Renewable Energy Advocate
Location:
Sydney, NSW
Technology:
Hybrid and enabling technologies
ARENA program:
Emerging Renewables Program
Start date:
June 2015

Need

Network businesses do not currently offer a tariff to reflect partial use of the network and retailers do not currently offer a standard netting off service, called local electricity trading (previously known as virtual net metering), for multiple sites.

Current arrangements mean proponents typically match local generation with the lowest onsite electrical load to minimize grid exports. This affects economies of scale and operating efficiency and has stopped some projects going ahead.

Applications for rule changes to the National Electricity Market (NEM) must be supported by robust evidence and data. There is a need to investigate the potential impact of proposed changes on the NEM.

Project innovation

Five virtual trials of local network charges and local electricity trading will be conducted in NSW, VIC, and QLD to support two potential NEM rule change proposals.

Local network charges are reduced network tariffs for electricity generation used within a defined local network area. The tariff could reduce the network charge portion of electricity bills for local generators, recognising the generator is using only part of the electricity network and reflecting any long term network cost reductions.

Local electricity trading would allow generation at one site to be netted off at another site on a time-of-use basis, assigning exported generation at one site to another nearby site. This will reduce the combined energy and retail portion of electricity bills for local generation.

Benefit

The trials and studies will significantly increase industry understanding of local network charges and local electricity trading. They will establish a methodology for calculating local network charges, investigate metering requirements for local electricity trading and establish economic modelling for the benefits and impacts of both changes.

If passed, the proposed rule changes will improve opportunities for small-scale electricity generators to distribute and sell electricity locally using cost-reflective pricing arrangements. This could encourage the development of more community based renewable energy projects.

More information

Media release – 15 June 2015: Investigating more flexible charges for local renewables

Contact information

Alison Atherton, Research Principal, Institute for Sustainable Futures, University of Technology, Sydney
Phone:
+61 2 9514 4909
Email:
Alison.Atherton@uts.edu.au