Ausgrid - Community Power Network Trial Waiver
The AER, through the Energy Innovation Toolkit, has granted Ausgrid a trial waiver from ring-fencing obligations (clause 6.17.1) of the National Electricity Rules for a period of 5 years to enable it to conduct a Community Power Network trial at Two Trial Sites. This waiver allows Ausgrid to own and operate 130MWh of battery assets. It will also enable Ausgrid to install up to 70MW of solar generation assets as a supplier of last resort if the competitive market is unable to provide this.
| Type: | Regulatory Sandboxing
A Regulatory Sandboxing mechanism is a framework within which participants can test innovative concepts in the market under relaxed regulatory requirements at a smaller scale, on a time-limited basis and with appropriate safeguards in place. Regulatory Sandboxing mechanisms usually also offer enquiry services, which provide innovators with informal guidance on existing regulation. The Energy Innovation Toolkit is a Regulatory Sandboxing mechanism.
Trial Waiver
The Regulatory Sandboxing trial waiver function allows the Australian Energy Regulator (AER) to grant a time limited trial waiver for eligible trial projects, exempting an innovator from having to comply with specified rules for a period of time to allow a trial to proceed. The Victorian Regulatory Sandboxing trial waiver function allows Essential Services Commission (ESC) to issue trial waivers providing time limited relief from Victorian energy frameworks. For more information, please see our trials page and the AER's Trial Projects Guidelines.
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| Sector: | Electricity |
| Segment: | Distribution |
| Status: | Decision Published - Trial Approved. Trial yet to commence. |
| Trial Period | 5 years |
| Region: | New South Wales |
| Service provider: | Ausgrid |
| Contact: | regulatorysandbox@aer.gov.au |
Overview
The AER, through the Energy Innovation Toolkit, has granted Ausgrid a trial waiver
A copy of the final waiver decision document is provided below.
This trial will involve stimulation of investment in rooftop solar on both residential and C&I rooftops to increase local renewable generation. Ausgrid will also install local battery storage to store and redistribute local generation within the trial areas to reduce the cost of energy to consumers during the evening peak. It is intended to manage the local network more efficiently and reduce the need for energy to come from outside the local area at higher cost. It is also intended to generate value by trading in energy markets and through lower network charges and will share this value back with customers.
Under current market arrangements, while all customers receive some indirect benefit from DER through lower wholesale market prices during high-solar periods, customers who don’t own their own solar and batteries miss out on the direct benefits that are available come to those who do. The trial will assess whether a shared model can extend these direct benefits to customers who may face structural barriers to installing solar and batteries, including renters, apartment owners and commercial and industrial sites.
The trial was approved under the AER’s regulatory sandboxing
Ausgrid originally sought a waiver from the rule relating to the ability to reopen its revenue determination to enable it to recover costs from customers (NER cl. 6.6.5). Their application also noted their intention to apply for a future waiver from ring-fencing requirements which constrains DNSPs from offering certain services.
Section 18ZT(2) of the NEL states that the AER cannot grant itself a trial waiver
As such, this waiver is only to Ausgrid from clause 6.17.1 of the NER at the Two Trial Locations for a period of 5 years, subject to conditions.
The AER’s grant of the waiver is subject to seven binding conditions designed to ensure the full value of the trial is captured while safeguarding consumer, market, competition, system and technical outcomes. These conditions were informed and shaped by stakeholder feedback.
The trial conditions include:
- Comply with remaining procedural obligations: Where compliance with a procedure or guideline is a rule requirement, the AER is able to waive compliance with that requirement and require compliance with the remainder of the guideline or procedure as a condition of granting the trial waiver
The Regulatory Sandboxing trial waiver function allows the Australian Energy Regulator (AER) to grant a time limited trial waiver for eligible trial projects, exempting an innovator from having to comply with specified rules for a period of time to allow a trial to proceed. The Victorian Regulatory Sandboxing trial waiver function allows Essential Services Commission (ESC) to issue trial waivers providing time limited relief from Victorian energy frameworks. For more information, please see our trials page and the AER's Trial Projects Guidelines.. As a condition of this waiver, Ausgrid is required to comply with all other requirements of the Ring-Fencing Guideline with respect to the Trial Sites and Ausgrid’s operation of its network outside of the Trial Sites.
- Requirement for a Third Spatial Energy Plan Location: Ausgrid must publish a Third Spatial Energy Plan for another location, which is not subject to this waiver, for the benefit of the competitive market to engage with to install and coordinate CER/DER. The inclusion of this third site is intended to provide a point of comparison and support analysis of whether the trial’s outcomes are driven by local conditions, the trial model or a combination of both.
- Reporting: Reporting conditions are important to allow the value of learnings to be captured and shared with the market, and to aid future policy formulation. These regular reports will allow the AER to monitor progress of the roll out, issues and have visibility of complaints and emerging issues, and have visibility of key learnings.
- Publishing of Spatial Energy Plan: Ausgrid must publish a Spatial Energy Plan for Trial Sites and the Third Spatial Energy Plan Location, every six months after the trial start date on their website.
- System operation: This condition requires Ausgrid to proactively engage with AEMO in respect to any requirements that come into effect during the trial period and promptly implement any necessary changes to ensure ongoing compliance
- Exit Strategy: The AER has included a condition to this trial that, at trial end, Ausgrid will need to determine the future of the assets installed under the waiver. this condition ensures that customers are not disadvantaged by the treatment of assets once the trial ends
- Competitive Tendering: This condition requires Ausgrid to engage with the competitive market to provide the commercial aspects of its trial (including battery installation and procurement of any solar or battery assets).
Ausgrid initially also sought a waiver from NER clause 6.6.5 relating to reopening its 2024–29 distribution determination for capital expenditure so that it could recover trial costs from its customers. However, the AER is unable to waive this clause.
Ausgrid will have to decide within this current determination period (2024-2029) how it will fund the trial. It may seek additional funding to support the trial in future as part of its next reset determination. This will likely require consideration about service classification and expenditure recovery as part of that future regulatory determination process. In the current framework, in certain situations, Ausgrid can attribute project costs to the regulatory asset base (RAB) and these situations can still occur during the trial. As this decision does not make a determination about service classification or expenditure recovery, the AER reserves its rights to make an assessment on any future expenditure claim.
Ausgrid is also able to source external funding for this trial or provide their own funds.
Key trial documents
Submissions
We released an Issues Paper and publicly consulted on Ausgrid’s trial waiver