Properties at the edge of the electricity grid would cost far more to be served by energy companies than the occupants could afford if network charges weren’t averaged across all connected homes and businesses.
Sometimes it would be cheaper for the cord to be cut and an off-grid system be set up and maintained for the customer, but this would mean the property was not part of the network and thus couldn’t be paid for with regulated network revenue, so the customer would have to be charged the full cost.
WA’s Western Power has proposed a national electricity rule change to enable companies to replace an edge-of-grid connection with a stand-alone power system where it’s cheaper, and still consider it part of the network so the customer pays the same shared network charge. Such customers would still be cross-subsidised by others but by a lesser amount.
The Alternative Technology Association (ATA) supports the change overall. It will only apply in limited circumstances – existing connections that are very expensive to maintain – so is unlikely to appreciably compete with the existing market for private off-grid systems, which are generally only cost-effective where they are avoiding high connection costs.
However we’ve strongly recommended that customer protection regulation needs to be extended to affected customers, since they will still be customers of a mainstream energy utility.
We also noted that if networks will be taking this approach they need to pay special attention to educating customers in the operation of off-grid systems, and ensuring systems can accommodate a reasonable amount of load growth and variability, and have backup capability to enable sufficient supply in the event of component breakdown.
Click here to read the ATA’s submission to the Australian Energy Market Commission on Alternatives to Grid-supplied Network Services.