Energy network industry leaders call for reforms to the way electricity is paid for

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Energy network industry leaders have said that reforms are needed in the way electricity is paid for to ensure that the maximum benefit is made from increasing investment in rooftop solar and battery storage solutions.

Energy Networks Australia chief executive officer Andrew Dillon said that existing pricing, where the fee for network connections depends on how much grid power is used, is “fundamentally unfair” and ignores the fact that the cost of the grid is primarily driven by peak demand

Andrew Dillon

Speaking at an Energy Network Conference in Sydney, Mr Dillon said a combination of “carrots and sticks” is needed to change the system, which would involve encouraging energy consumers to shift their usage to overnight when demand is low, or in the future to midday, when renewable energy surplus will become available.

Mr Dillon said the key challenge to reforms is that there will be winners and losers in the short term, depending on the electricity usage pattern and the ability of users to shift their demand patterns to off-peak periods.

He said that if the change did not happen, everyone would lose out in the long term. He called for the government and industry to take leadership in managing the transition process.

Cost-effectiveness needed to drive change in consumer behaviour

Deputy Chair of the Energy Security Board Clare Savage said that policymakers identified the need for cost-reflective prices for the grid to drive change in consumer behaviour.  “Customers need the right price signals,” Ms Savage said. “That’s economics 101.”

But some players are calling for the industry to set the agenda and move ahead of policy. Greensync founder Phil Bythe said that the industry itself needed to get the ball rolling and called for regulators, network owners, and tech companies to work together to integrate solar and batteries into the National Energy Market and keep the grid stable.

Action needed to prevent breakdown of the energy network system

Dr Blyth warned that action needed to be taken now to avoid a breakdown of the energy network system in the future. He said that if nothing is done, the machine will grind to a halt. He warned that within two years, Sydney could reach critical mass, where too much solar power would be generated for the grid to handle, bringing the transmission system to a standstill.

Phil Blythe

Dr Blythe said that as things stand, there is no regulatory infrastructure in place to deal with this scenario, however, he said he hoped that within two years, some structures would be in place. He said that the time for testing, trials and “playing around the edges” was over and that the industry needed to be braver.

While excess solar production is being seen as a potential threat to the grid’s function, there are opportunities that are presenting themselves to investors. Mr Dillon said that one offshoot could be the budding hydrogen industry.

He said that given that certain parts of the network cannot yet handle the overflow of solar, opportunities exist in the hydrogen industry. He said that electrolysis could be used to convert hydrogen into water. That hydrogen can either be sold or stored in gas networks which offer storage capacity equivalent to 6 million Tesla Powerwall batteries.

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