This section outlines how the National Electricity Rules (NER) and the National Energy Retail Rules (NERR) impact neighbourhood battery ownership and operational models. The NER are accessible here.
At the time of the creation of the national regulatory framework, energy flows were not bidirectional. The regulators are currently in the process of reforming the NER to support distributed energy resources (DER) implementation and growth. A key part of this is adjusting the framework to accommodate battery services and ensure there is more clarity in how battery services fit in with traditional distribution services. While the NER is evolving, waivers can be obtained for some regulations if they are getting in the way of good outcomes for customers.
| RULE | RELEVANCE FOR NEIGHBOURHOOD BATTERIES |
|---|---|
| OWNERSHIP | |
| NER 6.17 Ring-fencing | DNSPs can only own the proportion of the battery that is used to provide network services (not energy retail services). This rule can be waived if in the best interests of consumers e.g. see waiver provided by AER to United Energy in December 2020 allowing it to lease storage capacity of pole-mounted battery units to a retailer partner as part of a trial |
| TARIFFS |   |
| NER 6.18.5 | Network tariff should reflect the long run marginal cost (LRMC) of providing the service to the customer |
| NER 6.18.4 | All customers with similar usage profiles must be charged similarly |
| NER 6.1.4 | Prohibits DNSPs charging for solar exports (this rule was changed in 2021) |
| NER 6.18.1C | Changes to tariff structures are allowed between regulatory periods if the total revenue from this tariff and related tariffs is no greater than 0.5% of the DNSPs revenue? |
| NER 11.14.1 Access, pricing and incentive arrangements for DERs | DNSPs required to provide export services; DNSPs can charge for exports. Commences 1 July 2022. Not occurring in Victoria until July 2026 |
| Â REQUIREMENTS OF DNSPs | |
| NER 5.13.2 | DNSPs must publish network constraint information in the Distribution Annual Planning Report (template provided by the AER). Only relevant for the high voltage (HV) network, not the low voltage (LV) distribution network |
| NER 11.142 Distributor-led SAPS | DNSP can own and list stand-alone power systems (SAPS) on its revenue asset base |
| NER 11.108 Register of DERs | Requires DERs to be registered on the AEMO DER register |
| NER 5.13A | DNSP obliged to provide zone substation load data to anyone who requests it |
| Customer export curtailment value (CECV) methodology (template provided by the AER) | Procedure for calculating value of customer exports enabled by a particular DNSP investment |
| DNSPs must procure services from providers in a contestable way | Prevents having a special business deal between the DNSP and the battery owner — it needs to be open to competition |
| BUSINESS MODEL | |
| NER 11.103 Five Minute Settlement | Creates a financial advantage for batteries over other slower-responding forms of energy supply |
| FCAS bids must be greater than 1 MW | Single neighbourhood batteries are generally too small to bid for FCAS, need to be aggregated |
| Fast Frequency Response markets | New FCAS value stream that will reward batteries (Aggregator must have over 1MW to register) |
| NER 11.145 integrated resource category (baseline release March 2023) | Simplifies registration for storage — allow storage to participate in a single registration category rather than two. Registered aggregators also able to provide ancillary services from generation and load |
| Efficient network investment | The benefits that all customers receive under a neighbourhood battery Initiative must outweigh the costs. |
| NER 3.8.3 load/generation aggregation | Generators or customers who wish to aggregate generating units or generating loads can apply to AEMO to do so |
| NER 6.6.2 Service target performance incentive scheme — STPIS | Incentive for DNSPs to maintain and improve reliability A battery could receive payment from a DNSP to improve reliability through this scheme? However, network reliability metrics do not currently include major event days (e.g. linked to severe weather events). |
| OTHER | |
| NERL | |
| Australian standards | |
| Comms — IEEE2030.5 and CSIP-Aus | |
| DNSP connection rules | |
| PROPOSED RULE CHANGES | |
| Transmission access reform | Financial incentives for batteries to locate where they’re needed most (i.e. for firming wind/solar) |
| Allowing virtual net metering | Would allow the neighbourhood battery to be used as virtual storage by customers |
| Changes to ring fencing | Allow DNSPs to own batteries and generate revenue from contestable markets |
| Reducing FCAS minimum to < 1MW | Original rule means neighbourhood batteries typically need to aggregate |
| Dispatchable capacity market mechanism to provide reliability services | |
| Level playing field with transmission connected storage | |
| Visibility of LV constraints and geographical regions requiring network services | |
| RIT-D | |
| ESB data strategy and flexible trading arrangement | |
| Distribution Network resilience | How it is defined and how costs can be recovered Recognising the resilience value of neighbourhood batteries |
| National Energy Objectives | State and Federal ministers have discussed incorporating (reducing) emissions into the NEO. This will shift the regulatory framework in favour of batteries and their contribution to decarbonisation. |
| Carbon pricing | Adding carbon incentives to NEM market operation |