Empowering Consumer Energy: Strengthening Competition and Regulation in Australia’s Energy Transition
Competition in the rollout of Consumer Energy Resources (CER) has fostered innovation, consumer choice and lower prices across rooftop solar photovoltaic (PV), batteries and electric vehicle (EV) charging. This has underpinned significant consumer demand, with Australians leading the world in the adoption of PV and behind-the-meter home batteries.
More than one-third of homes nationwide already have solar panels installed, spending over $20 billion since 2018. Rooftop PV uptake is set to accelerate and be increasingly coupled with battery installations, enabled by competition and innovation in the provision of these products and services.
This uptake is challenging the traditional role and business models of the regulated monopoly Distribution Network Service Providers (DNSPs). In response, these regulated monopolies falsely claim that CER is causing volatility, but have been failing in their fundamental responsibility to effectively manage the grid – and are now seeking to benefit from owning these assets themselves. This has led to the weakening of regulation which they are subject to – in particular, ‘ring-fencing’ arrangements – which allows these businesses to encroach on competitive markets.
This report by Nexa Advisory recommends urgent action to uphold and strengthen the regulatory measures that preclude DNSPs leveraging their monopoly position to deliver services which can otherwise be delivered competitively. This would ensure that Australian consumers can fully realise the benefits of competition and innovation in CER.
We are seeking urgent attention and action on the following key recommendations:
Recommendation 1 – Strengthen enforcement of the existing ring-fencing provisions
The Australian Energy Regulator (AER) must uphold current ring-fencing arrangements and clarify their application to non-network investments such as EV charging infrastructure and distribution-scale batteries.
Recommendation 2 – Enhance the ring-fencing waiver process
The AER should cease the consideration of further waivers until it assesses the impact of waivers already granted. This would allow time to assess the effectiveness of these models before further waivers are granted, such as for public EV charging.
Recommendation 3 – Undertake an independent review of distribution networks and address the capex bias
It is well understood that DNSPs have a natural incentive to invest in capital expenditure. Therefore, to avoid inefficient network asset growth in the current cost of living environment, the AER and other state regulators must provide better regulation and oversight of regulated capital expenditure by DNSPs.
Recommendation 4 – Address other barriers to facilitate CER uptake
Enforce obligations for DNSPs to share granular data on network operations, hosting capacity, and constraints. This is critical to enabling competitive, low-cost solutions and avoiding unnecessary network investment.
The AER must also require DNSPs to standardise and streamline processes for new network connections, enforcing penalties for delays, and to modernising tariffs to reward CER across all customer segments.
Read our full report here: Empowering Consumer Energy