The changing energy landscape
Changes in the generation mix, advancements in technology and evolving consumer needs are causing South Australia’s electricity distributor to re-think its approach to future investments, the augmentation of its network and its consumer pricing strategies. New opportunities exist, as identified by the Australian Energy Market Operator in its 2018 Integrated System Plan, for consumers to benefit from the time of use tariffs as the continued development of distributed energy resources is complemented by growth in residential battery storage systems. In addition, consumer investment in the localized generation is presenting new challenges for grid management.
Case study: SA Power Networks
SA Power Networks faces the challenge of network stability issues, caused by increasingly high solar penetration and generation in South Australia.
With over 30% of its customers exporting electricity back into the National Electricity Market (NEM) through its distribution network, SA Power Networks is proposing to offer appropriate price signals to its customers to smooth out the network’s demand profile. This, in turn, should defer the need for network investment or solar curtailment.
From 1 July 2020, SA Power Networks is proposing to assign all existing customers with interval meters and customers who receive a new or replacement interval meter to one of two new tariffs:
- Time of use tariff as the default tariff for customers without batteries or solar panels; or
- Prosumer demand tariff aimed at customers with batteries, solar panels, and electric vehicles.
The new tariffs reflect the shift in customer profile over the last few years to acknowledge the fact that an increasing proportion of customers is exporting electricity into, as well as consuming electricity from, SA Power Networks’ distribution network.
Customers will pay lower prices during the ‘solar trough’ period (i.e. the period from 10 am to 3 pm during which solar generation in South Australia exceeds localized demand), to utilize power and recharge their batteries. Customers with batteries will then source required electricity from their batteries during the peak period from 5 pm to 9 pm.
Who will benefit from the new tariff structures in South Australia?
The new tariffs will empower consumers to:
- take charge of their electricity usage and bills;
- make informed decisions to reduce their electricity charges by planning their electricity use in advance;
- make the most of their batteries and solar panels; and
- consider future investments in more efficient plant and distributed energy resources to reduce overall electricity use and costs.
In turn, reducing peak demand across the network will reduce the need for future augmentation and investment by SA Power Networks, which will lead to lower long term prices for all of its customers.
We anticipate that, as solar penetration increases in the other NEM jurisdictions, other distribution business may need to follow suit.
Where to from here for solar penetration in South Australia?
Should the new tariffs be endorsed by the Australian Energy Regulator, it will be a matter for electricity retailers as to whether the benefits of those tariffs are passed on to customers. We anticipate that consumer pressure will be brought to bear, but if retailers do not come to the party, then a regulatory change may be required to see this customer-centric solution fully implemented.