Solar Reforms To Support Virtual Power Plants

According to the Clean Energy Council, 23.5 per cent of Australia’s clean energy generation in 2020 came from small-scale solar (systems up to 100kW).

With rooftop solar forecast to double over the next decade, concerns have been raised — by industry, consumer and environmental groups, and other experts — that the current power system will not be able to cope with the volume of solar.

The Australian Energy Market Commission (AEMC) recently finalised reforms to address these concerns and support small-scale solar customers exporting into the electricity grid. The rule changes will cater for the growth of distributed energy resources (DER) such as solar, batteries, electric vehicles (EVs) and smart energy management systems like Karit’s virtual power plants.

These reforms are set to transform the energy system, with clear obligations for power networks and rewards for solar owners who limit solar waste.

Why reform is needed

The needs of our power system are changing as more and more Australians put solar on their roofs, install batteries and embrace new technologies. Our current system was designed for a one-way flow of power to homes and businesses, but it now needs to cater for a two-way flow.

Naturally, solar owners want to export any excess energy they’ve generated back to the grid. This is mainly in the middle of the day and doesn’t match peak demand times for electricity. So, it puts stress on the network and any excess renewable energy goes to waste.

As a result, some power networks have started to block solar exports in areas where there is congestion. Not only is this a waste of solar power and limits our ability to reduce emissions, it’s simply not a sustainable model.

Australia’s electricity grid will also need to support the uptake of EVs, which are set to become the primary driver of increased energy consumption. According to a CSIRO study, EVs could account for at least 30 per cent of new car sales by 2035 and 100 per cent by 2050.

The AEMC’s smart solar reforms, which were finalised on 12 August 2021, were designed to help integrate DER including solar into the electricity grid. The onus will be placed on power networks to reduce congestion by running their systems smarter rather than simply investing in costly infrastructure upgrades. The reforms serve the long-term interests of consumers including price, quality, safety, reliability and security of supply.

What this means for solar owners

Power networks will no longer be able to place blanket bans on solar energy exports. In fact, they will be able to incentivise solar owners who limit solar waste and help the grid. Although they’re not obliged to do this.

You will still benefit from putting solar on your roof. It’s just how you get paid will be different. As a solar customer you won’t have to pay if you don’t want to. Pricing schemes will have to include a basic free export option.

If you choose a paid plan you might earn more at some times and less at others but the AEMC has stated that there will be more ways to earn and save under the reforms. For example, you could earn when you use batteries or electric vehicles to export energy to the grid when there is high demand.

You can rest assured that distributors will have to consult with their customers before they decide on the pricing structure under this new system. Furthermore, any pricing proposals must be approved by the Australian Energy Regulator. Pricing plans won’t be introduced for existing customers before July 2025.

What this means for Karit customers

The good news is that the reforms are positive for Karit customers and users of Karit virtual power communities.

Karit’s Brett Milne says the Karit Virtual Power Plant (VPP) has been designed to bring coordination and control to distributed energy resources which aligns with the intent of AEMC’s rule changes.

“Customers will be able to participate and take advantage of the new rules — so they will be able to gain access to the rewards of having control.”

Innovation and technologies like Karit’s VPP can help take pressure off the grid, by allowing people to generate, store, share and sell their electricity.

What happens next?

It’s still ultimately up to the AER to approve plans from power businesses in states and territories, however things are looking up for the much-needed transformation of Australia’s energy system. You can be confident as you invest in renewable energy technologies. The future of energy is bringing together distributed energy assets and using them more efficiently. The new reforms cater for new technologies such as Karit’s VPP and will pave the way for a more efficient, clean and affordable system.

Now is an opportune time to review your energy strategy. Whether you’re a solar customer, have a large portfolio of solar assets, or your organisation is at the start of your net zero journey — we can help you to gain greater control over your energy management and costs.

Contact Karit and speak to one of our experts today.