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Sender: Ausnet Services – ABN 37 108 788 245 Address: Locked Bag 14051 Melbourne City Mall Centre Victoria 8001 Tel: 1300 360 795 Web: www.ausnetservices.com.au To: Department of Economic Development, Jobs, Transport and Resources Address: 121 Exhibition Street Melbourne VIC 3000 By email to: [email protected] Dear Sir/Madam, Victoria’s Renewable Energy Roadmap AusNet Services commends the Victorian Government for developing a vision for renewable energy in Victoria. We acknowledge the importance of developing and implementing clear strategies and policies in relation to renewable energy, and consider Victoria’s Renewable Energy Roadmap an excellent start for this endeavour. This submission highlights some areas where our expertise may help inform the development of the Renewable Energy Action Plan, including: identifying initiatives and trials that AusNet Services has undertaken to better understand the technical, commercial and regulatory issues and potential applications of renewable energy resources and new technologies; outlining areas where broader review of market structures and regulatory frameworks will promote the efficient development and take-up of renewable energy resources; and clarifying the technical considerations that need to be addressed to ensure renewable energy resources are integrated into the overall power system so that they can be utilised most effectively. There are significant technical and economic complexities associated with reliable power system operation that need to be taken account in policy development. In finalising the Roadmap we would encourage policy makers to engage with industry to ensure that the proposals are robust, sustainable and do not result in unintended consequences. AusNet Services would be pleased to discuss any aspect of this submission with you in more detail. Should you have any questions please contact me on ph. 9695 6622. Sincerely, Katie Yates (Acting) Manager Regulatory Frameworks AusNet Services 1. Introduction The Victorian Government released “Victoria’s Renewable Energy Roadmap” (the Roadmap) in August 2105, and invited submissions from interested stakeholders. The purpose of this brief submission is to provide AusNet Services input into this process. AusNet Services owns and operates the transmission network throughout Victoria, the electricity distribution network on the eastern half of the State, and the gas distribution network on the western side of Victoria. This diverse energy portfolio means that AusNet Services has a range of interests and impacts from the Roadmap. AusNet Services commends the Victorian Government for developing a vision for renewable energy in Victoria. We acknowledge the importance of developing and implementing clear strategies and policies in relation to renewable energy, and consider the Roadmap an excellent start for this endeavour. AusNet Services is particularly pleased to have the opportunity to participate in this process, as it is evident that the successful implementation of a sustainable renewable energy policy will require support and involvement from all industry sectors. We would be pleased to discuss this submission with you further to clarify any of the matters that we have raised. 2. Summary The key points which AusNet Services submission wishes to make in response to “Victoria’s Renewable Energy Roadmap” are as follows: AusNet Services agrees that renewable energy resources will have a very important role to play in the energy systems of the future. As such we have been active in supporting and developing renewable energy resources, including trials of new approaches; Given the significant changes occurring in the electricity sector, including the substantial and increasing investment in renewable energy resources it will be important to ensure that the supporting market frameworks and network regulation are addressed to ensure that there is no barrier to efficient development, and that efficient options are not prevented by overly restrictive regulation that may not continue to be appropriate in the future; The most effective customer outcomes will be achieved through proper integration of the diverse components that will make up the future power system, including the effective integration of new renewable energy resources with the existing electricity networks; and It is important that setting policy direction that has implications for the development of the power system has appropriate input from the industry. AusNet Services welcomes the opportunity to comment on the Roadmap and are keen to participate collaboratively in its final development and implementation. 3. AusNet Services’ Initiatives AusNet Services agrees that renewable energy resources will have a very important role to play in the energy systems of the future, and that it is important for the sector to understand and prepare for the implications. Consequently AusNet Services has been active for some time in supporting and developing renewable energy resources, with particular emphasis on implementation where this results in a lower cost to customers than traditional network solutions. This has become even more important in the changing electricity industry environment with increased levels of uncertainty regarding longer term energy and demand sources and consumption, and the preference for shorter term solutions to be adopted for emerging energy constraints. More recently AusNet Services has initiated trials of renewable energy resources and new technologies to determine the potential application of renewable energy sources, to identify the challenges that may arise from connection of renewables and to develop solutions ideally in advance of the need for the commercial development of these projects. Examples of projects that AusNet Services have developed and supported include: Trial of residential battery storage and solar PV. AusNet Services is now finalising a 2 year trial of 10 households with solar PV, battery storage and communication systems to investigate the value of distributed storage to the network and to solar customers. From the network perspective this considered both peak demand management as well as the ability of storage to reduce PV exports and therefore voltage control issues, potentially allowing higher PV penetration. AusNet Services is proposing a further stage to be a scaled project with hundreds of storage units operating under an aggregated control system; Trial of a 1MW battery at Thomastown to test the technical, commercial and regulatory considerations associated with network connected storage facilities. This is currently the biggest battery installation for network support in Australia; AusNet Services has developed an LV network model for a pilot location (and validated to measured data) to prove the concept of modelling the detailed network impacts from of individual PV connections rather than relying on standards, which may result in connection policies being conservative and placing unnecessary and over-restrictive constraints on connection. Investigations are now underway into incorporating the lessons from this trial into our connections policies; A proposal has been developed and approved to commence a trial of a community network to demonstrate the scope for achieving optimised and efficient operations in a smaller network incorporating renewable resources and minimising the size of the connection to the grid. These projects are intended to identify technical, commercial and regulatory issues that will need to be addressed to ensure that such projects can be developed on a sustainable and effective basis in the longer term. AusNet Services recognises that there are a range of challenges associated with the implementation of renewable energy resources, and that it is very difficult to identify and address these without practical experience. We are therefore committed to continuing these programs to ensure that as a distribution business AusNet Services is well prepared to meet the changes that will be necessary in the future. As a consequence we are supportive of the intention to carry out trials and provide support for various investigations into renewable energy resources referred to throughout the Roadmap. AusNet Services would be very happy to assist in any of these projects from the experience we have gained in setting up trials and the learnings that have already been obtained. We would be particularly interesting in contributing to any trials that may be envisaged in our franchise distribution network area. 4. Market Structures and Regulation The future of the electricity sector is changing rapidly and new technology and innovation across the value change will inevitably change the way in which energy is produced, transported and consumed in the future. This will include increasing connection of renewable energy resources. The options and choice available to customers is increasing dramatically, allowing customer to develop and manage their own renewable energy resources to meet their own supply needs. This will fundamentally change the operation of the power system in the future. The current market structures and regulatory arrangements were carefully established to provide the necessary competitive environment, supported by regulation of the monopoly industry elements, to encourage the most efficient development of supply options and the market. AusNet Services considers that the energy market frameworks and regulation must continue to facilitate the most economic supply options for customers, as they are currently intended to do. This is not to say that the current market frameworks and regulations will achieve this in the longer term, and it is important to assess whether or not this will be the case. There will need to be appropriate consideration given to market structures and regulation to ensure that the anticipated value and benefits of renewable generation can be achieved through normal market responses. The Roadmap references investigations that are proposed to be carried out into industry regulation and market structure to ensure that barriers are not being placed on implementation of renewable energy sources. This for example includes a review of appropriate regulation for storage, and assessing the value of distributed generation and whether the current regulations appropriately remunerate owners for this. It includes a review of feed in tariffs and whether these remain appropriate. AusNet Services supports reviews of regulations and administrative arrangements. We also note that the scope of these reviews covers specific aspects of the existing regulatory framework. As noted earlier we consider that a broader review of the entire framework may be desirable to ensure consistency with longer term industry direction and change, and to facilitate the effective development of renewable energy resources. 5. Effective Integration AusNet Services agrees that renewable generation is a very desirable component of an economic and effective power system of the future. We note that the most effective utilisation of renewable energy resources will be achieved if they are properly integrated as part of the overall power system. This involves all aspects of the existing supply chain, but AusNet Services particularly wishes to draw attention to the need for effective integration with the distribution networks. The power system remains complex, and secure and reliable system operation requires it to be carefully planned and operated within well-defined limits. The connection of devices on low voltage networks without proper coordination in certain circumstances may not be technically feasible. In the worst case this may result in serious compromises in the operation and reliability of supplies to customers. For example voltage control issues become increasingly significant in a “solar PV rich” network, particularly if this involves long lengths of distribution feeders and inverters may be very sensitive to outages resulting in lengthy delays for reconnection. AusNet Services also acknowledges the concerns expressed within the Roadmap regarding the difficulties encountered by the proponents of renewable energy resources seeking connection to the distribution networks, including the time taken to process connection applications and the extent of the technical requirements and the costs imposed on them. There are very significant technical issues that are being faced for the first time by distribution networks seeking to connect renewable generation on a large scale, and these must be adequately addressed to ensure the power system continues to operate effectively as the generation mix changes. In many cases the connection of renewable energy resources can require extensive system redesign and new approaches that take time to develop. This is likely to be achieved most expeditiously and to best long term effect if they are dealt with on a collaborative basis. AusNet Services welcomes the intent expressed in the Roadmap to carry out an investigation into the technical constraints on the connection of renewables and develop effective solutions. 6. Industry Engagement The Roadmap encourages stakeholder response to assist in the development of the final document. Engagement with the industry to develop robust and sustainable policies is important to ensure the desired objectives will be achieved. The inclusion of industry experts will ensure the longer term impacts and realities are well understood and inform policy development. In finalising the Roadmap we would encourage policy makers to engage with industry to ensure that the proposals are robust, sustainable and do not result in any unintended consequences. Industry involvement will also be important during the implementation stage to ensure that the outcomes can be achieved. As previously noted there are significant technical and economic complexities associated with reliable power system operation that need to be taken account in policy development. Given that a number of these issues are unique or more extreme in AusNet Services rural networks we are very interested in being involved in this work. 7. Conclusions AusNet Services acknowledges the importance of the document released by the Victorian Government entitled “Victoria’s Renewable Energy Roadmap”, and in particular appreciates that it provides a vision for the future development of renewable energy resources in Victoria. AusNet Services agrees that the future of the energy sector is changing rapidly and that renewable energy resources will from a critical part of the future. As a consequence it is critical that preparation commences now as there are many factors that require significant development to achieve the long term benefits that are possible. AusNet Services supports many of the initiatives outlined in the Roadmap aimed at facilitating renewable energy in the future. We also note that there are many challenges, some which are generally not well understood that will need to be addressed to effectively achieve the desired outcomes. This is a complex policy area that requires significant expert input to achieve the best possible outcomes. AusNet Services has expertise and interest in this area, and is committed to the further development of efficient and effective renewable energy resources. We would be very interested in working with the Victorian Government to achieve the best possible outcomes from this visionary policy initiative. AusNet Services would be pleased to discuss any aspect of this submission with you in more detail.