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Embedded Networks in Victoria; Review Recommends Sustainable Energy Exemption

Clean Energy Group IKEASOLAR 5701
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One of the primary election promises of the government in Victoria back in 2018 was to ensure that embedded energy networks are banned in all newly constructed buildings, whether they are residential apartments, retirement homes or caravan parks, shopping centres or social housing. In addition, the government formally released an Issues Paper in February 2021 for stakeholder consultation, a step closer to resolving the disparity for consumers in embedded energy networks. 

A panel of experts were called in to lead a review of these private networks to decide the contours of a future ban and provide practical solutions for improving the existing structure of embedded networks. 

Now, the review of the embedded networks is complete in Victoria; the state is one step closer to a ban on such networks,

So, what is the issue with these networks that have forced the government to intervene?

A primary contention of consumers and the Victorian government, with private electricity networks or embedded networks, is that they are not licensed retailers and operate outside the national energy market. As a result, areas that are supplied electricity through these privately owned and managed supplies tend to pay higher rates for electricity and don’t have access to proper consumer protections or competitive retail offers.

Experts who carried out the review were given clear directions. They were to develop a strategy while keeping consumer benefits and equitable pricing at the centre. Australia offers its energy consumers specific rights. However, purchasing electricity from an embedded network leads to problems because they are categorized as “exempt sellers”, which keeps them out of the purview of the Australian Energy Regulator. These networks do not require authorization as energy retailers, which has held these networks at the periphery of Victoria’s regulatory framework. One of the jobs of the review was to come up with coherent reforms for the existing embedded networks as well. Around 140,000 Victorians meet their electricity needs from an embedded network, and the choice, if any, to purchase electricity from other registered retailers instead of the operator is limited.

As the curtains are drawing on private energy networks, an exemption is being made for sustainable energy. Before the government went ahead with its proposed ban from January 2023, the review was to release a final report, which was made public recently.  

The review has incentivized sustainable energy options by recommending that sites with 50% or more electricity consumption be met out through low-cost solutions like solar power, energy storage, and other such systems are exempt from the ban. But, even more importantly, an operator has to show that this benefit is being transferred to the consumer.

However, ensuring a 50% reliance on low-cost renewable sources is daunting for most operators. So much so that even the report acknowledged the difficulties of managing such a high percentage. To meet this threshold, the review recommended “GreenPower” purchases or working through “Power Purchase Agreements” (PPAs) to benefit from the exemption.

The exemption is supposed to provide a workable solution without embedded networks while promoting a reduction of carbon emissions. Renewable energy is one of the key agendas of the Victorian government.

If the government accepts the review recommendations, “Allume Energy”, a local business and makers of “SolShare”, can experience a growth spurt. Solar power is fast gaining popularity as a renewable energy option in Australia, Solshare was a significant breakthrough in Solar technology. The device allows a single installation between separately metered units.