Australian Energy Regulator introduces new requirements for embedded electricity networks

The changes include increased consumer protections such as the publishing of tariffs imposed on customers from exempt sellers online, the implementation of a policy to assist customers impacted by family violence and requirements to keep all key registration details up to date.

AER published its final decision following its review of the exemptions framework for embedded electricity networks, alongside the revised network exemptions guideline and retail exempt selling guideline.

In Australia, private networks can operate under exemptions from the requirement to register as a network service provider under certain circumstances.

Future small business and residential embedded networks must now be registered on AER’s public register of exemptions, but existing exempted providers will be unimpacted by this change.

Since May 2023, authorised retailers have been required to implement a policy that sets out the protections their customers can access if affected by family violence. The changes will extend these requirements to exempted embedded networks.

Nick Li, an expert in energy at Pinsent Masons, said: “Stakeholders should consider if the updated guidelines apply to any current or future activities. This decision will impact property owners, developers, strata managers and other entities that own residential and commercial embedded networks, as well as the operators of embedded networks.”

“Impacted embedded network operators will need to update details, adopt new consumer protection requirements as they phase in, and comply with reporting and transparency obligations where applicable,” he said.

“Any new small business and residential embedded networks will need to pivot to registrable exemptions.”

AER has also introduced measures to increase transparency, including a requirement for exempt network service providers to report annually to the AER with updated residential customer numbers and to notify the AER within 20 business days of any changes to their contact details.

The revised guidelines were released after a nearly two-year process that commenced with the release of an issues paper in November 2023.

Annabelle Pendlebury, an expert in energy projects at Pinsent Masons, said: “AER reviewed its exemptions framework for embedded networks to improve transparency and compliance and enhance protections for customers in residential and commercial embedded networks.” 

“While the final decision retains the framework, AER has introduced significant updates to its guidelines,” she said.

“Despite calls from some submissions during the consultation phase, there has been no move to introduce a ban or restriction on embedded networks. The AER has concluded that curtailing all embedded networks may inhibit individual customers from accessing distributed energy resources and other sustainability and grid benefits in the transition to a more decentralised energy system.”