An AEMC boost to green energy

As Australians wait expectantly to see the impact of the carbon price on July 1, they may have missed an important announcement by the Australian Energy Market Commission that could change the way we deliver and use energy.

On June 14, the Australian Energy Market Commission announced it would commence a rule change process considering changes to the National Electricity Rules to make it easier for embedded generators to connect to the electricity grid.

ClimateWorks Australia, Seed Advisory and the Property Council of Australia initiated the rule change process through a formal submission to the AEMC.

The AEMC said the rule change request seeks to make it easier and less expensive to connect embedded generators to distribution networks. A consultation paper has been published by the AEMC to facilitate the first round of consultation with submissions due on August 9.

The rule change review includes two main types of embedded generation – cogeneration (combined heating and power) and trigeneration (combined cooling, heating and power). Importantly, the rule change is intended to promote low carbon and renewable embedded energy systems more broadly, not just co/trigeneration.

In both cogeneration and trigeneration systems, a fuel (typically gas) is burnt in an engine, which drives a generator to produce electricity and deliver it locally. The heat from electricity production is captured and used to heat and cool buildings. 

Cogeneration has significant environmental benefits over conventional fossil-fuelled power generation. By using natural or waste gas, as opposed to coal, it produces less carbon dioxide emissions. More importantly, by using a single fuel source to produce multiple forms of energy (e.g. heating and electricity), cogeneration systems significantly reduce fuel requirements.

It is estimated these technologies are 80 per cent more energy efficient than conventional energy sources and produce 60 per cent less carbon emissions.

Cogeneration systems located in buildings and precincts, also avoid the need to transport electricity long distances to the demand point. Not only does this reduce electricity transmission losses but it also reduces some of the demand on our electricity networks and the need to build expensive new grid infrastructure.

Increasingly, Australian property developers and owners seek to incorporate co/trigeneration systems into their existing building and new developments. However, they face a complex and burdensome connection process and regulatory barriers that inhibit them from deploying the technologies.

These barriers make the connection process uncertain, complex, time consuming, inefficient and costly. In particular a cogeneration proponent is required by the NER to reach an agreement with the electricity distribution company that operates the poles and wires to the building. The distribution companies follow different connection processes and have little incentive to facilitate connection to cogeneration. As a result, the connection process can take more than a year, which can cripple a commercial project.

The joint proposal submitted to the AEMC called for changes to the NER to streamline the grid connection process for embedded generators including:

-- An automatic right of connection to the grid and standard access terms, that applies to generators, which meet ‘Automatic Access Standards'.

-- Enabling embedded generators a right to export electricity to the grid.

-- Providing an improved connection process for embedded generators that are ineligible for automatic access and a right of export.

-- Allowing electricity network companies to charge an optional fee-for-service to promote collaboration with their customers.

-- An obligation on electricity network companies to publish annual network reports identifying where capacity is limited.

The proposal states that these changes can be easily incorporated into Chapter 5 of the NER, which already sets out elements of a streamlined connection process for large generators.

The changes are also similar to aspects of Chapter 5A of the NER which provide a streamlined connection process for micro-embedded generators such as roof top solar panels.

These changes will replace electricity customers' case-by-case negotiations with a standard process that is clearer, more certain and efficient. It will also encourage greener energy without compromising the integrity of the national electricity grid.  

ClimateWorks, Seed Advisory and the Property Council of Australia want to encourage organisations with an interest in embedded energy to provide a submission to the AMEC review of the Connecting Embedded Generators rule proposal.

The environmental and economic benefits of fully utilising this existing technology are clear. In fact, the introduction of a price on carbon will only improve the economic viability of cogeneration systems as they become more price competitive with conventional alternatives. 

Implementing changes to the NER so that cogeneration can become more widely used will benefit the environment and lead to increased investment and more efficient operation of Australia's electricity services.

Professor John Thwaites is chairman of ClimateWorks Australia.