Thank you for the opportunity to provide input to the discussion regarding electricity tariff reform in
NSW. CLEANaS believes that the implementation of Local Network Charges providing reduced
tariffs for electricity generation used within a defined local network area and its use with Local
Electricity Trading (Virtual Net Metering) would provide a viable and more socially equitable
alternative to customers leaving the grid with it’s potential for greater network charges.
CLEANaS is the Clean Energy Association of Newcastle and Surrounds, a not‐for‐profit association
formed in 2012 by a group of locals passionate about clean energy. CLEANaS is dedicated to driving
the uptake of clean energy that our region can transition from our current dependency on fossil fuels
to a more competitive and sustainable local economy. We will achieve this by working with our
partners to demonstrate profitable community‐led and community‐owned clean energy projects;
raise the profile of clean energy in the local economy through education and awareness raising; and
by improving access to financing mechanisms and affordable technologies so that investment and
activity grow. Our initiatives must deliver a win‐win for local community investors, local enterprise
and, of course, our environment.
Submission regarding the question i)
Centralised electricity supply has been falling which reflects reduced demand due to behavioural
changes in electricity use, energy efficiency and rooftop solar PV that have to some extent been
related to increased electricity charges. With less supply, cost recovery of assets puts pressure on
increasing charges. These increased charges have then the potential if passed on to the consumer to
reduce demand further. With the advent of battery storage tied in with the Solar Bonus Scheme
ending on 31 December 2016 there is strong likelihood many customers with solar PV may elect to
leave the grid further reducing demand. As the customer base diminishes, it may be less and less
equitable for the customers who remain to pay for legacy infrastructure.
The current charging structure in the National Energy Market (NEM) reflects the historic model of
one‐way flows from large, remote generators, via the transmission and distribution systems, to the
customer. Everyone except very large customers used all (or nearly all) network levels. This charging
structure does not produce optimal outcomes. There is little incentive to reduce peak loads, there is
no flexibility to cater for partial use of the distribution system, and the potential benefits of local
energy generation and use are not rewarded.
Local generators sell at wholesale and buy back at retail prices. Therefore, there is a strong incentive
for these customers (and product developers) to focus “behind the meter” & reduce grid
consumption. This again has the potential for increased costs for consumers left using only grid
electricity, as infrastructure costs are recouped from smaller sales volume.
Local Electricity Trading or Virtual Net Metering involves an electricity customer with on‐site
generation assign their ‘exported’ electricity to other site(s). This requires netting off generation
from one site at another site on a time‐of‐use basis, so that Site 1 can ‘sell’ or assign generation to
nearby Site 2. Local Electricity Trading provides an alternative to leaving the grid and provides social
equity by mitigating the potential effect of spiralling customer loss from the network.
Benefits accrue to both the network and these local generators. The network provides the local
generators access to bigger markets, keeps a high level of reliability, allows local generator to run
systems for maximum efficiency, and supports technical requirements of consumers. In turn the
local generators provides the networks with reduced transmission and distribution losses, the
potential to save money on network investment, emissions reduction, increased resilience of system
and technical network services.
Local Electricity Trading takes place between sites in the LV Distribution and potential HV
Distribution and does not use Transmission and Subtransmission parts of the network. However, the
network charges for the full network are currently levied against those wishing to partake in Local
Electricity Trading. These additional charges affect the potential financial viability of Local Electricity
Local Network Charges provide reduced tariffs for electricity generation used within a defined local
network area. In most circumstances, the tariff would reduce the network charge portion of
electricity bills for local generators to the extent that the generation reduces long term network
costs. This recognises that the generator is using only part of the electricity network, and reduces
the network charge accordingly. To date reduced network tariffs have been applied most
systematically in the UK. Local Network Charges should be technology neutral, calculated on
performance rather than type of local generator, and applicable to range of sizes.
The introduction of reduced local network charges for partial use of the electricity network, and the
implementation of local electricity trading between associated customers and generators in the
same local distribution area provides a desirable alternative to customers who might otherwise
choose to disconnect from the grid altogether or keep all their generation “behind the meter”,
drastically reducing the amount of electricity they take from the grid.
There are five ‘virtual trials’ of local network charges and local electricity trading currently underway
in NSW, VIC, and QLD being conducted by the Institute for Sustainable Futures and funded by
ARENA. Some of the expected key outcomes of these trials are: a recommended methodology for
calculating local network charges, an assessment of the metering requirements and indicative costs
for the introduction of local electricity trading, and economic modelling of the benefits and impacts
of local network charges and local electricity trading.
Reducing network charges for local energy is a proactive approach to keeping networks competitive
and managing the transition to an electricity market with high contributions from local energy. Local
electricity trading coupled with local network charges has the potential to increase renewable
energy options for the local community, supporting economic growth and local procurement of
Thank you for considering our submission,