The Australian Energy Regulatory (AER) is currently consulting on its DER integration expenditure guidance note, that is intended to guide the AER’s determinations on distribution networks expenditure proposals to support the integration of distributed energy resources (DER) with the electricity market system.

AGL made a formal submission in response to its Draft DER Integration expenditure guidance note, a copy of which is available here.

While the Guidance note is an important starting point in aligning network businesses’ approach to DER integration expenditure, we consider that the AER’s network expenditure assessment framework should also be revised directly though the Expenditure Forecast Assessment Guideline.

As the energy industry’s transition accelerates with the uptake in DER and the scaling of business models such as orchestration, it will be critical that the AER’s network expenditure assessment framework supports the policy direction articulated by the Energy Security Board (ESB) in its Post-2025 Market Design, towards encouraging and enabling consumers to be rewarded for their flexible demand and generation.

To minimize the cost of this transition whilst maximizing value to customers, distribution networks will need to invest in DER integration strategies that support the establishment of these new value streams for consumers for DER services, including the competitive procurement of network services.

Having regard to this policy context, we consider a more holistic approach is required to ensure a coherent framework that effectively addresses DER integration considerations alongside traditional energy supply expenditure, given the interdependency between distributed energy and more transitional energy supply arrangements.

Given the broad range of potential consumer impacts associated with network businesses’ varying approaches to DER integration, we consider greater regulatory oversight is required in the form of an AER Guideline to facilitate more consistent outcomes.