Current regulatory reviews
Over the last few years federal and state governments have undertaken reviews into the regulatory framework surrounding electrical embedded networks and centralised hot water solutions.
In 2021 the Victorian Department of Environment Land Water and Planning (DEWLP) appointed an expert committee to complete a review of the embedded network industry in Victoria.
In January of 2022, the panel produced and provided a recommendation paper to the government. The report to government contained 16 recommendations on ways in which the government could restrict new embedded networks going forward and to offer greater protections and freedoms to customers in existing networks.
In July 2022 the Victorian Government made a media announcement that they have approved a “Ban on Embedded Networks” with some exceptions from January 2023.
Of the 16 recommendations made by the expert panel, only one will be progressed in this term of government. The other 15 recommendations, whilst supported in principle by the government, will not be reviewed in any way until the next term of government.
The sole recommendation relates only to new (2023 and beyond) Greenfield residential developments and only requires the building to commit to providing 100% renewable electricity to the residential apartments. It also requires 5% of energy to be generated on site through something like solar panels, which most new embedded networks are already providing.
In NSW, the government is currently working through a review with a similar intent to Victoria and that is to ensure that customers in embedded networks receive the same protections as customers in the retail markets. This review is to present a report in November this year.
Lastly, the Australian Energy Regulator (AER) has picked up some of the proposed changes from the Australian Energy Market Commission (AEMC) embedded network review in 2019 and is focussing on similar outcomes.
What about sustainability and the reviews?
What has become clear through all of the review discussions and reports is that embedded networks are a key infrastructure design element in delivering the sustainable buildings of the future.
Those who attended the SCA National Conference in Melbourne would recall presentations from Active and Macquarie that showcased how the electrical infrastructure design of an embedded network will be critical for buildings looking to introduce on site renewable generation, such as solar panels, at a scale large enough to provide genuine options to the grid.
Other sustainable energy elements such as EV charging solutions that work to support electricity demand management during times of peak usage and battery storage sufficient to power a building off grid for any period during an outage will all require the electrical infrastructure of an embedded network for the building to take full advantage of these emerging.
Governments are rightly trying to ensure that customers are protected. This is an extremely important outcome for many reasons, not least of which is that without private networks, reaching required sustainability goals will be made much more difficult.
What about resident protections in these networks?
Active has been a long-term supporter of regulatory change that provides protections for consumers in embedded networks and delivers the value of the solution to the building and not to the embedded network operator.
Much work still needs to be done by governments and regulators in many areas, particularly, with developers and what obligations they can place on a building owners and with industry bodies such as SCA and the Property Council to ensure that the baby isn’t thrown out with the bathwater when it comes to the regulatory framework.
Limiting contract terms and preventing building owners from facing hundreds of thousands of dollars in hardware and equipment buy out costs is a good start. Requiring embedded network operators to hold a license and penalising them for bad behaviour is even better.
Realising through all of this that it isn’t the way that the infrastructure is set up that is the key, it’s the way that the operator provides the service that matters.
Get that small bit right and ensure that the building owners can control its own destiny; set rates for residents, make money for sinking funds, or implement technologies to go a little bit greener or improve NABERS ratings or even go carbon neutral and everyone will be happy.
The truth is that the cost of electricity or hot water is a key driver of customer dissatisfaction, operated correctly, embedded networks can protect customers from market driven increases and offer the best pricing outcomes. What’s more, the greener a building’s credentials the more attractive it is to buyers, sellers, and residents.
This is how Active works with our buildings. If it’s not how your building works with yours, then you should also support a regulatory framework that is in your future as well. As a national partner of SCA, our focus is on ensuring that this is future is attainable for all buildings and if you are interested in us helping your building to be part of this future, just touch base and we’ll work with you to get there.