Despite having the potential to save NSW consumers $1.2 billion by 2050, the Australian Energy Market Commission (AEMC) has advocated rejecting a proposed energy market rule change to allow district energy sharing.

Put forward by the City of Sydney, the Total Environment Centre and the Property Council of Australia, the Local Generation Network Credits rule change has been separately modelled to reduce network expansion costs by 59 per cent.

The rule change proposed would allow local businesses, community groups and councils to sell and share the solar power they generate with their neighbours.

But in a draft rule determination last Thursday, the AEMC advocated rejecting the request, arguing it would build "a new, expensive subsidy into the regulatory framework ... achieving little but higher prices for all consumers.”

The council did not accept the findings of the AEMC, with City of Sydney lord mayor Clover Moore believing that the regulator had "missed an opportunity" to modernise Australia's energy market regulations.

"The decision by AEMC means city residents will continue to pay for upgrades to an ageing and inefficient network that transports coal-fired power all the way from the Hunter Valley to Sydney."

Moore said producing energy locally helped "avoid expensive upgrades to the NSW electricity grid of poles and wires, which have pushed up power prices.”

Support for the rule change was offered by a study conducted by the UTS Institute for Sustainable Futures (ISF), which found that combining local network credits with a measure allowing businesses and communities to trade electricity could provide an overall economic benefit of about $1.2 billion by 2050.

Jay Rutovitz from Pingala Community Solar​ said the AEMC's decision showed they were "out of touch with consumers and where the whole energy system [was] going.”

"This was a rule about making a level playing field, so that if you have a council with a building on one side of the street, they can generate electricity to use at buildings on the other side of the street and not pay as if it's coming from 400 kilometres away.”

However, AEMC disagreed that credits would offer a financial benefit, and instead proposed a draft rule that required network businesses to publish an annual "systems limitations report.”

"The regulatory framework already provides a range of incentives to network businesses to provide a safe and reliable electricity supply at the lowest possible cost," said AEMC chairman John Pierce.

"Our analysis shows that paying credits to embedded generators would likely result in higher costs for all electricity customers because payments would be made regardless of whether the embedded generator is located where it provides value."

The draft determination is open to submissions until 3 November.


District energy sharing projects are slowly popping up in communities across Australia. 

Fourteen homes in Mooroolbark, Melbourne have been equipped with solar panels and batteries, allowing them to share their solar-generated electricity with neighbours. AusNet Services, who are running the trial, hopes it will demonstrate that a group of homes can be taken completely off the grid.

Merri Green in Northcote, Victoria. Image: Merri Green

Similarly, Merri Green, a development in Northcote, Victoria will see 20 homes and 29 apartments hooked up to solar panels and batteries to create a mini grid. The grid, created by Codstream, will allow the homes to share power and is expected to cut consumption from the conventional grid by up to 70 per cent.