The Australian Energy Market Commission - the body charged by federal and state governments to provide policy advice and determine energy rules - has called for urgent action to cope with rooftop solar expansion and to get the grid ready for electric vehicles
In a report released on Thursday, the commission said rooftop solar penetration had reached the point where a choice had to be made between distribution networks spending billions on new substations and poles and wires to cope - or start delivering the grid of the future so consumers weren't landed with unnecessary costs.
The commission's report calls on distribution network businesses to lead the implementation of major reforms to open the way for renewable energy and avoid the need for significant new network investment.
The report, Integrating distributed energy resources for the grid of the future, is published as part of the commission's 2019 economic regulatory framework review.
Releasing the report, commission chairman John Pierce said networks were increasingly cutting solar PV flows off from the grid because of the power system's inability to connect new technologies.
"We need electricity networks to become trading platforms where consumers are the drivers of change," Mr Pierce said.
"We are already seeing more take-up of distributed energy resources like batteries, electric vehicles and smart appliances. They can smooth peak demand on the grid and help stabilise the power system - making the most of all the energy in the system, wherever it's produced or stored.
"A grid-enabled trading platform will open up a whole new world of opportunities for households and businesses - providing payments for services like frequency control and network support to make the power system stronger and enable higher levels of domestic demand response.
"But escalating penetration of rooftop solar, industry-wide failure to comprehensively introduce cost-reflective customer reward pricing, lack of network visibility of low voltage network constraints, and inadequate technical network standards and compliance are combining to reduce system security and efficiency," Mr Pierce said.
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The AEMC-distributed energy resources blueprint identifies initiatives that can be implemented starting immediately and sharpens focus on reforms already underway that need to pick up speed. There are 10 key actions to deliver distribution networks that will work for the future through an integrated program with all the market bodies and the Energy Security Board.
"There are serious choices to be made: to keep building traditional infrastructure and passing on those costs to consumers or get on with the job of implementing reforms to increase access to the network for new solar connections; to improve reliability and security while that happens; and to avoid gold-plating," Mr Pierce said.
"Consumers are already doing their part and investing in their own rooftop energy generation but distribution networks are not moving quickly enough to realise the value of those investments," Mr Pierce said.
"Where new rules are required to accelerate change we will push ahead with proposals for new distribution network pricing, access and connection arrangements if proponents don't start that process themselves by early next year. We won't stand by and allow the current situation to continue.
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"Failure to act now would mean either fewer people are able to export solar to the grid, or all consumers will pay more to build new substations and poles and wires that are rarely needed," Mr Pierce said.
"It is very costly to invest in generation and network infrastructure when it is only used for a few hours each year to service peak demand. By more efficiently using the energy produced by distributed energy resources, and by encouraging consumption and storage of energy when it is cheapest, both power bills and demand on the electricity network can be reduced.
"That's why the ability for customers to choose to reduce demand in a manner that is suitable to them is such an effective part of the energy market's toolkit."