Victorian Government Ban on Residential Embedded Networks in Victoria

August 5, 2022

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Written by

Michael

Background

October 2018 saw the Victorian Government make an election commitment to ban embedded networks in new residential apartment buildings,with appropriate exemptions for renewable energy microgrids and low-cost renewable energy.

Three years later in January 2021 the public release of the first issues paper regarding this ban was released. Following a two-year feedback and submission process, the Victorian Government released their response to the Final Recommendations Report by the appointed Expert Panel on the 26thJuly 2022.

The Essential Services Commission (ESC) reports that there are a total of 166,148 Victorian customers who are supplied electricity by an Embedded Network operator. The Expert Panel received 88 submissions on the Issues paper from Embedded Network Customers that informed their approach to implementing the ban. Industry stakeholders were invited to provide submissions in response to the Issues Paper and Draft Report.  Through this time, ENM Solutions engaged as a member of the Local Energy Networks Advocacy Group (LENAG) directly with the Victorian Government, regarding the challenges of the proposed recommendations.

Outcomes

Following a lengthy consultation and review period, the Victorian Government announced in July 2022 that they support the expert panel’s recommendations, with some recommendations to be modified in response to recent stakeholder feedback. Notably, the Panel reiterated a number of times that their mandate was to determine the most practical way to implement the government election commitment to ban Embedded Networks, and the Government has cited the Panel’s intent and reform direction when implementing the ban.

It is important to note that Embedded Networks will not be“’banned” in Victoria, there will instead be amendments to the Generation Exemption Order (GEO) shaping how embedded networks will be regulated and monitored from 1 January 2023 onwards. The Expert Panel initially recommended that all new residential embedded networks would require at least 50% on-site generation, while the Government has cited a requirement for 100% renewable energy sourced either on or off-site, in addition to 5% on-site generation. All new residential embedded networks from 1 Jan 2023 onwards must meet these requirements to be eligible for exemption.

Following the amended GEO, the Victorian Government will continue to roll out further changes to the licensing and exemption framework that will improve customer protections and outcomes for those in both existing and new embedded networks. Some of which have already been implemented such as maximum price setting to the Victorian Default Offer (VDO), access to the Energy and Water Ombudsman Victoria (EWOV) scheme and information provision/disclosure for customers.

ENM Solutions welcomes the further protections for Embedded Network customers, enforcement by the ESC and sees the reshaping of the renewable energy generation requirement as a positive, but challenging outcome of the Victorian Government review.

For more detail pertaining to these proposed reforms, we recommend reviewing our previous articles on the proposed changes HERE.

You can download a copy of the Government’s Response to the Ban and timeline of events via the links below. For advice on what this means for your network in the years to come, reach out to our team who can provide independent and expert advice on your Energy Strategy and Compliance requirements through this time of significant change.

-         Victorian Government Response to the Embedded Networks Review

-         Embedded Networks Review Timeline and Consultation

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