The graph that should send shivers down the spine of distribution network MD’s

Displaced network Energy

This is AEMO(WA)’s view of the impact of increased PV and Battery uptake on the SWIS.  Additional displaced network energy represents 8% – 16% of energy currently served to small business and residential customers (RT1 – RT4 tariffs).  This group accounts for $1,104 million of network revenue for 2016/17 (out of a total of $1,520 million).  Assuming the current tariff structure is retained, revenue leakage would be $54 – $112 million.  Alternatively, the variable network tariff would need to increase by 10 – 22%, or up to 2c/kWh to compensate.

But that’s just the scary bit.  The really scary bit is…

This data doesn’t explicitly contemplate existing owners of PV retrofitting batteries.

This data doesn’t explicitly contemplate the negative feedback loop of higher tariffs contributing to higher uptake of batteries and PV.

We know retailers are contemplating business models that see them moving to become providers of distributed capacity rather than distributing energy.

 This should be a wake-up call to DNSPs.  If DNSP’s were taxi companies this would be like Uber flashing its headlights to warn of an approaching threat.

DNSPs need to realise they’re in a competition for relevance and it’s a competition that we all – tax payers, PV owners, those of us without the means to participate in the distributed renewables economy – need them to win.

 Peer-to-peer energy trading changes the paradigm for energy industry players and energy consumers.  It maintains the relevance of network businesses.  It maintains the affordability of electricity for millions of Australians.

 There you have it; the data is plain to see.  But we need to change our thinking about energy provision to really understand what it means and then to do something about it.

DM

https://www.aemo.com.au/-/media/Files/Electricity/WEM/Planning_and_Forecasting/ESOO/2015/Deferred-2015-Electricity-Statement-of-Opportunities-for-the-WEM.pdf