Network Access – what is it really about?

Few aspects of Australia’s large-scale energy transition are as challenging and contentious as access policy.

Critics of access regimes describe them as a solution in search of a problem and a policy intervention nobody asked for. Some claim that if we could just bring back the ‘good old days’ of universal open access across the NEM we’d all be better for it.

While some elements of these criticisms may be well founded, we should not lose sight of the fact that the renewable energy generation industry have been some of the greatest supporters of access reform.

Let’s cast our mind back to the previous decade. As large-scale wind and solar projects connected to the grid in unprecedented numbers over the course of the 2010s, the limitations of the NEM open access regime started to become apparent. Increasing congestion, rising curtailment and worsening MLFs emerged as key challenges for industry. Exacerbated by an uncertain and lengthy connections process, these factors combined to undermine revenue certainty for new projects and heighten challenges in achieving financial close. And the industry started speaking up.

State-based access policies are a direct response to these issues. At the date of writing, all NEM States except South Australia have access policies in place or under development as part of their REZ development ambitions. Access policies squarely target the fundamental coordination challenge of REZ development by providing a centralised planning framework for achieving multiple strategic objectives simultaneously.

It is perhaps less widely known that the scope of matters encompassed by contemporary access policies goes well beyond optimising for technical and commercial performance. With REZs now rightfully recognised as a regional transformation project, not simply a power-systems project, access policies act as a kind of ‘Swiss army knife’ for dealing with whole-of-REZ matters as diverse as social licence, economic development and cumulative impacts.

But effectively managing and integrating so many complex and diverse initiatives is not easy and may not be realistic.

One of the criticisms levelled at access schemes is that they can lead to under-utilisation of network capacity, whereby capacity is capped at overly conservative levels to preserve a strong value proposition for the select group of projects that are granted access to the REZ network, leaving consumers to foot the bill for the inefficiency.

However, it is also true that an open access approach to REZ development carries the risk that renewable energy developers choose not to develop projects in a REZ without any certainty over future curtailment, leaving new REZ transmission investments stranded. Access policies can overcome the risk of stranded assets by requiring generation and storage project developers to enter contractual agreements with relevant REZ planning, delivery or coordination entities and stump up some form of financial security to ensure they are committed to developing projects with benefits to them in the REZ.

So what lessons can we take away at this relatively early stage in the design and implementation of access regimes in Australia?

Firstly, policy design is everything. While the underlying rationale for access policies is sound and generally agreed upon, if the details are not carefully designed, and settings / processes are not optimised, benefits may be diminished.

Secondly, commensurate resourcing is vital. Significant capability and capacity is required to design and implement access frameworks. Multidisciplinary expertise is required across diverse fields including strategic land-use planning, community and stakeholder engagement, social impact assessment, transport and local economic development. REZ planners/coordinators need to develop strong partnerships with other Government entities with relevant expertise in key aspects of access policy.

Finally, flexibility and tailoring of access policy settings to the individual circumstances of each REZ may produce different results for REZs within the same jurisdiction. Optimisation trumps standardisation if the true benefits of an access scheme are going to be realised.