The United States of the NEM - is coordinated CER across the NEM a challenge that is insurmountable?

The National Electricity Market (NEM) has long been a world leader in collaborating across State boundaries to optimise power flows and costs to end consumers. However, the cross state boundary collaboration is experiencing one of its toughest challenges yet, as the future of orchestrated Consumer Energy Resources (CER) hangs in the balance.

The fertile ground for State centric approaches

Each State has differing economic and political environments, and these factors may trump the technical and longer-term economic energy system / consumer benefits of coordinated CER.

While South Australia (SA) and Queensland (Qld) were relatively quick in establishing means to respond to opportunities and risks arising from soaring rooftop PV installations, other States, prospectively due to slower take up of rooftop PV, have not been as responsive. These differing priorities and methodologies will influence the roles and responsibilities of various stakeholders, complicating efforts to achieve a unified national strategy for CER integration.

South Australia Power Networks and Energy Queensland, the Distribution Network Service Providers (DNSPs) of SA and Qld respectively, are at the forefront of experimenting with various roles and responsibilities associated with a Distribution System Operator (DSO) – a concept that moves beyond network operators and focuses on DNSPs being involved in the system operation (balancing/optimising load and generation) at lower voltages. This can further be extended into leveraging DSO activities to establish and operate various energy markets running at lower voltages.

With different rates of change, States may be more likely than not to choose their own path with respect to CER coordination policy settings and implementation.

Advancing a One-NEM approach

Against the backdrop of States running their own race, NEM regulators and policymakers are striving to create a cohesive strategy for incorporating CER into the energy framework.

The incorporation of CER into the NEM entails a long list of stakeholders, including State governments, rule makers, market operator(s), regulators, transmission and distribution companies, retailers, aggregators, technology providers, and consumers. Each stakeholder group possesses potentially different interests and priorities, which are likely to result in a lack of alignment to drive towards a common national coordination purpose.

The greatest opportunity for a coordinated CER future within the NEM involves the establishment and agreement on the market models that will facilitate CER deployment. These models include Wholesale, Distribution, Network Support markets, and can act as a focal point for the subsequent definition of roles and responsibilities of all market actors.

A fading glimmer of hope

The prospect of a coordinated CER future within the NEM is certainly attractive. However, the likelihood is that individual states will persist in following their own distinct trajectories. Factors such as differing rooftop PV penetration rates, rooftop PV as a proportion of overall renewable energy sources, state-specific regulations, and potential conflicts among stakeholder roles all contribute towards State-based CER futures.