The Essential Services Commission (ESC) is currently conducting a review of the true value of distributed generation. This is a two stage review with the first stage considering the energy value of distributed generation and the second stage considering the network value.
At the end of June 2016, the ESC published its first discussion paper for the second stage of its review. This paper proposes a framework for examining the network value of distributed generation and is seeking feedback on the framework itself and a range of questions in order to:
- identify and quantify the network value of distributed generation;
- assess the extent to which the current regulatory framework takes this value into account, and
- recommend any changes to the regulatory framework necessary to better account for the network value of distributed generation.
The following broad categories for potential network benefit have been identified to date :
- Network Capacity – the effect of distributed generation reducing the need to build or replace network infrastructure.
- Grid Support Services – the effect of distributed generation on services required to enable reliable operation of the grid, including voltage regulation, frequency regulation, energy balancing, operating reserves, and market operation (usage of the network).
- Electricity Supply Risk – the effect of distributed generation in improving the reliability and resilience of the grid.
- Environmental and Social – the extent to which changed operation of the grid resulting from distributed generation leads on to environmental and social benefits.
Following this the ESC has identified the need to develop a methodology capable of measuring the benefit provided by distributed generation across each of the benefit categories. This will need to be able to compare the technical requirements (and therefore costs) of managing the network with and without the existence of distributed generation.
Submissions to the discussion paper need to be returned by Friday 29 July. The discussion paper will be followed by a draft report in October 2016 and a final report in February 2017.