IEEFA Urges Energy Ministers to Act on A$25 Billion DER Investment

A new IEEFA report calls on Australian state and federal energy ministers to implement six policy measures that would unlock the full potential of A$25 billion in consumer investments in distributed energy resources before their November 2023 Perth meeting. Without action, delays in large-scale wind and solar projects and transmission infrastructure construction risk derailing Australia's 82% renewables target by 2030.

Australia leads the world in residential rooftop solar adoption, with more than 22 GW installed and record-setting performance in September 2023, when South Australia was briefly powered entirely by household solar. The IEEFA report by Dr Gabrielle Kuiper identifies six reform areas: technical standards governance for DER; flexible solar export limits; expanded wholesale demand response to include households; financial support for distributed battery storage; level-playing-field network service regulation; and a governance review to ensure energy market institutions can support rapid DER integration. The Victorian government estimates improved voltage management alone would save consumers A$30 million per year.

The report emphasises that smart electrification of hot water systems represents one of the largest aggregated demand response opportunities. Research by the University of Technology Sydney found that efficiently electrifying all hot water systems and making them grid-controllable by 2035 could save consumers up to A$6.7 billion annually by 2040, while creating 22 GW and 45 GWh per day of flexible demand. Currently, household demand response is excluded from the Wholesale Demand Response mechanism, which is limited to large commercial and industrial customers, leaving a significant revenue source inaccessible to residential DER owners.

Dr Kuiper notes the policy package would leverage not only the A$25 billion already invested by households but also a projected A$250 billion in further investment over 20 years if five million households each spend an average of A$50,000 on solar, electric vehicles, and smart appliances. Consumers who installed DER before market integration standards were in place have been unable to maximise their financial returns, and continued regulatory inaction will compound this underperformance. IEEFA has published the full report ahead of the Energy and Climate Change Ministers meeting scheduled for 24 November 2023 in Perth.

Key figure — Australian consumers have spent at least A$25 billion on rooftop solar and other distributed energy resources.