Insights

The Australian Energy Market Explained

4 September 2018

The Australian Energy Market is a complex system with different requirements from state to state and various forms of deregulation impacting on electricity supply.

Nationally, the market is controlled at a federal level by several different government bodies; the Australian Energy Market Commission (AEMC), the Australian Energy Market Operator (AEMO), and the Australian Energy Regulator (AER). Each of these bodies has a responsibility to the COAG Energy Council, a ministerial forum for the Commonwealth, states and territories to work together for national energy reforms.

The legislative framework is governed by the National Energy Rules (NER) as well as specific requirements within each of the states, as not all fully participate in the National Scheme. Victoria is an example of this and the energy industry is governed by the Energy Retail Code, developed by the Essential Services Commission Victoria (ESC Vic).

 

Electricity Network Supply

 

There are three key elements to electricity supply:

  • Generation - involves the power stations that generate electricity.
  • Distribution - the network of poles and wires that take the supply from the generators and deliver it to the end consumer premises, both residential and commercial.
  • Retail - the companies that connect you to the distribution network and provide your power bills.

There is considerable reporting and debate in the market currently regarding generation and distribution, with retail power prices and continued supply being a focus. The closure of power stations in Victoria and the role of renewable sources of generation are issues of great importance to all electricity consumers, who wonder about the impact on the supply and cost of their electricity.

 

Electrical Embedded Network

 

An electrical embedded network will be found in multi-tenant developments such as shopping centres, apartment buildings, retirement complexes and industrial estates. These are private electricity networks that are generally held by the owners of the multi-tenant development and operated by companies such as Energy On.

Embedded networks operate under exemptions issued by the AER nationally and the ESC in Victoria. These exemptions authorise the embedded network to replace both the distribution and retail components of the Australian electricity market.

Embedded networks must operate under the same rules as the rest of the electricity market and, when operated properly, provide competition to both distributors and retailers. This competition is designed to provide value to the owners of the network as well as to those that occupy premises within these networks.

For more information about embedded networks, visit our website.