Insights

What is an Embedded Electricity Network?

27 July 2017

Definition of Embedded Networks

If you live in a multi-tenant residential building or perhaps have a shop inside a shopping centre, chances are you will have heard of, or be part of, an electrical embedded network. Chances are you feel the same way about your Embedded Network Operator (ENO) as most of the country feels about their electricity retailer, which is not all that flattering!

And you know what? That’s not great, because there should be a whole host of advantages to living in a building with an Electrical Embedded Network, advantages that should flow through to owner occupiers and tenants alike. Electrical Embedded Networks form an important part of the competitive retail electricity market and when they are operated properly, should give traditional retail electricity companies more than a run for their money.

How does it work?

 It’s pretty straightforward. The Embedded Network Operator buys the total electricity supply for the building at wholesale prices and on-sells to the occupiers at retail pricing. As with all wholesale / retail situations, there is a margin earned between the buy price and the sell price. In an embedded network, this margin, also called a surplus, is available to the network owner.

There are lots of different models for how the Embedded Network Operator makes a living. At Energy On, we are a fee-based provider who operate the network, including meter reading, customer billing, customer service, managing payments and so on. In every respect, your ENO has the same requirements as an authorised traditional retailer. We are governed by the same state and federal regulations and your rights within an embedded network are the same as those for everyone else.

Not all ENOs work the same way. The model we believe works best involves the Owners Corporation (Body Corporate, Stata Community, etc.) operating as the owner of the network and benefitting from the surplus that’s generated. Why? Because in this model, the surplus can be used to reduce common area costs, for maintenance, or for any other building related purposes. This makes the building less expensive to run, minimising the costs to owners, which can flow through to costs like rent and other tenant related costs.

In a well-designed and well-run embedded network, no occupier, be they owner or tenant, should ever be disadvantaged in the cost of the electricity supplied to them. A well-run embedded network should provide market competitive pricing or better. A well-run embedded network should not force customers into paying on time by direct debit or credit card to access the pricing.

You can find a detailed explanation on how this all works on our Embedded Network Electricity page if you want to find out more.

If your Electrical Embedded Network isn’t working this way or delivering the way you think it should, maybe it’s time to think about an alternative?