What price for energy resilience – and should it be enshrined in the rules?

One of the laments repeated by residents of the Lismore area after the recent record floods was: “We were here in 2017; five years later, why weren’t we better prepared?

The same question could also be asked about the 2019-2020 catastrophic bushfires in southeastern Australia. If a bushfire crisis emerges in 2022 or 2023 of a similar magnitude to the previous one, would the outcomes for affected households and the power system be significantly different?

To refresh your memory, the National Royal Commission reported that:

“…more than 280,000 customers of various energy providers experienced a bushfire-related power outage at one time. These outages were widely attributed to the fires which damaged more than 10,000 utility poles and thousands of kilometers of power lines, including those located underground.

“…In the most affected areas, some customers were without power for up to 10 days. Essential Energy reported that more than 104,000 of its customers were affected (including 4,700 life support customers) and more than 3,200 utility poles and 4,500 cross poles were damaged or destroyed.

In response to this litany of destruction, the NSW Bushfire Inquiry investigated (in very general terms) a range of potential ways to build back better, including more vegetation clearing near power lines; bury certain lines; the use of more fire-resistant materials in the posts and transoms; and the possibility that some properties and small communities will be served by stand-alone electrical systems (SAPS) and microgrids instead of long, narrow lines running through heavily forested areas.

So what happened to prevent a similar outcome next time? Other than replacing some wooden poles and rails with more fire-resistant (and expensive) composite alternatives and phasing in insulation on some overhead lines, not much so far, it seems. he.

In early 2020, there was a lot of fanfare surrounding Atlassian gazillionaire Mike Cannon-Brookes’ announcement that he would be investing $12 million in a new initiative called Resilient Energy Collective.

It was intended to help provide solar systems and portable batteries to local communities that had lost their supply in the fires.

It was a commendable move, but it looks like they actually installed the grand total of two systems, and the organization itself seems to be gone. Why? Regulatory hassles, apparently.

Meanwhile, Essential Energy has installed eight SAPS at remote properties on the New South Wales south coast which lost power for long periods after the lines feeding them burned down. These systems have been provisionally approved by the AER under ring-fencing waivers.

However, an internal analysis subsequently concluded that the business case for installing SAPS rather than rebuilding the lines as-is could not be justified within Essential’s existing risk assessment framework, which does not take into account the growing risk of future bushfires. The SAPS were then deleted and the old lines rebuilt.

Finally, in Mallacoota, AusNet Services installed a 1 MWh battery system and generator that was supposed to back up the mainline to provide continuous supply during “unscheduled outages.” However, a report for the ECA revealed considerable concern among residents about what the battery was supposed to do and how well it performed, even during short outages.

The Total Environment Center has spent much of 2021 trying – largely unsuccessfully – to interest the Australian Energy Market Commission, the Energy Security Board and the Distributed Energy Integration Program of ARENA to the role of local energy resources such as SAPS, community batteries and micro-grids in increasing system resilience.

Still, there is hope, in the form of the six distribution networks (in NSW, ACT, Tasmania and NT) which have begun planning the next round of five-year revenue determinations. They take climate resilience very seriously. There is a buzz of activity around climate modelling, risk assessment frameworks, consultations with vulnerable communities and capital investment wish lists.

These networks try to develop a coordinated approach. This is good, because at the moment there is not even a common understanding of what is meant by resilience; how it interacts with reliability; who is responsible for achieving which elements; how much users and communities are willing to pay for it; etc

At least one government is also taking the lead. The Government of Victoria is considering regulatory reforms to the state’s electricity distribution network following prolonged power outages caused by severe storms on June 9 and October 29, 2021.

The Distribution Network Resilience Review examines how networks can improve their preparedness and response to extended power outages resulting from storms and other extreme weather events, and how to build community resilience to extended outages.

The pachyderm in this bunker, however, is whether the Australian energy regulator will allow networks to anticipate what could be large long-term capital investments to improve climate resilience (such as SAPS and micro- networks) in their revenue proposals. According to the AER itself (in a letter to the TEC):

“If a grid company considers that the frequency of outages or their duration is increasing (or is likely to increase) due to the increased frequency of extreme weather events, under the NER, the grid company can apply for funding additional investment beyond that already included in its forecasts.

We’ll have to wait and see how that pans out after all six networks submit their draft revenue proposals to the AER.

Underneath are a host of other related regulatory issues that are also the responsibility of the AER.

Another issue was the need for new rules that would allow networks to own and operate SAPS. This necessitated changes to the National Electricity Act as well as the National Electricity Rules.

The FMEC released its final decisions regarding the required rule changes several weeks ago. Unfortunately, he persisted with a model of charging rates to SAPS customers as if they were still part of the retail market, rather than based on how customers actually use SAPS. This, the networks say, will make SAPS unprofitable to install and operate.

However, the larger regulatory question is whether resilience should be specifically recognized in the NER, or even in the national electricity target, as one of the relevant criteria for the long-term interest of consumers.

TEC has drafted a rule change request that would recognize resiliency in the rules. It would also create a context for having difficult conversations about how much resilience we are willing to pay for and who should pay for it. We look forward to advancing the rule change if and when the time is deemed appropriate.

We now have ample evidence of the impact of climate change on Australia’s electricity system through bushfires, floods, storms and heat waves. The damage caused by each of them will only get worse. If we don’t want to change where and how we live, including how we get our electricity to enable the ‘electrification of everything’, we may have to pay a lot more for grid electricity.

Meanwhile, TEC is working with a consultant on what households, small businesses and communities can do themselves to improve their energy resilience – independent of grids, regulators and governments – in the context of more severe weather events. chaotic and destructive.

Because when shit shots the fanwe can’t always wait for help to arrive.

Mark Byrne is an energy market advocate at the Total Environment Center