May 25 2023

Why it’s important to have good standards

Why it’s important to have good standards

There is so much going on in the Consumer Energy Resources (CER) space it’s difficult to keep track of developments. We’re seeing record uptake in rooftop solar, VPP trials, advanced trials for a CER marketplace.  We also see, market bodies and regulators making real efforts to enable consumer uptake of CER.  This uptake is only set to accelerate and the Australian Energy Market Operator’s 2022 Integrated System Plan (AEMO’s 2022 ISP) forecasts the current install of rooftop solar (15 GW) will grow by 65 per cent to 69 GW by 2050.  It’s an enormous opportunity, and a lot of electricity businesses are thinking about how they can get involved and unlock CER value streams for their customers.

CER and technical standards

This large install of CER can be good for the grid.  If consumers can self-consume, becoming less reliant on the grid, as well as supplying to the grid at times of high load. It’s handy stuff but it’s important to remember that these benefits arise from the considerable investment that CER owners have made or will make in their systems. The Energy Security Board (ESB) and the energy market bodies are conducting a broad set of reforms to realise the opportunities presented by CER for all energy consumers.  The role of technical standards in supporting CERs successful integration for the long-term benefit of electricity consumers is part of these reforms.

There are many technical standards relating to consumer energy resources. These standards cover things like the installation of solar, inverters, battery or electric vehicle (EV) systems, grid connection of these devices and communication protocols. As new technologies come online, the standards guiding their operation need to be updated. For example, as households evolve from consumers of energy to prosumers (producers and consumers) of energy, the standards guiding devices must evolve to unlock their benefits.

Technical standards will strongly influence how consumer energy resources operate, interact with the grid and what benefit owners ultimately derive. It’s a complicated, convoluted space with a high information barrier for many energy sector participants.  Here we provide a simplified overview of technical standards – why they exist, how they work, how and why they are amended.  And why it’s important for stakeholders to get involved in or simply stay across developments with technical standards.   

What are technical standards and how are they developed?

Technical Standards are documents that set out the specifications, procedures and guidelines to ensure the safety, consistency and reliability of the products, services and systems we interact with.Unless cited in legislation or commercial contracts, standards are a guide and are not mandatory. Standards Australia is the national standards body that organises the creation or updating of Australian standards and the adoption of international standards.

Standards cover 12 sector classifications including things like consumer products, services and safety; transport and logistics; and – of most relevance to this readership - electrotechnology and energy.

Net benefit of standards

New standards development projects must demonstrate a net benefit to the Australian community. These benefits – as set out in the Standards Australia Standardisation guide for Standards Development - include public health and safety, social and community impact, environmental impact, competition, and economic impact.  At present there is no specific consumer benefit criterion in the net benefit assessment.  This test may need examination in the case of energy, where the role of consumer is changing from traditionally a consumer to a prosumer.  We believe that standards that impact CER should also include a benefit test to ensure that the value consumers contribute to the benefit of the energy system is correctly assigned.

Technical Standards Committees

Technical standards committees develop the standards. They are made up of individuals (often technical experts) who are nominated by organisations that represent the views of large groups of stakeholders with a common area of interest. The Australian Energy Council (AEC) is the nominating organisation for merchant (unregulated) electricity businesses.  Committees have wide ranging memberships.  In the cases of electrotechnology and energy for example, committees might include representatives from networks, regulators, original equipment manufacturers (OEMs), master electricians, research organisations, associations involved with the supply of consumer electronics, those testing for electrical compliance and often peak bodies from New Zealand as well, where joint standards are being developed.

Not all the available vacancies on committees must be filled, and very often aren’t.  Technical standards committees can involve significant work and time. Some businesses might only put staff forward to join standards committees relevant to their area of expertise or business interest.  Some might not see the committee as a good use of company resources while others may not have the technical expertise to contribute meaningfully.

The reason that different stakeholder groups are included in standards development is so that the people with direct expertise dealing with the implementation of the standard can contribute, resulting in optimal outcomes.  For example, when developing a technical standard that will impact consumer energy resources, input would be needed from installers, regulators, networks, retailers, electrical engineers, product specialists and consumers themselves.  However, the number of representatives across all nominating organisations is not perfectly balanced.  This is important because each representative has a vote to pass the content of the finalised standard. If a committee has more voting members from one particular type of organisation, there is a risk that outcomes become weighted towards particular viewpoints or particular interests.  Standards Australia has a range of standardisation guides setting the rules for various aspects of standards development including the structure and operation of committees.  Although Standards Australia aims to have balance on committees they acknowledge that perfect numerically equal representation from all groups on all committees is not possible.  

In the AEC’s view this needs to change, limiting voting to one per committee membership not committee attendee.  This helps ensure that committees are able to access technical expertise, but are not stacked to favour one stakeholder group. 

There’s a lot at stake.

In recent history CER prosumers were the losers when standards setting inverter export limits to 5 kW on 1-phase installations was agreed. 

The 4777.1:2016 revision saw the introduction of an export limit of inverter systems which was recommended as 5 kW for single phase systems. Prior to the introduction of the 2016 revision of 4777, a 10kVA inverter capacity limit was broadly implemented by many DNSPs for single phase installations, which prior to metered export limits, served as a proxy 10kW export limit.  With the introduction of the recommended 5kW export limit, many of the DNSPs with the previous 10kW export limit followed the AS/NZS 4777.1:2016 recommendation. This led to most DNSPs implementing a 5kW export limit, even though the maximum safe export can be shown to be 10kW.

The AEC view was that limitations on export that may require the reduced capacity of some sections of the distribution network to accommodate export compared to others should have continued to be set within distributor connection agreements, and not by the standard.  Setting conservative export limits is a blunt instrument which constrains a consumer’s ability to participate in the energy system. There are other, more nuanced avenues that can be used to address voltage imbalance in a dynamic system like the energy grid.  Yet unfortunately through the less balanced make-up of the standards committee, a 5kW export limit was recommended. 

The 5kW limit is proving demonstrably unnecessary in VPP (virtual power plant) systems that are currently being trialled with 10kW limits.  In the future, for those inneighbourhoods participating in a VPP with larger CER systems, constraining export to 5 kW will undoubtedly limit their ability to participate and maximise the value of their investments to themselves and to their community.  Consumers factor the ability to export into their own cost-benefit analysis when considering the value of home batteries or VPP participation, and the conservative technical standard of 5kW will constrain their investment and participation. 

What should change?

Changes to standards should of course aim to incentivise innovation whilst maintaining safety.  But if conservative export limits continue to be applied within the standard then this will continue to dramatically affect payback periods for households, resulting in lower net benefit.  When establishing standards broad participation is the key to representing all stakeholder needs, so that the needs of all stakeholders are balanced.  That is why the AEC urges more eligible stakeholders to get involved.  But change is also required to committee governance, so that voting rights in particular are clearer and well defined.  This will help prevent single issue interest groups from dominating future committees, and ensure that decisionsmore readily reflect the committee median.

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