The Victorian Renewable Energy Condition (embedded networks)

In response to an enquiry into embedded networks in Victoria, the Victorian government gazetted the 2022 General Exemption Order with new requirements for residential embedded network. Chief among those was the ‘Renewable Energy Condition’ that applies to any entity operating under the VR2 exemption.

Let’s delve into the specifics of when this condition applies, how it operates, and the implications for compliance. Anyone who proposes to rely on the VR2 exemption must ensure that they obtain independent legal advice- noting that this article is a summary and is not intended to be an exhaustive review of relevant compliance obligations.

The renewable energy condition applies to new embedded networks with 10 or more residential customers. An embedded network is a private electricity network that serves multiple premises and is typically located within a single property or development, such as a shopping center, apartment complex, or retirement village.

The condition mandates that:

1. At least 5% of the electricity sold to residential customers within the new embedded network each calendar year must be generated by onsite renewable energy facilities.
2. The remaining electricity sold to residential customers that is not generated onsite must be sourced from offsite renewable energy facilities. This can be achieved by:
   • Voluntary surrendering of qualifying LGCs on or before the voluntary surrender date for that calendar year.
   • A voluntary surrender arrangement.
   • A GreenPower arrangement.

To ensure transparency and accountability, the exempt person must:

• Maintain detailed records for at least 7 years, including:
  • The amount of electricity supplied from a licensed distribution company.
  • The amount of electricity generated by onsite renewable energy facilities.
  • The amount of electricity sold to residential customers, specifying the portion generated onsite.
  • Details of any qualifying LGCs surrendered.
  • Details of any voluntary surrender or GreenPower arrangements.
• By 31 March following the end of a calendar year, provide a summary of these records to:
  • The Essential Services Commission, in the required format.
  • Residential customers in the new embedded network.

The exempt person must ensure that:

• Electricity generated by onsite renewable energy facilities and electricity sold to each residential customer is metered.
• Metering installations comply with the National Electricity Rules or would comply if registered with the Australian Energy Market Operator (AEMO).

To remain compliant with the renewable energy condition, the following steps are recommended:

1. Implement Onsite Renewable Energy Facilities: Invest in and maintain renewable energy sources such as solar panels or wind turbines to meet the 5% onsite generation requirement.
2. Acquire Qualifying LGCs: Engage in the market to acquire the necessary LGCs to cover the balance of electricity supplied to residential customers.
3. Maintain Accurate Records: Develop a robust system for recording all required information, ensuring accuracy and ease of access for reporting purposes.
4. Ensure Proper Metering: Install compliant metering equipment to accurately measure electricity generation and consumption.
5. Communicate with Customers: Keep residential customers informed about the renewable energy usage and compliance measures in place within the network.
6. Stay Informed: Regularly review and stay updated on changes to Electricity Industry Act, the Energy Retail Code of Practice, the National Electricity Rules and any amendments to the renewable energy condition requirements.

The renewable energy condition is a significant regulatory requirement for new embedded networks, emphasising the shift towards sustainable energy practices. It certainly does not result in a ‘ban on embedded networks’, as the Victorian Government characterised it, however it has and will reduce the number of embedded networks in Victoria. Compliance with this condition not only contributes to environmental goals but also ensures that operators remain in good standing with regulatory bodies. By understanding the intricacies of this condition and implementing the recommended steps, businesses can navigate the complexities of energy regulation and contribute to a greener future.

For further information or assistance with compliance, please contact our team at Compliance Quarter. We are dedicated to helping you navigate the regulatory landscape and ensuring your operations are fully compliant with current standards and requirements.