Victoria’s pricing regulator sees network value in rooftop solar

Victoria’s pricing regulator has recognised there is network value in rooftop solar, but says it is difficult to measure it without the development of a grid services market.

Since being commissioned by the Victorian government to investigate a “fair value” of rooftop solar, the state’s Essential Services Commission has recognised benefits for climate change and avoided transmission losses, resulting in a doubling of the FiT.

In its final report released on Thursday, the ESC has had another go at so-called “network value” finding that these values do exist, and that solar PV and other “distributed generation” can and do create network value.

“The main source of that value is the way distributed generation can reduce network congestion, which may defer the need to upgrade the network and thereby save costs. Reducing network congestion can also reduce the amount of expected unserved energy,” the report says.

But it says these benefits are hard to value because they vary by location – for instance, if a lot of money has already been spent on upgrading a network, the value may be less. (That is highly contentious from the point of view of solar advocates, as it seems to justify network spending).

Consequently, the ESC wants to regard the main benefit – reducing network congestion – as a form of ‘grid service’ and to create a market for such services. That, though, will be complicated and will take some time.

“Such a market could provide adequate opportunities for small-scale grid service providers, including distributed generators, to be remunerated for the grid services they are capable of providing,” it says.

It is proposing yet another review to look at how this market can be structured, including auctions and other means.

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Giles Parkinson