11. Distributed Generation
126. Distributed generation is generation which is connected to local distribution lines rather than the transmission grid. It is expected to play an increasingly important role in meeting electricity demand as the cost of smaller-scale and new renewable technologies continues to decline. Distributed generation can improve security of supply by creating diversity of fuel types, locations and technologies, and, where appropriately sited, helps reduce the need for transmission and distribution upgrades. Accordingly, it is important that there are no unnecessary barriers to its development.
Access to Lines
127. Electricity Governance (Connection of Distributed Generation) Regulations 2007 enable connection of distributed generation where this is consistent with network connection and operation standards. The regulations provide a process for applications for approval to connect and regulated terms of connection. The Commission is responsible for administering these regulations and for proposing amendments as required.
128. The Commission should investigate the provision of guidelines or standards for domestic scale distributed generation to reduce regulatory compliance costs and improve the safety of connections to local networks.
Purchase of Surplus Generation by Retailers
129. The Commission should ensure reasonable terms and conditions in model contracts for purchase of small electricity surpluses by local retailers from generators with generation units capable of generating up to 40,000kWh over a year. The Commission should investigate and make recommendations:
- on whether model contracts should specify pricing principles; and
- on how the model contracts should require itemised billing (showing imports and exports) by 2009.
130. The Commission should review the model contracts from time to time to ensure that they remain effective and up-to-date with current market issues.
131. The Commission should recommend regulations or rules if voluntary arrangements are unsuccessful in achieving the policy outcomes the Government seeks.
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