In just over a week, Victoria’s Emergency Backstop Mechanism (VEBM) requirement for rooftop solar installations comes into force. Here’s what’s happening, why and how much it could cost all electricity customers.
Why an emergency backstop for solar energy?
The adoption of residential solar power is still progressing rapidly in Victoria. To date, more than 770,000 small PV systems have been installed across the country; this year there have been over 36,000 so far. The excess electricity exported from these systems helps reduce the price of wholesale electricity during the day, benefiting all Victorians, regardless of whether they have solar panels or not.
For example, at 10:35 a.m. yesterday in Victoria, the wholesale spot price was -$44.00 per megawatt hour. At this point, rooftop solar systems alone contributed 31.8% of the state’s needs (source: OpenElectricity – formerly OpenNEM). Since it was a Sunday morning, demand was comparatively low, but last week the rooftop PV system covered up to 50.9% of demand (Wednesday afternoon at 1 p.m.).
Managing all of these benefits of solar energy poses several challenges for grid operators. This includes the potential for events with minimal system load (demand) associated with high solar exports and threatening grid stability.
The Victorian Emergency Backstop Mechanism is intended as a last resort to prevent potential power outages and damage to electricity infrastructure.
How does the VEBM work?
The VEBM enables the state’s Distributed Network Service Providers (DNSPs) to temporarily throttle or shut down solar power systems remotely, as directed by the Australian Energy Market Operator (AEMO).
The sequence of actions in such an event:
- Reduce or completely prevent exports – a solar household continues to have access to its self-generated electricity and to the grid supply.
- If problems with grid stability persist, the systems may be shut down – but grid supply will remain.
- Once the event has passed, an “all clear” is given and normal system operation/exports can be resumed.
To trigger such actions, a signal is sent to the systems’ solar inverters. To receive and respond to these signals, an inverter must support the Common Smart Inverter Profile Australia (CSIP-AUS) and be connected to the internet.
When and who?
Originally, rooftop solar systems with an output of less than 200 kW installed or upgraded after July 1 this year1 were required to be compatible and activated with an emergency backstop, but the deadline has been extended to October 1, 2024 – next Tuesday .
The requirement does not affect systems installed before the deadline. However, if you have had an installation under Victoria’s solar panel rebate scheme since March this year, it will most likely be CSIP-AUS compliant. This is due to a requirement introduced for the Solar Homes program to prepare systems for flexible/dynamic exports2.
Even if an internet connection is not available, a CSIP-AUS compatible inverter is required. A lower fixed export limit applies to these systems.
How much does it cost electricity customers?
The National Electricity Rules allow distribution and transmission network service providers to apply to the Australian Energy Regulator (AER) for an adjustment to allowable revenues when allowable cost changes occur during a regulatory control period.
Jemena, Powercor and United Energy submitted requests for reimbursement of costs related to the VEBM, and the AER announced its decision on Friday. The AER found that the networks incurred significantly higher costs due to the emergency backstop requirement.
After minor model adjustments, reflected in the approved pass-through amounts for all three networks, the AER estimates that the average annual impact on residential electricity bills in the 2025-26 regulatory year is expected to be (nominal amounts):
- Yemen: $10
- Powercor: $7
- United Energy: $6
Initiatives such as VEBM and flexible exports not only help protect Victoria’s electricity grid, but also enable the installation of greater rooftop solar capacity. This means that even more households can benefit directly and indirectly from PV and the need to burn emissions-intensive brown coal to generate electricity is further reduced.
Further information on Victoria’s emergency backstop mechanism for solar energy can be found here.
Footnotes
- If the upgrade includes a new inverter or an inverter replacement that is not under warranty with an equivalent inverter. ↩
- Powercor has announced the imminent launch of flexible exports ↩
Comments are closed.