Consumer Energy Resources: The next big thing?

One of the major outcomes of the latest Energy and Climate Change Ministers’ meeting was the endorsement of the Consumer Energy Resources (CER) Roadmap.

It is considered by government to be the next big reform for the energy system and is important to achieving the Australian Energy Market Operator’s Integrated System Plan (ISP). Federal Energy Minister, Chris Bowen, recognises the key to it will be “making sure that those consumers who have solar panels or a battery or an electric vehicle are able to get maximum benefit out of it for themselves and also for the grid”. And the Australian Energy Market Commission (AEMC) has just announced an “electricity pricing for a consumer-driven future review” to help drive CER which it claims could deliver net benefits of up to $6.3 billion by 2040. The AEMC expects to release its final report in early 2026 to map out a “more consumer-centric, efficient, and sustainable electricity market”.

There’s no doubt that CER will be important; equally there is no doubt that it is not simple to achieve, nor a certainty. With the grid intended to serve customers, not the other way around, customer interests need to be front and centre as the Roadmap is rolled out. Small customers such as households and small businesses will be key to CER becoming a reality at the levels envisaged.  We take a look.

Benefits and Challenges

The Roadmap outlines the potential benefits and scale of CER within our energy system based on what the ISP assesses will be required to meet Federal and state government policies and ambitions. It flags the potential for rooftop solar paired with battery storage, the possibilities of harnessing the batteries in electric vehicles and the opportunities in energy smart new household appliances to provide flexibility on when they draw energy and supply energy in the grid.

The Roadmap provides a national approach to reforms to ensure Australians are able to harness the full potential of CER. And it posits that if consumer resources are coordinated effectively, they can help lower costs for all consumers by offsetting the need for billions of dollars in grid-scale investment.  No one can argue with that, but the market goals will need to be aligned to enable free exchange between customers and other participants to allow them to maximise value in the harnessing of the full potential of CER.

Of the many areas o be considered under the Roadmap, with the growth in electric vehicle (EV) ownership, is the potential for vehicle-to-grid (V2G) connections. There are now more than 180,000 BEV’s (Battery Electric Vehicle) in Australia, with projections for 1.5 million in the next six years.  That’s a lot of battery.  EV growth will hopefully meet jurisdictional targets - New South Wales, Victoria and Queensland have set targets for EVs to reach 50 per cent of new car sales by 2030 – and will also be driven by new Federal vehicle efficiency standards.

With all these ‘available’ batteries forecast, consideration is now being given to nationally consistent standards for V2G. Work is underway to update Australian Standard 4777 to remove barriers to V2G charging, and on defining electric vehicle supply equipment (EVSE) minimum technical standards for power system security and reviewing minimum operating standards for government supported public electric vehicle charging infrastructure.  This work highlights how important technical standards are to the effective integration of CER.

We already know a lot about whether this will all work in practice.  Electricity retailers, along with others, have conducted trials for EV owners to make their batteries available by taking advantage of market price movements; with vehicles discharging their batteries when power prices are high and charging when prices are low^[i].  Research suggests there is still considerable work required to bring owners into participating, while technical challenges facing V2G technology including communication complexity and potential battery degradation^[ii] are also apparent.  If enough EV owners are unwilling to participate then the feasibility of V2G technology to deliver at the expected scale obviously becomes much more challenging.

We are not alone with these concerns.  A previous Nordic survey, in countries more renowned for their collectivity and cooperativeness than Australia, has highlighted widespread scepticism towards V2G technology, with respondents including a number of experts^[iii]. In a separate survey, while a majority supported the idea of V2G, 24 per cent of respondents expressed concerns about privacy leaks related to V2G technology, and 39 per cent had concerns it could take control away from them “in a way that I would not like”^[iv] These are the types of concerns that will need to be properly addressed. The Roadmap may describe what’s possible, but we will need to remain mindful of what’s likely.

Battery Storage

Aside from EV batteries linking into the grid, to achieve the ISP, home and small business batteries will need to deliver the bulk of our energy storage capacity. To achieve the current ISP capacity of coordinated CER, storage will need to rise from today’s 0.2 GW to 3.7 GW in 2029-30 and increase tenfold to 37 GW in 2049-50.  At that stage it is projected to account for up to 66 per cent of the NEM’s energy storage nameplate capacity.  And if it’s achievable, then it needs to be coordinated.

‘Coordinated CER storage’ usually refers to batteries at homes and businesses, which are aggregated into Virtual Power Plants (VPPs). Retailers and aggregators would provide for orchestration of battery charging and discharging as part of a VPP.  The ISP notes that hitting the projections will need a mix of financial incentives, technology and communication standards, customer preferences, and market or policy arrangements as well as greater engagement from consumers, retailers, networks and other market players.  This is no simple recipe.

As we have previously noted, while consumers appear positive about the concept of coordinated CER, there are financial and trust barriers to getting involved.  Households and small business will need not just incentives, but also the confidence they will actually be better off, to get them to participate at the scale required. And again, we already have some insight into these challenges to large-scale CER integration through trials like Project EDGE  (Energy Demand Generation Exchange).  Project EDGE was a 3-year cross-industry collaboration, part funded by ARENA, that was undertaken to consider the potential for coordinated CER and VPPs involving households and businesses.

Project EDGE showed that price responsive CER was technically feasible- that is, an exchange could be built and operated.  But EDGE also found while households like the idea of VPPs, they appear less interested in becoming involved. The motivation for most households to invest in solar PV, batteries and EVs is to manage their own energy costs and be more energy self-reliant themselves – nothing more.  The final Project EDGE report notes consumers are “open but lukewarm about joining VPPs”. It confirms consumers will need significant incentives to join a VPP and will need to be entirely confident they will be better-off by participating in VPPs.

Where to now?

The CER Roadmap recognises that bringing customers along will be critical, and to do that will require more than just communication and good information (as important as these will be) but also the right incentives, protections and technical standards.  To achieve this, the Roadmap outlines a work program built around the four key areas of consumers, technology, the market and power system operations. Priorities within those four areas are shown below

Bringing these priorities to fruition will take time and careful consideration. The Roadmap outlines a range of taskforce and reference groups that will be involved in defining these key priorities and determining changes to market offers, data sharing and rules amongst many things. An indicative timeline is shown in the following infographic.

Source: National Consumer Energy Resources Roadmap (You can find a more detailed timeline and larger infographic here).

For our part, the Australian Energy Council and its members are supporting implementation of the CER Roadmap through participation on the:

• CER Taskforce Reference Group
• CER Taskforce: DSO Workstream
• CER Data Exchange Industry Co-Design Expert Working Group.

The AEC is also involved in numerous other collaborations.

Conclusion

In our view, for the Roadmap to be successful the interests of consumers will need to be front and centre. Electricity retailers have long argued that the customer lens must come into sharper focus in the CER discussion. The Roadmap notes that ensuring adequate consumer protections are in place “can help people trust that the control of CER by third parties – necessary to coordinate technologies and realise possible benefits – is safe, in their interest, and does not require them to become energy experts”.  Research (highlighted above) confirms the importance of ensuring consumers still feel in control.  Research also highlights people most often behave like people – not energy market participants.

Therefore, as a principle, the ‘system’/’technical’ goals should be to enable customers to continue to buy and use CER to meet their needs and preferences, within a safe andstable operating parameters.  And these should require the least intrusive constraints within practical physical and cost constraints.  Protections are important, but they need to genuinely be in the customer's interest.

Given the importance of CER to the current ISP, there is and will need to be continuous government, market body and market participant attention given to how the scale of CER envisaged can be delivered and consumers brought along; otherwise, the ambitions for decentralised energy will not be realised. In particular, a failure to adequately reward and incentivise participation will likely lead to drivers discarding the Roadmap and choosing their own route. 

[i] The Age “EVs charge to the front - and to the rescue – in clean power reforms, 19 July 2024

[ii] Energies | Free Full-Text | Feasibility and Challenges for Vehicle-to-Grid in Electricity Market: A Review (mdpi.com)

[iii] Noel, L.; Zarazua de Rubens, G.; Kester, J.; Sovacool, B.K. Navigating expert skepticism and consumer distrust: Rethinking the barriers to vehicle-to-grid (V2G) in the Nordic region. Transp. Policy 2019, 76, 67–77.

[iv] Bailey, J.; Axsen, J. Anticipating PEV buyers’ acceptance of utility controlled charging. Transp. Res. Part A—Policy Pract. 2015