Local Use of System Tariffs ReconsideredLance Hoch | 23rd June 2022
The Total Environment Centre (TEC) commissioned OGW to re-consider the applicability of a local use of system (LUoS) tariff for grid-side batteries operating in the low-voltage distribution network. We found that a much simpler and more economically efficient price signal would be provided by a cost-reflective tariff with two-way pricing that includes both charges and credits. In addition, authors Rohan Harris and Lance Hoch argue that grid-side batteries are prime candidates for cost-reflective pricing given that:
- There are no ‘legacy’ tariffs for these customers that might impede the adoption of an efficient price signal
- The owners of these sorts of batteries will almost certainly be commercial operators whose sole product is electricity – and therefore should be expected to be capable of understanding and dealing with complex electricity price signals given that those price signals provide the basis for their business operation.
To invert the logic in Frank Sinatra’s line about New York: If we can’t put cost-reflective two-way network prices for grid-side batteries, we probably put them in place for anyone.
A copy of the opinion piece that Mark Byrne, the TEC project manager, published in ReNew Economy can be accessed here: https://reneweconomy.com.au/community-batteries-offer-great-promise-but-will-need-the-right-market-settings/
A copy of the OGW report can be accessed here.