Power Grab: Ausgrid’s solar and battery plan sparks an industry backlash

Ausgrid is the latest poles-and-wires company planning to expand its role in electricity markets but its proposal to install batteries has ignited a wave of opposition.

Ausgrid is nearly 50 per cent owned by the NSW government. Picture: AAP Image

Sections of Australia’s energy industry have lashed out at Ausgrid’s bid to broaden its reach, saying the electricity distributor’s proposal to orchestrate solar power through its batteries would drive up household power bills and distort competition.

Ausgrid, which operates the largest electricity distribution network on the eastern seaboard and is nearly 50 per cent owned by the NSW government, has lodged an application with the Australian Energy Regulator (AER) seeking a waiver from rules which prevent network operators from competing in unregulated markets.

The application is the latest in a series by distribution companies to broaden their reach.

The Australian understands the proposal was first raised in 2024, but was formally circulated to the broader market earlier this month. Sources briefed on the plan, but not authorised to speak publicly, said Ausgrid intends to install rooftop solar panels and batteries at sites across its network, aggregating and orchestrating the output back into the grid.

The proposal is aligned with federal and state governments’ ambition to accelerate the shift away from coal-fired power generation – one of the cornerstone policies of Prime Minister Anthony Albanese’s energy transition agenda.

A faster rollout of renewables is critical to phasing out coal use and achieving Australia’s emissions reduction target. But progress has been slow. NSW was forced to extend the life of its largest coal plant, Origin Energy’s Eraring station, until at least 2027 after conceding it had insufficient renewable generation to allow the plant to close.

A spokesman for Ausgrid confirmed the AER application and said the proposal would address inequalities in the current energy market, particularly for customers unable to install solar panels and batteries.

“Ausgrid has applied to the AER to test an innovative community power sharing concept we call a community power network,” a spokesman said.

“The concept solves inequity challenges that currently exist in the market for those living in apartments, rentals and other locations who cannot currently access the benefits that rooftop solar and storage can provide.

“It will encourage individual and commercial entities to install more solar and share the benefits of this solar with all customers within the community.”

However, Ausgrid’s proposal has prompted a backlash from sections of the energy industry. Critics have invoked memories of the so-called “gold plating” crisis of the early 2010s, when sustained overinvestment in poles and wires infrastructure contributed to soaring household power bills.

Opponents argue that allowing Ausgrid to expand into new markets could repeat that mistake, with the risk that the distributor could recover solar and battery installation costs from the broader network – forcing even those who don’t benefit directly to foot the bill.

They said the plan could discourage cost-effective private investment in rooftop solar and batteries, ultimately adding to the financial burden on NSW households where Ausgrid remains the monopoly poles and wires operator.

NECA chief Oliver Judd.

National Electrical and Communications Association chief executive Oliver Judd said the AER must immediately reject the proposal.

“The networks’ brazen power grab to operate in new markets and control the energy transition should alarm consumers, government and industry,” Mr Judd said.

“It risks higher costs and less competition and the AER needs to properly enforce ring-fencing regulations, not water them down.”

Ausgrid has rejected the criticism, insisting its proposal would reduce infrastructure costs over time by cutting the need for major new transmission assets.

“We believe it will reduce the need to build new transmission and high voltage distribution assets and enable higher utilisation of the existing network assets. We will be attempting to prove that this ultimately results in a lower-cost network and will contribute to lower energy costs for customers,” the spokesman said.

“The design makes the network more robust and able to deal with more customer demands without augmentation – so it is actually the opposite of gold plating the network.”

The proposal has exposed deepening tensions between retailers and distributors. NSW household electricity bills rose by more than 5 per cent from July, and retailers blamed increased distribution costs which is a key element regulated by the AER.

Distribution companies argue they have been forced to invest in new power lines to manage the surge in rooftop solar panels which can threaten local grid stability when poorly co-ordinated.

Still, critics warn Ausgrid’s plan would directly compete with households and small businesses installing their own solar panels and batteries, a market expected to grow substantially under the federal government’s battery subsidy scheme which offers households a 30 per cent discount on new batteries.

Nexa Advisory chief Stephanie Bashir.

Nexa Advisory chief executive Stephanie Bashir said the market was already functioning well, with major retailers like Origin Energy and AGL Energy providing battery and solar aggregation services.

“This is not the time for power plays. (Distributed network service provider) must stay in their regulatory lane. If monopolies continue to encroach on competitive markets, Australians will pay more and get less,” Ms Bashir said.

“The distributed network service provider model belongs to the last century. We need competition, not consolidation, if we’re going to deliver affordable, consumer-driven energy solutions.”

The AER has traditionally enforced strict ring-fencing rules to prevent network operators from using their monopoly position to slow or block competitor connections, protecting their regulated revenue streams in the process.

However, the regulator has softened its stance in recent years, allowing distributors to operate community batteries that store excess solar power and release it during peak demand periods.

Originally published as Power Grab: Ausgrid’s solar and battery plan sparks an industry backlash