AGL leads backlash against Ausgrid’s bid to extend reach into solar and batteries
Energy retailer AGL has attacked Ausgrid's bid to enter the solar and battery market, warning the move threatens to drive up costs for all customers.
AGL Energy has urged regulators to reject Ausgrid’s $180m bid to install and operate large-scale batteries and rooftop solar, warning the move would drive up household bills, undermine competition and set a dangerous precedent by allowing a monopoly network to stray into competitive markets.
Ausgrid, one of the country’s largest electricity distributors, has asked the Australian Energy Regulator (AER) to waive restrictions that prevent poles-and-wires companies from owning or running generation and storage assets. The company argues its proposed Community Power Network (CPN) would cut costs for households, reduce carbon emissions and ease pressure on its grid as rooftop solar reshapes the market.
The request has set off an industry backlash and looms as a key test of how far regulators are willing to let monopoly networks expand their reach as the energy system decarbonises. The AER is expected to hand down a ruling in November.
In its submission to the consultation, AGL said Ausgrid’s plan — which would see it purchase and manage 130 megawatt-hours of battery capacity and up to 70 megawatts of solar in Mascot–Botany and Charmhaven — blurred the line between legitimate regulatory reform and “unnecessary monopoly intervention”.
Australia’s second-largest energy retailer said the proposal would add $72.8m to Ausgrid’s regulated asset base, costs that would be spread across all households, not just the 32,000 in the two pilot areas. Those customers would be promised dividends of $150–$200 a year, but AGL said the benefits would be bankrolled by network-wide subsidies rather than efficiency gains.
“On face value the Community Power Network would operate at a significant financial loss and increase overall costs for Ausgrid customers,” AGL said. “Characterising cross-subsidies as a dividend may be misleading.”
Consultancy Tahu, commissioned by AGL, found the trial would fail to deliver a net financial benefit for consumers and risked entrenching a precedent that network operators can use regulated charges to subsidise forays into competitive markets.
The stakes are high. Distribution costs have been the single largest driver of higher electricity bills in recent years, with households across the National Electricity Market — except in Victoria — paying more as networks recoup investments in poles, wires and substations. Critics fear that allowing Ausgrid to add new storage assets to its regulated base will repeat this cycle.
Ausgrid has argued that network-led orchestration is needed to soak up the vast surplus of solar energy produced during the day and release it in the evenings, avoiding costly upgrades and delivering broader system benefits.
But opponents insist private investors are already responding to market signals. Tesla told the regulator that Ausgrid’s claims “are flatly contradicted by real-world evidence”, pointing to the uptake of batteries under the federal government’s cheaper home batteries program, which has supported more than 43,000 installations since July.
“These examples show that where equity is a concern, the solution lies in targeted government policy and competitive delivery, not in network service providers displacing markets,” Tesla said.
To proceed, Ausgrid is seeking a waiver to reopen its 2024–29 revenue determination and another to bypass ring-fencing rules designed to stop distribution businesses competing directly with retailers and generators. Those rules were put in place to ensure networks did not give themselves preferential access to infrastructure at the expense of private developers.
Stephanie Bashir, chief executive of consultancy Nexa Advisory, said the guardrails must hold.
“Networks frequently claim to act in the ‘public interest’ by filling infrastructure gaps and boosting virtual power plant uptake,” she said. “But public interest isn’t the same as public responsibility. When monopolies use their position to stifle competition under the guise of public service, they create a false choice: ‘It’s us or no one.’ Regulators should see through this power grab.”
The trial would also test whether Ausgrid can monetise avoided carbon emissions by capitalising the value of new rooftop solar on its books — an approach opponents say risks double counting benefits already covered by federal schemes.
For AGL, the risk is clear: if the AER approves Ausgrid’s plan, other networks could follow suit, undermining the delicate balance between regulated monopolies and competitive energy markets.
The regulator now faces a difficult decision: whether to allow one of the nation’s largest distributors to run an unprecedented experiment in network-led generation, or hold the line on ring-fencing and insist the energy transition remains driven by competitive markets and government policy.
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