The Australian Energy Regulator (AER) today released its assessment of the annual expenditure claims for 2016-17 made by electricity distributors under the current Demand Management Innovation Allowance (DMIA).
The DMIA scheme provides extra funding to encourage distributors to conduct research and investigation into innovative techniques for managing peak demand. If successful, these initiatives can be used to reduce reliance on more costly infrastructure and thereby reduce network charges.
The assessment provides insights into the total value of expenditure approved and the type of projects the scheme has delivered. The projects varied in both their nature and scale. In the most recent period, almost 60 per cent of expenditure relates to residential battery storage, tariff studies, and micro-grid trials.
The allowance is provided to each distributor in the form of a fixed allowance for each regulatory period. If distributors do not spend their DMIA in full, the underspent amount is deducted from the expenditure allowance for the next regulatory period. If the allowance is overspent, the distributor must meet the higher expenditure itself and cannot recover this from its customers.
This assessment covers expenditure in 2016-17 for non-Victorian distributors and 2017 for Victorian distributors (who report on a calendar year basis). All of the expenditure claimed by the distributors met the DMIA criteria and has been approved.
For more detailed information about the projects, please refer to each distributor’s DMIA report, which are also published on the AER's DMIA assessment web page Demand management innovation allowance (DMIA) assessment 2016-17 and 2017.
Background
A revised demand management incentive scheme (DMIS) and a new and improved Demand Management Innovation Allowance Mechanism (DMIAM) was established in December 2017. They will replace the current DMIS and DMIA in the forthcoming regulatory control periods of all electricity distributors.
The new DMIS is designed to provide higher incentives for distributors to adopt more demand management measures, which should put greater downward pressure on prices, benefitting the whole community (Demand management incentive scheme and innovation allowance mechanism).
Along with the new DMIS scheme, the AER has improved its current research and development fund―the DMIAM. The improved allowance provides more funding to networks to undertake further research on demand management initiatives and to share these learnings across industry and consumers. The details of the new DMIAM are available on the AER’s website Demand management incentive scheme and innovation allowance mechanism.