Overview

In October 2018, the Victorian Government announced an election commitment to ban embedded networks in new residential apartment buildings, with appropriate exemptions for buildings that use renewable energy microgrids to deliver low-cost renewable energy to apartment buildings.

The Government’s election commitment was made in response to ongoing concerns that consumers living in embedded networks pay higher prices and do not have access to the same level of consumer protections as those who live outside of embedded networks. An Expert Panel (Panel) leading the Embedded Networks Review (Review) has developed recommendations to Government on how best to implement the ban.

The Panel was also tasked with providing recommendations to Government on how to ensure that, to the fullest extent practicable, embedded network customers in legacy (existing) residential settings can access the same competitive retail offers and consumer protections as standard electricity customers.

After an extensive review, the Panel has developed a comprehensive package of recommendations to the Victorian Government on how to best implement its commitment to ban embedded networks in new residential apartment buildings. The Victorian Government will now consider the recommendations and prepare a formal response. If the Government decides to implement the recommendations in full, the Panel considers that the recommendations will significantly improve fairness, choice and protections for Victorians living in new and legacy (existing) residential embedded networks.

Read the Final Report

The Final Recommendations Report (Final Report) outlines the Panel’s final recommendations on how the Victorian Government should implement its election commitment to ban embedded networks in new residential apartment buildings, with limited exemptions.

The Panel’s Final Report has been informed by extensive public consultation and stakeholder feedback on the Issues Paper and Draft Recommendations Report (Draft Report). There is more information about the response to stakeholder consultation below.

The Panel is grateful to all those who contributed to the Review. The input provided by stakeholders has enabled the Panel to develop a comprehensive set of recommendations which, if implemented, will give effect to the ban while also providing all Victorian electricity customers with equivalent protections, market access and treatment, no matter where they live or how they get their energy.

Implementation of the ban and next steps

The next stage of the review is for the Victorian Government to consider the recommendations and prepare a formal response which outlines the extent to which it will implement the recommendations. The Government response is expected to be published by mid-2022.

The Panel recommends that the ban be initially implemented through amendments to the General Exemption Order (GEO), with new conditions to include enhanced consumer protections and a renewable energy requirement for new local energy networks (previously known as embedded networks).

The renewable energy obligation will require new local energy networks to have at least 50% of energy consumption at the site met by on-site renewable energy. Following this, the Panel recommends that a new Local Energy Service licensing regime be established.

When the amended GEO takes effect from 1 January 2023 there will be three pathways for new and legacy embedded networks to operate legally:

1. In future apartment buildings if an operator cannot meet the on-site renewable energy generation requirement: Embedded networks will be banned and each customer will be grid-connected. These customers will have standard Victorian retail market customer protections under the existing regulatory framework, including monitoring, oversight and enforcement for compliance breaches.

2. If an operator does meet the on-site renewable energy generation requirement: a local energy network will be allowed. Benefits of the renewable energy must be shared with consumers at the site and customers will have enhanced protections and retail market access.

For legacy (existing) residential sites:

3. Current legacy (existing) customers won't be left behind: Existing embedded networks will be allowed, however these customers will gain access to equivalent consumer protections with other Victorian residential customers and be transitioned over time to have access to the benefits of renewable energy and their choice of retailer. Once the new licensing regime is established (by late-2023 to mid-2024), new local energy networks will be given 6 months to apply for a licence, while existing embedded networks will be given up to 3 years.

Response to stakeholder consultation

The Panel has consulted broadly with the public and other consumer, industry, regulatory and government stakeholders when identifying issues, developing solutions and finalising its recommendations.

Response to the Issues Paper

In January 2021, the Panel released an Issues Paper setting out the key issues related to the Review and sought stakeholder feedback.

The Panel received 133 submissions from a broad range of stakeholders in response to the Issues Paper, including embedded network customers, consumer representatives, embedded network providers, energy retailers and distributors, and others (local government, Energy and Water Ombudsman (Victoria), consultants and research institutes).

During the consultation period, the Panel held two online sessions in February 2021, an Issues Paper webinar and a Solutions Design workshop. The Issues Paper webinar presentation slides from this phase of engagement can be found in the document library.

Submissions to the Issues Paper consultation have been made publicly available.

Response to the Draft Report

In June 2021, the Panel released a Draft Report that set out 16 draft Recommendations. The purpose of the Draft Report was to provide stakeholders with a clear understanding of the Panel’s proposal to deliver the Governments election commitment to implement the ban, and how outcomes for embedded network customers could be improved.

When developing its draft Recommendations, the Panel considered stakeholder feedback to develop an approach that aimed to retain the consumer benefits that should arise from living in an embedded network (for example through bulk purchasing and reduced costs associated with renewable or clean energy technologies), while ensuring consumers are adequately protected and have actual access to the retail market if they wish. This will ensure that, to the fullest extent practicable, all Victorian energy consumers will have access to the same competitive retail offers and consumer protections, no matter where they live.

The Draft Report was informed by stakeholder feedback on the Issues Paper and public consultation. The Panel received 50 submissions in response to the Draft Report from a similar cross section of stakeholders, including embedded network customers, consumer representatives, embedded network providers, energy retailers and distributors, and others (local government, Energy and Water Ombudsman (Victoria), consultants and research institutes).

In July 2021, the Panel held an online Draft Recommendations Report webinar. The webinar presentation slides and supporting documents can be found in the document library.

The Final Report includes a summary of stakeholder submissions and the key themes identified during the Draft Report consultation process, as well as outlining how the Panel has responded.

Submissions to the Draft Report consultation have been made publicly available.

Privacy Collection Statement

The Department of Environment, Land, Water and Planning (DELWP) is committed to protecting personal information provided by you in accordance with the principles of Victorian privacy laws. For more information read DELWP's Information Privacy Policy.

The information you provided has been used by DELWP to inform the Review. The information in your submission was collected by DELWP to administer the public consultation process only.

Details about the use of your submission (including your questionnaire response)

DELWP may do the following with the information you provide in your submission and questionnaire response:

  • use the personal information you provide to update you on the results of the consultation process, and to discuss the details of the submission and questionnaire content further where necessary
  • publish a copy of your submission on the DELWP website or other Victorian Government website
  • publish de-identified and aggregated questionnaire results on the DELWP website or other Victorian Government website
  • quote directly from your submission in the draft and final Review reports
  • make it available to other Victorian Government agencies to inform the Review.

DELWP asked stakeholders to de-identify any free text in comment boxes so that individuals could not be identified.

For transparency and accountability, the contents of your submission may be published on a Victorian Government website which is accessible worldwide. Any person may view your comments.

Your comments may remain on external servers, even once your comments are removed from the original website it was published on.

All submissions are public documents and may be accessed by any member of the public unless you request, and your comments are given, confidential status.

If you are making comment as an organisation, then your comments may be published, including the name of your organisation.

If you are making comments as an individual, then your comments may be published, including your postcode but with no other details.

If you choose to make available the contents of your submission for publication, please ensure that individuals are not identified in the content.

If you freely and voluntarily provide any ‘sensitive information’ under the Privacy and Data Protection Act 2014 in your submission, DELWP will consider that provision to be consent to collect the information and will then protect it under the Information Privacy Principles in the Act. Sensitive information is information relating to racial or ethnic origin, political opinions, membership of a political association or trade association/union, religious or philosophical beliefs or affiliations, sexual preference or criminal record.

You have the right to access and correct your information. Requests for access should be sent to the Manager, Embedded Networks Review, by one of the following:

  • email: EmbeddedNetworks.Review@delwp.vic.gov.au
  • mail:
  • Manager, Embedded Networks Review
    Energy Sector Reform
    Department of Environment, Land, Water and Planning (Vic)
    PO Box 500
    East Melbourne VIC 8002