Posted with permission from ESG Impact Zone.

State and federal energy ministers have dumped a controversial new rule proposal on grid connections in what is being hailed as a major victory for wind, solar and storage projects, and another significant rebuff to the Energy Security Board.

The ESB’s push for Locational Marginal Pricing caused outrage in many parts of the renewable investment community, with the Smart Energy Council labelling it a “solar-stopper” and others warning it would result in billions of dollars of investments going overseas.

The LMP proposal was as controversial and hotly disputed as the ESB’s proposed design for a capacity mechanism. Like that proposal, common sense won out over energy market ideology and ministers have agreed to turn to a formula proposed by the industry itself.

The win was immediately celebrated by the SEC, which described the ESB proposal as as a “terrible idea” that it had been “stubbornly pushing” for years.

“As we pointed out in this important RenewEconomy article, the Smart Energy Council is fundamentally opposed to SolarStopper, a proposal that would stifle the development of new solar and wind farms,” it said in a statement.

“Australia will not achieve 82% renewables by 2030 with Locational Marginal Pricing.”

The question about grid congestion – locations and pricing – has been a problem for the industry for years, along with connection and commissioning issues.

Some solar projects have had half their output cut because of grid congestion – such as the Molong and Manildra solar farms in NSW, which RenewEconomy reported on in detail in January (even though the Guardian claimed the same report as an exclusive on Friday!!).

See: Solar farm output cut by half as renewables cop brunt of grid congestion

The ministers have told the ESB to dump the LCM proposal and work with government officials to develop a “more orderly” mechanism to manage grid congestion. They have been told to come back with proposals in the middle of the year.

The ESB was similarly rebuffed by ministers after pushing its version of the capacity mechanism for many years – with the encouragement of the then Coalition government and its anti-renewables energy minster Angus Taylor, and many now question if the ESB has, or should have, a future.