October 11, 2024
Embedded Networks can be challenging at the best of times for many who have been in the industry for years to keep pace with, let alone those new to this, as they become increasingly common in multi-tenanted environments. With that in mind, this article will provide insight for those looking to get up to speed – and good clarity for those who have been in and around these terms for some time.
An Embedded Network is a privately owned and operated embedded electricity network at a site that has multiple customers. The customers’ consumption is ‘consolidated’ to a single connection (Parent Meter) with a Retailer in the National Electricity Market (NEM) and is used to purchase all electricity. This electricity can then be supplied, by someone who is not a Network Service Provider, and ‘on-sold’ to each of the customers at the site based on their measured consumption.
The Owner of the Embedded Network, which may be the Body Corporate, Owners Corporation, a single Site Owner, or the operator, who purchases electricity for the entire site at the Parent Meter, can do so at a reduced cost in taking advantage of the bulk purchasing. This reduced cost is relative to the cost of each customer having their own individual connection to a Retailer in the NEM and is also a result of the consolidation of metering and the reduction in other costs.
The revenue received from the customers of the Embedded and Solar Network, less the expense of purchasing electricity for the site as a whole, less other associated costs, generates a surplus of funds. The surplus can be utilised by the site in many ways and can include reducing customer electricity rates, repayment of ‘retrofitting’ an Embedded Network and supporting other site initiatives – such as Solar(PV) Array and Battery Technology. These additional funds can reduce the site requirement on capital contributions, owner levies, sinking funds and external financing sources.
Ultimately, this can provide a range of benefits to both Owners and customers at the Embedded network. For more information on this, explore our article here.
Now with a basic understanding of what they are, how they work and what the benefits are – we delve into two of the most commonly confused terms in the market. The Embedded Network Manager (ENM) and the Embedded Network Operator(ENO).
From1 December 2017, Embedded Networks of certain configurations in the NEM were required to appoint an accredited ENM. Primarily, the ENM is responsible for creating the National Meter Identifier (NMI) that is used to purchase electricity in the NEM and not from the Exempt Embedded Network Service Provider (EENSP) or site owner.
Customers who do not live in Embedded Networks, already have an NMI that they use for their premise to buy energy. Customers within Embedded Networks are known to be‘Off-Market’, and when they choose to buy their energy in the market, move to being ‘On-Market’. This process includes allocating them an NMI number and formed part of the “Power of Choice” regulation changes.
The ENM has the responsibility of performing the market interface function that links Embedded Network customers to the NEM. Importantly, the ENM will create and maintain a NMI so that the Embedded Network customer can be identified in the NEM by a market retailer.
Chances are, if you operate or support an Embedded Network with 30 or more customers,you should have an ENM appointed, or you will be in breach of your Australian Energy Regulator Exemption Conditions. We explore these obligations and requirements elsewhere in depth, which you can read about here.
NOTE: An Embedded Network Manager can also be an Embedded Network Operator, but they are not the same role. We delve into that next.
The operator of the site is called the Embedded Network Operator (ENO) and is responsible for providing the services associated with the on-selling of electricity at a site. The Owner of the Network may operate the site themselves or they may appoint a representative/agent to do this on their behalf.
Electricity is on-sold by the ENO to all customers within the Embedded Network. Each customer has their own individual electricity meter, identified by a unique‘meter number’, that is used to measure consumption periodically. The ENO then applies the electricity rates that have been set for the site to invoice customers. The electricity rates set by the ENO are generally comparable with the Retail offers in the NEM; however, there is no requirement for the ‘reduced cost’ at the Parent Meter to be passed on to customers.
You can read more about these two roles and how they fit into Embedded Networks in our in-depth article here.
If you are a site owner and looking for a party to manage the billing (generate and send invoices), provide customer service, debt management or associated operation services – you are looking for an ENO.
If you are a site owner who is managing this yourself, or already have an ENO approved and a customer wants to access to the market – you need an ENM. You may also realise you require one for your embedded network because you have 30 or more customers.
ENM Solutions is an Independent specialist and a recognised expert in Embedded Networks and the Embedded Network Manager function.
Accredited with the Australian Energy Market Operator (AEMO), we were one of only a small number of participants accredited before 1 December 2017. Our unique offering as an ENM is that we do not offer billing or retail services. This allows us to perform the ENM function at your network as an independent party, we can provide comfort to your customers that we are impartial and independent advice to you as a network owner.
We can fulfill the Embedded Network Manager requirement on your behalf – while you continue to manage your Embedded Network. Our purpose-built system to manage the creation and management of On-Market Child Meters and NMIs, and customers all throughout the NEM, has us well placed to assist all Embedded Networks that need to appoint an ENM.
For operators of Embedded Networks, the ENM role also represents an opportunity to increase revenue by providing additional services to their clients.
Reach out to us today to discuss whether an Embedded Network is right you, whether you need an ENM or an ENO, or whether you need advice or support navigating the opportunities and challenges available to you.
