December 12, 2024
Embedded Networks are private electricity networks in which the owner of the building or network is typically responsible for supplying and/or selling electricity to the customers, tenants, or users located within the network. This setup differs from non-embedded network arrangements, where customers connect directly to a retailer that sells them energy supplied through the public distribution network.
Certain scenarios can be more financially beneficial and efficient when established as a private electricity network, allowing for cost savings and better capital allocation for developments.
While many customers may first hear about embedded networks through the media or in residential apartment buildings—many of which operate under this model—there are a variety of other scenarios where this arrangement is also common. Below, we will outline some of these typical scenarios and provide context for their operation.
Perhaps the most common form of an Embedded Network, predominantly featured in high-rise apartment buildings and multi-tenant buildings with 30 or more units. This type of embedded network is well-suited for those who want to exercise greater control over their energy usage. It also allows property owners to benefit from the supply and sale of energy, contributing to site improvements and investment.
Many retirement villages will operate as an Embedded Network;operators of these sites can manage pricing, and investments, and allocate surplus funds back into the community. This setup provides residents with a single point of contact, streamlining the delivery of more affordable energy and tailored services that meet the specific needs of the demographic.
There are a range of scenarios where embedded networks will form part of a successful energy solution to supply and sell electricity to commercial customers. Common scenarios where this is applicable include shopping centers, office buildings, and business parks. These developments offer opportunities similar to those found in residential customers, as commercial tenants can easily access energy and utilize any surplus to improve the network and its services. Building strong relationships with tenants can lead to improved energy supply on-site and better account management
Caravan, holiday, and lend-lease parks frequently establish private electricity networks due to the reluctance of public distribution companies and retailers to provide and maintain infrastructure in these areas or to sell electricity to these customers. Consequently, park operators often become exempt providers by necessity, having made significant investments in the infrastructure required to supply and sell electricity.
Industrial parks and manufacturing facilities are another common use case for embedded networks, with upfront capital invested to provide and maintain the facilities required for these types of services. Sourcing the energy in bulk for the site can make use of the significant energy usage of multiple tenants and provide a net benefit to the entire park and the large customers included within it. There are also supplementary opportunities to incorporate commercial outcomes from Small Resource Aggregation through sites like these that can share and maximise the benefit of renewable technologies.
Remote locations can require the establishment of energy supply to employees, local residents, tourism facilities and other mixed use requirements. These scenarios inevitably involve the supply of energy to a third party, a core component of an embedded network, and provide a pathway for supply and sale of energy in scenarios that would not otherwise be feasible for registered distributors and retailers to service.
There are certain scenarios that are not covered by the standard arrangement but could qualify for an embedded network configuration.The regulations account for this by allowing for the completion of an Individual Exemption application. This could apply to unique, innovative opportunities that provide benefits to consumers or users, or to support specialized use cases such as islands or research facilities.
While we have not gone into the distinction here, it’s important to note that there are a variety of use cases for embedded networks that will be best aligned to the supply of energy to a third party, but not necessarily the sale of energy. This is a distinction that should be carefully considered given the complexity of private energy networks, where simply because you can purchase and on-sell energy, does not mean you can operate a profitable embedded network.
Above we have simply outlined some of the different scenarios that you may not have previously understood commonly operate as embedded networks.
With the evolving energy sector providing greater access to data, and a greater variety of innovative services and solutions, there are more and more opportunities to implement embedded networks in different situations that address different use cases. Understanding that this isn’t limited to apartment buildings and shopping centres helps to expand the view of these more and more common arrangements as part of fuelling and supporting the future of the energy transition.
Our team are recognised experts in Embedded Networks and can assist you with any questions you might have about whether a private electricity network is a viable solution for your use case.
Reach out to us today for an informed conversation about what this might look like and how we can ensure you proceed with confidence.
