The Victorian Government are making good on a 2018 election promise to ban embedded networks in new residential apartment buildings. The scheme is being phased in via short term implementation of a General Exemption Order (GEO) that places conditions on the establishment of new embedded networks, in force from 1^st January 2023. The GEO will eventually be replaced by a licensing framework, meaning any entity that supplies, sells, and distributes energy in an embedded network must obtain a license from the Essential Services Commission.

The ban intends to give customers the ability to choose their energy retailer, which will allow access to greater consumer protections in a competitive market and theoretically allow access to more affordable rates. For providers, the government is claiming the licensing scheme will offer greater regulatory oversight with improved monitoring, compliance, and enforcement mechanisms, that ultimately will serve to promote a competitive retail market that encourages environmentally friendly energy practices.

The GEO will make establishing new networks conditional on meeting certain renewable energy requirements. Specifically, 100% of electricity consumed by residential customers at the site must be ‘green’ or renewable energy (derived from a mix of on-site and off-site renewable sources). A minimum of 5% of the electricity consumed by residential customers must be met by on-site renewable energy generation- for example, rooftop solar panels. An embedded network must be fiscally beneficial for residents, with the intent being that on-site renewable energy generation should pass on energy savings to residents. Networks that fail to introduce renewable energy and demonstrate the benefit being passed on to consumers will be forced to discontinue operations.

Although primarily affecting the establishing of embedded networks in new builds, for existing embedded networks, if the renewable energy threshold cannot be met (for example, if renewable energy technology cannot be added to the site), the private network must be removed to allow private residents to access external deals and therefore competitive market rates. Alternatively, an existing network can introduce an alternative market-sourced renewable energy option for customers to choose from.