Embedded Networks and your Owners Corporation

Understanding Embedded Networks within your Owners Corporation

 

As more and more strata developments are built, embedded electricity networks are becoming a fact of life for many Australians.

The use of embedded networks are proving increasingly popular with developers, but are not always greeted with the same enthusiasm by the people who eventually purchase and reside in the apartments.

This is mainly due to a lack of understanding of the potential benefits an embedded network can bring to owner-occupiers and tenants as consumers, as well as the potential benefits they can offer an Owners Corporation in the long run.

Below we break down why so many buildings are now using embedded networks, what it means for people residing in buildings with such networks and try and bust some myths along the way.

WHAT IS AN EMBEDDED NETWORK?

An embedded network is when the electrical wiring is configured in such a way as to enable the owner of the site to sell energy to all the tenants or residents based there.

The owner of the site then purchases energy from a retailer and that energy is on-sold to customers (owner-occupiers and tenants) who live on the property.

What typically happens is the owner of the site (the Owners Corporation), signs a contract with a retailer which gives them the rights to install and manage the embedded network and then sell electricity to the customers within the building.

Developers opt for these solutions at an increasing rate because retailers offer to install the infrastructure required and manage the embedded network thereafter at no cost to the developer in return for a contract allowing them to sell energy to the eventual residents of the building.

As the sole owner of the land and the various lots within it, the developer signs the deal on behalf of the Owners Corporation and the eventual owners and members of the Owners Corporation inherit the deal.

There are a number of companies who install and manage embedded networks, from the likes of Origin and Energy Australia through to more niche embedded network management companies which deal exclusively in embedded networks such as OC Energy and WIN Connect.

WHAT ARE THE BENEFITS OF AN EMBEDDED NETWORK?

As previously mentioned, embedded networks are cheap for the developer and help to save on building costs, however, they also offer advantages to eventual customers.

Because energy can be purchased for the site at a bulk rate, rates through the embedded network retailer are typically lower than what they can offer standard customers.

Embedded networks also open up potential income streams for the Owners Corporation. At Strata Plan we have helped committees negotiate annual incomes of over $10,000 when the time comes to renegotiate their embedded network contracts.

With no shortage of providers vying for your contract when it comes time to renew or tender for a new provider, companies are literally throwing themselves at Owners Corporations with some great deals to take advantage of.

If your building generates its own power, such as through solar panels on the roof, it may be able to sell any extra energy back to the grid for further income.

These income streams can be used to help offset Owners Corporation fees or can be used to secure further discounts on electricity rates.

As the individual meters are often owned by the embedded network manager, any issues residents have with their meters can be reported directly to the retailer who will provide a fix.

WHAT ARE THE DISADVANTAGES OF AN EMBEDDED NETWORK?

The biggest criticisms we receive from customers who purchase into or lease properties within buildings with embedded networks is that they cannot understand how they can be locked into one provider for their electricity supply.

This is not technically true. Even in an embedded network, customers are able to choose a provider other than the retailer with rights to sell within the embedded network.

However, it is true that changing providers can be a difficult exercise. Doing so usually means removing the authorised retailer’s meter and installing a new meter.

If you are looking to use a provider outside your embedded network, you should speak to your existing provider about what needs to happen to change to a new provider. Make sure you talk to your preferred provider to make sure they can help you with the change.

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