Australia’s network operators have joined forces with two leading consumer groups to argue they should be allowed to disconnect remote and regional communities from the main grid, and instead provide them with renewables based micro-grids and stand alone power systems.

The move could save billions of dollars in costs to all energy consumers, and remove one of the biggest cross subsidies that supports the country’s ageing and fossil fuel focused centralised grids.

It will also likely result in consumers getting cleaner, safer and more reliable electricity, and over the longer term herald a complete rethink about the way energy is provided across the country.

Remote and regional communities are currently supported by billions of dollars in cross subsidies – paid for by other consumers – to deliver poles, wires and other infrastructure over thousands of kilometres.

Western Power estimates it can save nearly $400 million just by taking 2,700 consumers off the grid, and operators with bigger networks in other states have pointed to even bigger savings.

“This is as close to a ‘no brainer’ as we can get,” says Andrew Dillon, the interim CEO of Energy Networks Australia, which has teamed up with the Alternative Energy Association and the Public Interest Advocacy Centre to try to encourage regulators to come to the party.

The issue is the legacy of the massive “rural electrification” program of more than half a century ago, when state and federal governments were determined that all consumers should have access to electricity and be connected to the grid.

It was an admirable goal, and deserving of a modern economy, but the cost of stringing poles and wires across thousands of kilometres was, and remains, enormous.

The cross-subsides in Queensland and Western Australia remain more than $1 billion a year, while under what is known as “postage stamp” pricing, the service inflates the cost of networks for all consumers in other states like South Australia and NSW, likely to similar levels.

New technologies such as solar and battery storage now make it possible to build other options – such as stand alone power systems for individuals, or mini-grids for communities and towns – which are not just significantly cheaper, but also safer, cleaner and more reliable.

The three groups have come out in support of a rule change that is being pursued by Western Power, which operates the main network in the south-west corner of Western Australia, and find a way through the regulatory maze.

They argue that the networks are best placed to effect this transition, because there is no incentive for the consumer concerned: their costs are already heavily subsidised and they would be unlikely to be able to install off grid systems and keep their costs comparable to inner city customers.

The networks, however, argue that they can do this at a much cheaper cost than maintaining, upgrading, or even replacing the elongated networks, and so therefore can reduce the size of the subsidy paid for by all other users.

The problem is that, due to arcane rules, they are not able to do this. Networks are usually not allowed to provide generation and “retail” services to consumers – just the poles and wires – and the Australian Energy Market Commission has been reluctant to change this rule.

The ENA, the ATA and PIAF have joined forces to support Western Power in what will likely be a ground-breaking application to change this rule.

Western Power says it could save $388 million over the next 10 years if it could provide about 2,700 customers with solar, battery storage and back-up diesel generators rather than having to replacing ageing network assets. That is around $140,000 per customer.

It has already done trials with some rural customers in the Ravensthorpe, Lake King, Jerramungup, Lake Grace and Kondinin localities in the south of the state and it says the benefits have been outstanding.

Solar PV arrays were deliberately oversized to give customers greater comfort – and lithium batteries were sized to supply customers for two days if the sun wasn’t shining.

The level of reliability has improved dramatically from an average outage duration of nearly 70 hours to less than five hours in the latest year. In all, 92 per cent of the power came from the sun and the batteries, and the diesel generators were rarely used.

The systems were also robust. In January 2017, a major storm event occurred in the region with storms and flooding washing away major road arteries, isolating communities and causing power outages of up to 24 hours. The SPS sites were unaffected.

“There are significant potential future benefits to customers associated with the deployment of lower cost off-grid solutions to some regions, communities or customers,” the document says.

Indeed, Western Power argues that the old way of thinking about grids should be discarded in favour of a more “modular approach” – which means some consumers and customers off the grid altogether, and some serviced by a micro-grid with a “thin wire” to the main network. See our story: WA flags the end of the centralised network.