Recently the Clutch Compliance team undertook a market research study to better understand the key compliance management risks facing organisations as we develop our compliance offering to ensure it aligns with the needs of the market.
The purpose of the Clutch Compliance Market Research Study was to:
- engage with various NEM participants to capture their understanding of network connection obligations and their current compliance management practices, including any perceived gaps and concerns;
- uncover market sentiment from a range of participants regarding network connection compliance for operational assets; and
- gain insights into key ‘value-adds’ that Clutch’s compliance service (planned for launch in early 2022) could offer the market.
Clutch engaged with a range of market participants, from large, nationally focussed generators/retailers to asset owners and/or developers with varying levels of experience in operating assets in the National Electricity Market. By engaging with various participants, Clutch aimed to ensure a cross-section of perspectives were captured. This range of client organisations helped to highlight the varying maturity levels in dealing with compliance management in terms of resources, systems, and experience.
While some participants felt they were well-positioned to effectively manage compliance, most considered themselves less mature and acknowledged this as a gap within their organisation.
The following outlines the key results of the survey.
Organisational understanding of the NER and compliance risk
MEAN SCORE (out of 5.0)
|Understanding Compliance/Network Risks||
|Understanding NER for Operating Assets||
Clutch’s research showed organisation-wide understanding of network risk was a mean score of 3.2 out of 5. This score, coupled with the feedback provided broadly suggested that:
- participants felt this is an area for improvement within organisation;
- participants felt there would be an opportunity for more education in this space; and
- understanding is usually restricted to certain teams or individuals within organisations, resulting in potential key-person risks.
Organisation-wide understanding of the NER showed a mean rating of 3.7. This was slightly better than network risk, however, there is still an opportunity to provide more detailed information and better educate staff.
Despite the varying levels of maturity, there was a broad acknowledgment that:
- network connection related compliance was typically managed by a small team; and
- often these teams felt under-resourced and/or relied on too few experienced individuals.
Range of Compliance Management Systems
While the survey responses revealed a range of different systems are being used to track and manage ongoing compliance obligations, most organisations are still relying on basic, spreadsheet-based systems and acknowledge the limitations of such systems.
Broadly, survey respondents felt the way organisations identify, capture, and manage network connection compliance obligations can be improved. There were also concerns over compliance reporting, which was identified as an area that could be streamlined.
Complexity and Pace of Change
Another area respondents identified as a challenge was the complexity of the network connection process and the pace of regulatory change. The pace of this change was perceived to be adding to the challenges in organisational understanding and maintaining compliance on an ongoing basis.
Preference to Integrate Network Compliance with Other Compliance Workstreams
Many participants flagged a preference to capture all compliance matters within a single location (including jurisdictional generation licensing obligations and reporting, National Gas Rules obligations, land, and leasing, reporting to the Clean Energy Regulator, etc). While Clutch’s initial compliance service offering will focus on the core, high-risk area of network connection compliance, extensions to the offering beyond these core services will be considered if sufficient market demand exists.
Clutch’s research broadly highlighted that there were significant areas for improvement around network connection compliance of operational assets. Based on the results outlined above, Clutch has identified widely-shared requirements for:
- Better education to ensure the broader organisation is across the compliance obligations and the risks and consequences (corporate and personal fines for officers) associated with breaching compliance obligations;
- Better systems for capture, tracking, and reporting of compliance obligations;
- Greater awareness of regulatory changes and their impacts on operational assets; and
- Better support for small teams to help mitigate ‘single point of failure’ resourcing risks
Given the Key Findings and Key Learnings, Clutch will refine the Clutch Compliance service offering ready for launch into the market in early 2022. As we refine the service, Clutch will consider the following:
- Building a Compliance Culture: a key focus of Clutch’s Monitoring Service will be to support increased awareness of obligations at multiple organisational levels.
- Compliance System Development: Clutch’s Management System will incorporate the market needs identified for increased streamlining and automation of monitoring, tracking, and reporting compliance against obligations.
- Compliance Scope: While Clutch’s initial intention is to establish our compliance management service around network connection compliance for operational assets, Clutch will explore the market demand around other, complementary organisational compliance matters with a view to expanding the scope of its service in the future.
We trust this information has been useful and provided some insights into our approach to supporting the industry to better understand and manage compliance obligations.
Our team would welcome the opportunity to further discuss Clutch’s service and to better understand your organisation’s issues and how we can support you and your teams in ensuring compliance is thoroughly managed.