What Is an Embedded Network and Should It Change Whether You Buy an Apartment?

From 1 April 2026, every Strata Information Certificate issued for an NSW strata property must now disclose whether the building operates an embedded network. For most buyers, this is a term they have never encountered. Understanding what it means before you exchange contracts can matter more than it looks.

What Is an Embedded Network?

An embedded network is a private electricity supply system within a building or complex. Instead of connecting to the public grid through a retailer of their own choosing, residents receive electricity through the building's own internal infrastructure. It is managed not by a mainstream retailer, but by the building owner or a third-party operator appointed by the owners corporation.

The arrangement is legal and common in large apartment towers, mixed-use developments, and master-planned communities. The operator holds an exemption from the Australian Energy Regulator (AER) rather than a full electricity retail licence, which allows them to supply electricity within the site boundary without going through the licensing process that applies to mainstream energy companies.

Why It Matters for Your Electricity Bill

In a standard apartment, you choose your retailer, compare plans, and switch when you find a better deal. In an embedded network, that flexibility is often limited or removed. You are typically a customer of the embedded network operator for as long as you live in the building.

There are protections. The AER's exemption framework includes price protections for residential embedded network customers: in NSW, operators must not charge above the regulated Default Market Offer (DMO), the annual price ceiling the AER sets for electricity standing offers. That cap provides a floor of consumer protection.

But a cap is not a competitive rate. Mainstream retailers routinely offer plans well below the DMO to customers who actively compare and switch. Those options are generally not available to embedded network residents.

The picture is not always negative. Buildings with shared rooftop solar, battery storage, or bulk purchasing arrangements can sometimes deliver residents rates that sit below what they would pay on the open market. In those cases the embedded network is working in residents' favour. The challenge for buyers is that there is no obvious way to tell which type you are dealing with without asking directly.

What the New Disclosure Means for Buyers

The Strata Information Certificate is a formal document issued by the owners corporation under Section 184 of the Strata Schemes Management Act 2015 (NSW). It records key facts about a scheme at the time of issue: outstanding levies, current fund balances, any orders affecting the scheme, and the results of the most recent annual fire safety inspection.

From 1 April 2026, the certificate must also record whether an embedded network is in place and who the operator is. That disclosure converts what was previously a hidden condition of ownership into something a buyer can know, verify, and factor into their decision before committing.

Before this change, a buyer could settle on an apartment and receive their first electricity bill before realising they had no ability to switch providers. The new requirement does not prevent buyers from purchasing into embedded network buildings. It ensures they make that choice with the relevant information.

One important point: the Strata Information Certificate is not the same document as the strata inspection report. The strata report contains meeting minutes, financial statements, insurance certificates, and levy information assembled by a search agent from owners corporation records. The Strata Information Certificate is a separate formal certificate issued directly by the owners corporation or its manager. Your solicitor or conveyancer should obtain both before you exchange contracts. If you are buying at auction, request both before auction day.

What to Ask If the Building Has One

If the certificate discloses an embedded network, these are the practical questions worth pursuing before you sign:

Who is the operator, and what are their current tariffs? The operator name in the certificate gives you a starting point. Ask your solicitor to request the operator's current tariff sheet and compare it to the current NSW DMO (published on the AER website) and to typical market offers on the AER's Energy Made Easy comparison tool.

Can residents access market competition? Some embedded networks are configured to allow residents to contract with a mainstream retailer through the network infrastructure. Others are not. Ask directly whether this option exists and whether any current residents use it.

Is there solar or battery storage involved? An embedded network with shared solar generation may offer feed-in tariffs or generation credits that offset higher supply rates. Understand what the arrangement delivers in dollar terms, not just the concept.

When does the current operator contract expire? Owners corporations contract with embedded network operators for fixed terms, commonly five to ten years. If the agreement is nearing expiry, the committee may have the opportunity to renegotiate terms or change operators at rollover. If the contract has a long term remaining and the current rates are poor, that constraint cannot be unwound quickly.

Has the committee discussed it in meeting minutes? Strata meeting minutes sometimes contain owner complaints about embedded network costs, debates about renegotiating operator contracts, or resolutions to investigate alternatives. Reading the minutes alongside the certificate gives a more complete picture than the certificate alone.

Buying Into a Building With an Embedded Network

Knowing a building has an embedded network does not make it automatically a problem. It makes it a variable that deserves a clear answer before you commit, not a discovery you make after settlement.

The change to mandatory disclosure is practical progress for buyers. You now have the information earlier in the process. What to do with it still requires active inquiry, and that inquiry is worth doing before auction day.

This is informational only. Not financial, legal, or compliance advice. Electricity regulation and embedded network rules vary by state. The NSW information in this post reflects the Strata Schemes Management Act 2015 (NSW) as amended by the Strata Schemes Legislation Amendment Act 2025, and the AER's embedded network exemption framework. Consult a qualified professional for advice specific to your situation.