The Electricity Authority and Commerce Commission have jointly established the Energy Competition Task Force to investigate ways to improve performance and increase competition in the electricity market. It is about time and well overdue!!
Energy price spikes, electricity outages, and a lack of resilience and supply security are increasing burdens for New Zealand. Fuel shortages, dry years, cyclones, and downed transmission towers all impact our energy infrastructure and combine to cost us millions of dollars in lost productivity every year. Some companies have been driven over the brink of closure. Not to mention the social costs.
Solutions to help mitigate these issues have been available for years, however, our electricity market design and regulators, have favoured the incumbent generators, retailers, and network operators. Until now, there hasn’t been the political will to challenge the status quo despite our best efforts and those of others. It's been headwinds for distributed energy solutions such as solar and batteries and for those offering new retail offerings that value their contribution to the grid.
The Energy Competition Task Force is the first real step toward addressing this imbalance. In the words of Sarah Gillies, Chief Executive of the Electricity Authority “We are firmly focused on achieving a system that benefits New Zealand electricity consumers”. This approach is welcome and if realised could go some way to addressing the imbalance long protected by incumbency.
The Task Force will review electricity market regulation in several areas impacting SEANZ members and the consumers we advocate for. Any recommended regulatory changes will aim to encourage investment in new generation, bolster competition in retail, and provide more opportunities for consumers to manage their electricity use and costs - all positives.
Of specific interest, the Task Force is investigating options for consumers:
- Requiring network distributors to pay rebates (we prefer the descriptive term “consumer energy export payments”) when consumers export at peak times for the value it provides to the distributor, like deferred investment decisions and grid support
- Requiring all retailers to offer time-of-use pricing
- Requiring retailers to reward consumers for supplying power by offering prices that reflect the value of the electricity at the time they supply it (eg, at peak times)
- Appropriately rewarding industrial consumers for the benefit their short-term demand flexibility brings to the system.
This is about creating “fair terms of trade” for consumers with solar and batteries exporting to the grid, equalising their value with that currently enjoyed by generators.
Consumer energy export tariffs are much needed and are not to be confused with subsidies or feed-in tariffs which are typically overpayments for export used to increase a country's renewable energy profile, where renewable energy is not dominant.
This is about recognising the value of export from batteries at peak demand where it is aligned with the cost of a consumer importing energy from the grid, a reflection of its value to the grid and market, where neighbours also benefit by using the exported energy. The considerations with the Task Force are payments to consumers from network operators and mandated rates with retailers. With no mandated terms a retailer and network operator’s involvement is voluntary.
Distributed Generation, solar and batteries, can lower energy prices for everyone and support a more resilient grid, and they can do so at the lowest cost possible - we just need a regulator to make it right and provide the market that enables it, like other first world countries
Brendan Winitana
SEANZ Chair
