Where is Aotearoa New Zealand in the distributed energy resources space today.

The industry is in growth mode across the markets (residential, commercial and industrial) but that growth could be significantly better with adjustments in a few spaces. A clue to growth is the long-held SEANZ view. It’s not subsidies or feed in tariffs, as we don’t want them given the damage they do long term. It is far closer. It’s the by-product of a huge, multi-levelled system that portrays all the symptoms of such, resulting in a slow turning structure - from regulation to doing. That’s not a criticism but a statement of fact, as the electricity grid has been described many times as the biggest and most complex infrastructure machine ever built by man. Yes the claim surprised me too!

The distributed energy resources (DER) space which includes hardware/technology, digitisation/software smarts, prosumers and aggregators, is the key difference between where the energy sector of last century was, where it was 20 years ago and where it is today. As a group it’s the newish boy on the block. And its development here is slower than other jurisdictions, costing Aotearoa New Zealand a big chunk of change, in employment, lower cost electrification, increase in de-carbonisation and our economy. How big is this?

A cost benefit analysis completed by Sapere for the Electricity Authority, has identified the value to society (economy and environment) of DER in Aotearoa New Zealand. The numbers are conservative but up there, with an estimated surplus from DER uptake to 2050 of NZ$7.1 billion. That excludes behind the scenes benefits, like reduction in health spending. So how do we take advantage of this?

There is plenty of international research that reaches the same conclusions as Sapere. We have been saying this stuff for a few years with a published SEANZ report in 2017, titled the value stack of DER, so good to finally see an independent reach the same conclusions. Bottomline – costs can be reduced for consumers of electricity with competition using another market process while providing material benefits aka decarbonisation and the low-emissions economy.

As a result, the Electricity Authority has published this discussion paper Updating the Regulatory Settings for Distribution Networks  This explores issues on distribution networks and regulatory options that may be needed for distribution networks to support the transition to a low-emissions economy. The question of how far the Electricity Authority will move and take the right actions to change regulatory settings, that enables greater DER by consumers, for the benefit of all consumers is key.  Many changes have been identified and are needed to make this a reality by many parties over the last several years. SEANZ has identified a long list of those changes, which will be detailed in its submissions on this consultation. This thing is a major in the development of the DER industry and the right outcomes, if timely can potentially drive exponential growth.

The complexities of an industry is highlighted by its interdependencies. Change a regulation setting here, and a downstream impact on these other players over here is this. So do we expect to see, a, some or heaps of regulation setting changes? How long will it take to see positive outcomes that enable DER further from the Authority, to take advantage of the $7.1 billion economic surplus? Lots of questions tells the story.

It has been clearly identified by a few parties that the electricity industry has a very short window of opportunity to deliver on electrification of the economy to meet Climate Change Commission Advice. That time is fast approaching and we wonder where the schedule and game-plan is to make that happen. We know it will also provide more options to assist all consumers with lower cost energy by creating the much needed flexibility market approach with DER.

The next substantial challenge, is the way in which the electricity sector works in isolation with its siloed stakeholders (generators, retailers, gentailers, distribution networks, consultants, aggregators, DER providers, prosumers et al). One would think that working across all the silos to meaningfully address, in a consumer orientated world, that the interdependencies and downstream impacts could be worked through more effectively with inclusion of real players (not advisory, consultants or closed groups) well before public consultation happens. Or before the writing is on the wall. Or even well before critical consumer impacting, NZ Inc deadlines are raised. Or is it closed stuff going on that we as mere kiwis are not allowed to know.

This historical siloed approach, where the industry stakeholders keep their spaces, has some interaction and innovation between them in play in the DER space. However the predominance of some interaction as opposed to more or significantly more, clearly identifies the immediate need, requirement and leadership to create a cross siloed blueprint for Aotearoa New Zealand’s future in the energy sector. How else do we maximise and optimise the opportunities we have to get the benefits for the short, mid and long term benefit of all consumers? Sound familiar? Should do it’s how a few other industries were opened up.

A group of published articles penned by SEANZ members, Cortexo, Our Energy, CTQ Advisers raises all the relevant points and their call to action to make stuff happen, so please check it out here.

SEANZ will publish its submissions and engage further with a wider group of stakeholders, in driving our messages about the value of DER.