Changes to instantaneous reserve cost allocation

The Electricity Authority Te Mana Hiko is updating the way instantaneous reserve procurement costs are allocated to generators.

We have amended the Electricity Industry Participation Code 2010 so that groups of generating units receive the same instantaneous reserve cost allocation as single generating units that present the same level of risk to the power system.

This will level the playing field between different types of technologies and asset configurations and promote competition and efficient investment in future generation.

By incentivising investments that reduce system risk, this change will provide for a more resilient grid and a more reliable supply of electricity to consumers.

The new cost allocation methodology will be effective from 1 October 2026.

Read our decision paper

About instantaneous reserve

The System Operator procures instantaneous reserve to protect against the risk to consumer supply of a sudden loss of generation.

The costs of procuring the instantaneous reserve are allocated to those whose potential loss of generation causes the need for it.

About instantaneous reserve