Guidance to support a more competitive flexibility services market

Distributors should start using the newly finalised guidance when participating in the flexibility services market to create an even playing field with third-party suppliers.

Guidance for distributors involved in the flexibility services market

The Guidance contains 7 key principles for distributors to apply when providing or procuring flexibility services, and examples that demonstrate how they can be implemented.

These principles aim to minimise the risk – real or perceived – that distributors use their natural advantage to inhibit others providing flexibility services.

Minimising this risk could encourage new providers to enter the market and compete on a more even playing field, ultimately supporting a more competitive flexibility services market.

This in turn, supports more efficient investment in technologies that provide flexibility – such as home battery systems, controllable water heaters and solar generation – which make the electricity system more reliable and secure, and lower costs for all consumers.

Ripple control

We recognise many distributors rely on ripple control (a form of flexibility) to manage their networks. It is deeply embedded in their operations and in most cases, has been for several decades.

The Guidance doesn’t apply to distributors’ existing ripple control services. Excluding legacy ripple control helps avoid unexpected issues and undue costs for distributors and consumers.

However, we expect distributors will adhere to the Guidance when considering future investment in ripple control or end-of-life replacement of ripple control plant.

We think this is a sensible, practical approach that balances support for a more competitive flexibility services market, while still being workable for distributors.

A flexible approach

We’ve deliberately taken a principles-based approach rather than developing prescriptive rules. This is appropriate given New Zealand’s flexibility market is still evolving and there is little evidence to suggest distributors are acting in a way that inhibits the development of a competitive market.

A principles-based approach also helps avoid stifling innovation and provides distributors some flexibility when adapting their practices to align with the guidance.

We expect distributors will share their experiences and lessons learnt with each other to support the development and procurement of flexibility services.

Help us ensure the Guidance is working

The Guidance was informed by feedback on the draft version in 2024 and then 2025. However, it may be updated over time as changes are bedded in, lessons are learnt and the market evolves.

We want to support distributors to adapt their practices to align with the Guidance and welcome enquiries so we can help troubleshoot implementation concerns or answer questions.

Monitoring and future regulation

We expect distributors will adhere to the Guidance when making decisions about investment in load control. However, we will monitor this and if we need to, we will consider whether a stronger approach is needed, such as mandating the principles in the Code for all flexibility services.

We expect to undertake a distributor-wide assessment by mid-2027.

As part of this, we invite flexibility providers during this time to report misaligned distributor practices to info@ea.govt.nz

Enabling flexibility across the system

The Guidance is one part of the Authority’s wider programme to enable more flexibility in the system. For example, we are:

• establishing an emergency reserve scheme to provide further protection against unplanned disconnections for households and businesses
• exploring rule changes to improve visibility of capacity and constraints on networks
• moving towards real-time access to data so consumers’, or their agents, can access their electricity information in real time
• enabling rule changes that will allow consumers to have more than one retailer for different services at their property
• supporting industry trials through the Power Innovation Pathway to help identify and remove regulatory barriers, and to better understand and then develop requirements for flexibility service providers to interact with the market.

Guidance and decision paper

Guidance for distributors involved in the flexibility services market

For more information read the decision paper

Contact us

info@ea.govt.nz