Authority changes rules to boost battery flexibility

The Electricity Authority Te Mana Hiko (Authority) is amending the Electricity Industry Participation Code to remove barriers to battery energy storage systems (BESS) playing a bigger role in the wholesale electricity market.

“We’re updating the rules so that the flexibility that BESSs can offer the wholesale market can be better realised,” says Hayden Glass, General Manager, Wholesale and Commercial. “BESSs can charge when the wind is blowing and the sun is shining and release this energy back into the system after dark and when electricity supply is more constrained.

“We want to make sure market arrangements don’t discourage efficient investment in BESS systems just because they have some features that are new, like the ability to switch rapidly between charge and discharge. We expect BESSs to play an increasingly important role in our power system to balance the growing contribution of variable renewable generation, such as solar and wind farms.

“There are four BESSs currently operating in the wholesale electricity market, with two more soon to come online. Our investment pipeline indicates more will be added to the system in the coming years so it is prudent for us to get the settings right now,” said Glass.

The updated wholesale market arrangements will be phased in so that benefits can be delivered while software updates are developed to support the changes.

From 30 October 2026:

• BESSs will be required to be dispatchable when consuming (charging), ie, the System Operator will be able to direct the amount of power they take from the system
• As an interim measure, BESS owners will be able to trade based on their expected level of charge and update trade quantities (but not trade prices) after gate closure if their expected capability changes

From 31 March 2028:

• BESS owners will be able to trade their full capacity with the introduction of state-of-charge constraints, ie, enabling the System Operator to see the available energy of each battery
• BESS owners will submit bids to charge and offers to discharge using a single trade form and receive a single dispatch for their system, simplifying processes
• All BESSs will have a one-hour gate closure regardless of their connection type and operational state, an alignment of rules from the current approach, which treats BESS inside distribution networks differently

The changes were consulted on earlier this year. As a result of feedback, the Authority has decided to defer the move to a one-hour gate closure for embedded BESS offers until 31 March 2028 and delay the implementation of the final phase by three months.