Distributed generation pricing principles reform

Distributed generation – when it’s located in the right place and operating at the right time – can help lower electricity costs in the long term. Distributed generation also can create costs.

Distributed generation refers to electricity that is generated close to where it is used, rather than at large, central power stations. It includes things like rooftop solar panels, home or business batteries, small wind turbines and commercial-scale solar and wind farms that connect directly to the local electricity network.

We’re updating the network pricing rules for distributed generation to ensure it is rolled out and used in ways that benefit New Zealanders.

The Distributed generation pricing principles set out how lines companies allocate costs created by distributed generation and reward them for the benefits their electricity supply creates for the network.

Overall, we want the pricing principles to support a growing supply of electricity and encourage distributed generators to supply electricity when and where it reduces costs and delivers benefits, so New Zealanders are better off over time.

We’re taking a staged approach to reforming the pricing for distributed generation. This enables us to build a solid foundation for more efficient pricing and fine-tune the rules as needed to avoid unintended outcomes.

Distributed generation pricing principles were first introduced in 2007 and are the main regulatory mechanism affecting pricing for distributed generation.

As investment in distributed generation (and storage) grows, it’s important to review the pricing rules and ensure they’re working for consumers.

This multi-stage project is part of our wider work to reform distribution pricing.

Getting the pricing right drives more efficient distributed generation (and storage) and maximises the benefits it brings to electricity networks and all New Zealanders.