Enabling investment and innovation
Distributor involvement in flexibility services market
Developing guidance to support a competitive flexibility services market for more efficient and cost-effective use of the distribution network.
Overview
We have finalised the Guidance for distributor involvement in flexibility services. The Guidance comprises 7 principles and provides examples for how we expect distributors to implement them.
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.
The Guidance was informed by feedback during an online workshop and written feedback in June 2024 and a follow-up survey for participants in May 2025 after the project was paused to capture any further lessons or updated views. Feedback was used to inform the final Guidance released in February 2026.
We will monitor distributors’ alignment with the Guidance over time and 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 us at info@ea.govt.nz.
If we don’t see the outcomes we expect, we will consider whether a stronger approach is needed, which could include mandating the principles.
Workshop recordings and summary of workshop feedback
- Introduction and summary of the Authority’s position (Daniel Griffiths, Manager, Networks and Retail Policy)
- Overview of draft guidance, its development and objectives (Rob Bernau, Programme Manager, Market Policy)
- Guest presentation (Richard Le Gros, ENA Policy and Innovation Manager)
- Guest presentation (Eric Pyle, SolarZero Director, Public Affairs and Policy)
- Summary of attendees' feedback
Written feedback
Timeline
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24 May 2024
Publication —Draft guidance published
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October 2023
Project —Delivering key distribution sector reform work programme outlines project intent
Project background
The evolving flexibility services market has an important role in supporting an affordable, sustainable and secure electricity system. Flexibility services draw on consumer flexibility and distributed energy resources – such as home battery systems, controllable EV chargers and water heaters, or solar generation – to provide support services to distribution networks, the transmission grid and energy markets. This can avoid the need to build more network infrastructure, meaning lower overall costs for consumers.
We recognise that distributors have an important role to play in the development and use of flexibility services. However, as with any monopoly business, there is a risk that distribution businesses use their unique position, or are perceived to do so, affecting other businesses wanting to provide flexibility services, inhibiting competition in the flexibility services market.
This project seeks to address this potential risk and is part of our broader work on updating regulatory settings for distribution networks.
In October 2023, we indicated in our work programme that we would look into developing a threshold for applying ‘arm’s length’ rules to distributor involvement in the flexibility services market to minimise this risk. We have since determined that a principles-based guidance is a more suitable approach given the flexibility services market is still developing in New Zealand, and the limited evidence base regarding how that risk is materialising.
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