Wholesale market arrangements for battery energy storage systems: Code amendment consultation

We are seeking feedback on a proposal to amend the Electricity Industry Participation Code to improve wholesale market operations for utility-scale battery energy storage systems (BESSs).

BESSs can play a critical role in maintaining security and resilience, especially as New Zealand transitions to a more variable power system. They can help balance intermittent generation from solar and wind, support efficient investment, and reduce electricity prices for all consumers. To unlock these benefits, regulatory settings governing BESSs must be fit for purpose.

What we are proposing

We are proposing a Code amendment, and associated software upgrades, to:

• require BESSs to be dispatchable when charging
• move to a single bid and offer form, and a single reserve offer form (but with separate sections for generation reserve and interruptible load) for BESSs
• allow full capacity trading for BESSs with state of charge constraints and one hour gate closure. State of charge constraints would ensure dispatched quantities remain feasible, allowing BESS owners to trade their full capacity
• as an interim arrangement, allow BESS owners to trade their expected capability and revise trade quantities after gate closure if expected capability changes.

Key changes from previous issues and options paper

This consultation is informed by submissions received during our Wholesale market arrangements for battery energy storage systems issues and options paper. At a high-level, our proposals remain largely the same with two exceptions:

• we are no longer proposing to change existing financial compensation rules for BESS
• we are proposing to accelerate work to investigate reducing gate closure period for BESS.