The future of our electricity system

Aotearoa New Zealand’s electricity system is transforming. It's shifting from large scale electricity generation at a few sites across the motu to smaller scale renewables and other energy resources located closer to communities.

In the energy sector, we call this change ‘decentralisation’. By 2040, decentralisation will help unlock more affordable, clean, secure and resilient energy.

The reasons for change are also getting stronger:

• The costs of small-scale renewable power generation, such as rooftop solar and batteries, are falling quickly
• Consumers are increasingly focused on energy resilience and affordability
• Renewable generation, storage and flexible demand are becoming more necessary and valuable.

The shift towards decentralisation is being driven by three inter-related global trends, supported by one critical success factor - consumer trust and engagement.

The following trends are shaping decentralisation:

• Distributed energy resources – small‑scale generation and storage, like rooftop solar and batteries, where people live and work
• Democratised energy planning, decision making and ownership – consumers and communities having a greater role in how energy is generated, managed and shared
• Digitalisation of ‘smart’ systems – technology that enables real‑time data, automation and more flexible energy use.

A more decentralised future could unlock a wide range of benefits for Aotearoa. It can support greater affordability, improve energy security, and help accelerate decarbonisation. It also has the potential to empower communities and strengthen local economies.

Decentralisation also brings some challenges. These include integrating new and existing systems, overcoming funding and finance barriers, ensuring everyone can access the benefits, and putting in place the right governance and regulatory settings.

We are working with the sector to understand what New Zealand needs from a future electricity system. For part of this work, we consulted on Working together to meet the needs of New Zealanders, to explore how we can plan for a smart, affordable and resilient energy future. We are continuing to embed the findings into our strategy and work programme.

Enabling a digitalised electricity system is another key focus. Harnessing the power of data and new technologies will help deliver a secure and reliable electricity supply at the lowest possible cost, and support people to actively participate in and benefit from the system.

A number of projects are underway to support the transition towards a more digitalised system. For example, we are:

• improving how we monitor the retail market to improve outcomes for domestic and small business consumers
• improving the transparency of network capacity and connection pipelines by making more information available
• supporting the development of a potential electricity consumer data right
• proposing rule changes to allow consumers to have contracts with multiple electricity retailers
• enabling easier retail switching by improving comparison and switching services and tools for consumers.
• exploring the concept of 'network visibility' – where more information about network constraints and capacity is made publicly available and is accessible – could bring important benefits to a range of parties.

About our work to support the transition to a more digital electricity system