Envelopes, Not Handcuffs: Grid Safety and Flexibility Markets Can Work Together

New Zealand’s electricity network is changing fast.

More rooftop solar, batteries, electric vehicles and electric heating are connecting to networks that were never built for this much two-way, unpredictable use.

That creates two needs, and both matter.

Networks have to keep the physical system safe. At the same time, consumers and flexibility providers need room to use their energy resources in ways that create value.

So how do we protect the network without shutting out the flexibility that could help run it better?

Both sides have a fair point

Flexibility suppliers and aggregators worry about Dynamic Operating Envelopes.

If a network can cut the amount a customer can import or export whenever a constraint appears, it can fix the problem without ever buying flexibility.

Used that way, the envelope starts to look less like a safety tool and more like a pair of handcuffs.

Network engineers have a fair point too. A market signal is a request. It is not a hard limit. Response can vary, and when a transformer is close to its limit, the network needs to know the asset is protected.

Both concerns are real. The trouble starts when we expect one tool to settle both.

Maybe we’re asking the wrong question

The debate is often framed as IEEE 2030.5 versus OpenADR. Which should New Zealand back? Which one wins?

Both standards can do more than one job, so the choice isn’t that simple. In the approach we suggest, each has a different main role.

Think of a road. A speed limit sets the boundary for safe driving. A taxi dispatch system decides who goes where, and for what price.

You need both, and they do different work.

In this approach, IEEE 2030.5 helps set the limit. OpenADR helps the market work inside it.

Two standards, two main roles

IEEE 2030.5: communicating network limits

IEEE 2030.5 gives networks a way to talk to distributed energy resources and pass on operating limits.

Through the CSIP-AUS profile used in Australia, it can carry Dynamic Operating Envelopes.

An envelope sets how much electricity can be imported or exported at a connection point, based on what the network is doing right now. When the network is comfortable, the envelope is wide. If a feeder or transformer gets tight, it narrows.

In this design, its role is to communicate the limit the network needs.

OpenADR: creating value inside the limit

OpenADR does something different.

It gives networks, aggregators and flexible resources a common way to send events, prices and flexibility signals.

A provider can then decide how best to respond. That might mean delaying EV charging, discharging a battery or combining many small resources into one flexibility service. It also lets owners be paid for that help.

OpenADR doesn’t replace the safety layer. It gives flexibility room to work inside it.

What does this look like in practice?

Picture a local transformer close to its heat limit on a cold evening. Demand is high, and lots of EVs on the same street start charging.

A Dynamic Operating Envelope sets the maximum those connections can safely draw.

Inside that limit, a flexibility provider can still get a signal and decide how to respond.

Some EV charging might wait. A battery might power a home instead of pulling from the network. Other loads might shift.

The network gets the protection it needs. Providers can still find the best use of the room that’s left.

The envelope sets what can’t happen. It doesn’t have to dictate everything that does.

Real life is messier than this example. A single battery or EV might be answering a retailer’s price signal, a flexibility service, a network limit and the owner’s own settings, all at once. Someone has to decide which one comes first. Sorting out that priority is part of getting this right.

Rules matter as much as technology

Here is the harder question. A standard can carry a limit, but it can’t decide when a limit is fair.

When should a network restrict a connection, and when should it buy flexibility instead? Who decides, on what basis, and how can anyone check?

An open standard makes the message clear and easy to pass along. It doesn’t show how the limit was worked out. For that, people need to see the method, the inputs, how long the limit lasts and how often it changes. Some way to question a limit that looks wrong would help too.

Without clear rules, even a well-built envelope could turn into handcuffs. With them, it protects the network and leaves room for the market.

New Zealand doesn’t start from scratch

New Zealand already has hands-on experience.

The FlexTalk programme trialled OpenADR between electricity distribution businesses and flexibility suppliers. The main result was the value of a common way to communicate, with OpenADR as the tool used in the trials. The EEA FlexTalk reports cover lessons on interoperability, standards and scaling demand flexibility.

Flexviz tackles a different problem: visibility. Flexibility suppliers report what they have available, every five minutes, at each of New Zealand’s grid exit points. That gives networks a clearer picture of what they can call on.

Overseas, we can see useful signs of where things may be heading.

Australia has focused on limits at the connection point through CSIP-AUS and Dynamic Operating Envelopes. Great Britain has been working towards a common way to dispatch flexibility, including work around OpenADR 3.0. The UK Energy Networks Association’s interoperability analysis looks at that direction.

We can learn from both. Neither proves where every country will end up.

The bigger issue is not which protocol wins

A more important question sits under the standards debate. Can a flexibility supplier connect once and take part widely, or does it have to build a new link for every network?

If each distributor builds its own system, costs pile up. Smaller providers face higher barriers, and it gets harder to grow flexibility across networks.

Open standards offer another path.

The Electricity Authority has stressed the value of lowering barriers for flexibility providers and of open, interoperable approaches that avoid a patchwork. Read the Electricity Authority’s flexibility market guidance.

The EEA’s FlexTalk work has also looked at how common standards can make it easier for new providers and technologies to connect.

The aim is a common way to talk, without locking the sector into one technology forever.

As more batteries, EVs and solar connect, that matters more.

An envelope should build confidence, not close the market

Safe networks and active flexibility markets don’t have to be at odds. The network needs a clear limit it can trust. The market needs room to work inside it.

Networks get confidence that their physical limits will hold. Flexibility providers keep the chance to find the best use of what’s left. Asset owners keep the chance to take part and be paid.

So the question isn’t whether New Zealand picks an envelope or flexibility. It’s whether the rules for using the envelope are open, fair and leave space for flexibility to grow.

That gives us a boundary that keeps the network safe, and not handcuffs that stop the market from forming.

Want to go deeper?

This article draws on Terry Paddy’s paper, Envelopes or Handcuffs? Balancing Grid Safety via IEEE 2030.5 (CSIP-AUS) with Market Freedom via OpenADR; which was presented at the New Zealand Electricity Engineers Association Conference in Auckland, September 2026.

The paper covers Dynamic Operating Envelopes, OpenADR, CSIP-AUS, overseas developments and the case for open standards in more detail.

Email Terry Paddy to request a copy: terry.paddy@cortexo.com.

Terry Paddy

Managing Director, Cortexo Limited