Where is New Zealand on the Demand Flexibility Maturity Scale?

New Zealand is not starting from zero.

We have used forms of flexibility for decades, from controlled hot water through to large industrial response. But the next stage is different.

It’s about how close New Zealand is to a mature flexibility market, where distributed resources can be seen, valued, procured and used as part of normal electricity system operation.

Based on a US-based maturity framework, New Zealand is best described as Level 2, moving towards Level 3.

We have the foundations. We have growing demand. We have early signals from the market.

But the market is still forming.

A simple maturity scale for demand flexibility

There is no single global maturity model for demand flexibility, but most frameworks describe a similar journey.

Markets tend to move from manual control, through early programmes, into market-based participation, then towards real-time orchestration across many devices.

From the US Department of Energy, a five-stage model looks like this:

Level	Stage	What it means
Level 1	Ad hoc	Manual load reduction, often from large industrial users
Level 2	Emerging	Direct load control, such as controlled hot water
Level 3	Integrated	Market-based signals, with aggregators and flexibility suppliers able to participate
Level 4	Optimised	Real-time automated response across many devices, such as EVs, batteries and heat pumps
Level 5	Fully orchestrated	A plug-and-play electricity system, sometimes described as the “Internet of Energy”

So where is New Zealand today?

New Zealand sits somewhere between Level 2 and Level 3.

As Terry Paddy, Director at Cortexo, puts it:

“We’ve been doing flexibility behind the scenes for years. Networks control your hot water. That’s flexibility. We’ve been controlling large industrial plant for years. That’s flexibility. But we haven’t been doing high volume, small-scale flexibility, which is where we’re trying to move now.”

That distinction matters.

Controlled hot water has been part of New Zealand’s electricity system for decades. Large industrial users have also played a role in reducing demand when needed.

But the next stage is different.

It involves many more flexible resources, including:

• Home batteries
• EV chargers
• Solar and battery systems
• Commercial buildings
• Industrial load
• Aggregated consumer devices
• Flexible demand from retailers, aggregators and energy users

That is where New Zealand is still developing.

We have the early foundations. We have growing awareness. We have platforms, standards work, pilots and regulator support. But we do not yet have a fully formed flexibility market where buyers and sellers are regularly transacting at scale.

That is why Level 2 moving towards Level 3 feels like the right assessment.

What shows New Zealand is moving?

The clearest sign is that flexibility is becoming more practical.

For a long time, flexibility was discussed as something that would be useful “one day”. That is changing. Terry describes the shift clearly:

“Previous to this year, maybe two years ago, it was ‘yeah, yeah, flexibility, we’ll get to it one day.’ And now it’s ‘we want this, who’s got this that we could use?’”

That is a meaningful change.

Some electricity distribution businesses and Transpower are beginning to ask for real small-scale, high-volume flexibility solutions. The market is not mature, but the conversation has moved from theory to action. Terry is careful not to overstate the shift:

“It’s a sliver and it’s the first step. I would rather talk about it as a light at the end of the tunnel than ‘the world’s changed’.”

That is the right level of optimism. New Zealand is not suddenly a mature flexibility market. But the direction is clear.

Several things are helping move the industry forward:

• Regulatory pressure, flexibility is increasingly being treated as necessary, not optional.
• Industry planning, including things like the Flex Forum’s Flexibility Plan 2.0 and more practical discussion around market design.
• Real buyer interest, with some EDBs and Transpower starting to ask for flexibility solutions.
• Retailer activity, including simple customer reward models for controlled hot water.
• Growing supplier visibility, as aggregators, retailers and flexibility providers begin to show what could be made available.

For more on the wider industry shift, read our article on Flexibility 2.0.

What is holding New Zealand back?

The biggest barrier is not whether the technology exists. The bigger issue is confidence.

EDBs need confidence that flexibility will be available when and where they need it. Flexibility owners need confidence that there is value in making their flexible resources available.

At the moment, both sides are still waiting for the market to mature.

Terry explains the challenge from the EDB side:

“The problem for EDBs is they want certainty of flexibility now, and the flexibility market, which doesn’t really exist, can’t give that certainty because we haven’t built up the amount of flexibility they need.”

That is the buyer-side challenge. If an EDB has a specific network constraint, it needs flexibility in practice. It needs a useful amount, in the right location, at the right time, with enough confidence to rely on it. But the supplier side has an equally real problem.

“Flex suppliers want to know what the value is. If we get involved in this, what will we be paid? And no one can tell them.”

That is the early market problem.

Flexibility suppliers, aggregators, retailers and asset owners need a reason to participate. They need to know whether the effort required to connect, expose data, enable control, and participate in flexibility events will be worth it.

Without a clear value signal, many potential flexibility providers will stay on the sidelines. This is the familiar “chicken and egg” problem. Buyers want certainty before they commit. Suppliers want value before they participate.

The market needs both.

Why visibility matters

You cannot procure what you cannot see. That is why visibility matters at this stage of New Zealand’s flexibility maturity.

EDBs and Transpower need to know what flexible resources exist, where they are, and what they may be able to offer. Flexibility suppliers need a way to show the market what they can provide.

This is where platforms like FlexViz play an important role. FlexViz does not solve every commercial question. But it helps solve one of the first problems: making flexibility visible. Terry puts it this way:

“The more retailers, aggregators and flexibility suppliers get involved and get visible, the more potential flexibility providers will see that there is a market emerging, and EDBs will get more confidence that Flex will be available.”

Visibility creates confidence. Confidence creates commercial conversations. Commercial conversations create the market.

For more background on visibility and market formation, read Building Aotearoa’s First End to End Flexibility Market.

What needs to happen next?

To move from visibility into real market formation, New Zealand needs clearer value signals. Terry’s view is direct:

“Someone has to put some money on the table.”

That does not mean one large player has to solve the whole market. It means purchasers of flexibility, such as EDBs and Transpower, need to start rewarding flexibility participation in practical ways. As Terry explains:

“If they want certainty, they have to start rewarding or putting money on the table to entice flex out of the woodwork.”

Early volumes may not solve every network problem. That is expected. But if suppliers can see value, more flexibility will come forward. If more flexibility becomes visible, buyers gain more confidence. If buyers gain confidence, procurement becomes more realistic.

“If money’s on the table, more and more will come out and then eventually, 18 months, two years, eventually there’ll be flex that they can have confidence in. But it’s not a tomorrow thing.”

That is how the market starts to move.

What would the next stage look like?

Level 3 maturity would mean New Zealand has moved into a more integrated flexibility market.

That would include:

• More market-based signals
• More visible flexibility supply
• More EDB and Transpower participation
• More aggregators bringing flexible resources together
• Clearer commercial pathways for flexibility owners
• Repeatable use cases that build buyer confidence

Level 4 would go further again. Flexibility would become more automated, dynamic and widespread.

Terry describes the future as:

“Regular use of flexibility by all players in the electricity sector, distribution and transmission, and owners of the flexibility being rewarded for that on a regular basis.”

That is the destination. Not occasional pilots. Not one-off trials. Not flexibility as a side conversation. Regular use. Regular value. Regular participation..

New Zealand is moving, but maturity will not happen by accident

New Zealand has a solid foundation.

We have decades of experience with controlled hot water and industrial response. We have growing regulatory alignment. We have active industry work, emerging platforms, and early signs that buyers are starting to ask for real solutions.

But we are not yet at full demand flexibility maturity. The next step is to move from visibility to value. That means making flexibility easier to see, easier to trust, and worth participating in.

The market will not appear fully formed. It will be built through early signals, practical use cases and commercial confidence.

New Zealand is not at the beginning. But the real work of market formation is still ahead.