Hey Minister, the new electricity market is ‘shovel ready’

We shouldn’t hobble the future by looking for solutions based on the past. It’s abundantly clear Covid-19 has changed the economic landscape immensely. As we achieve the nations highest priority, our collective health, we now need to look at solving the second issue, our national economic well-being. 

The concept of shovel-ready projects to stimulate employment and the economy is a sensible one, but this is 2020, and our economy is not based on manufacturing, roading or unskilled labour. We need to continue the promise offered by new technology to improve our lives and the health of the planet. We need to speed up the implementation of those things we know are going to create a better New Zealand and at the same time, increase the value of our economy through new technologies and skills.

Nations everywhere are already in an energy transition defined by the 3D’s, Decarbonisation, Decentralisation and Digitisation and New Zealand is also in that transition. Let’s not add a fourth D, deceleration.

The electricity sector knows what to do; we’re just having trouble doing it. We are stuck in the busyness of today, looking at the model of the past.

Leading up to the Covid lockdown all the relevant agencies in this industry have said similar things. We need to manage increasing amounts of distributed energy resources (DER), solar (and other small scale generation), batteries, electric vehicles, and ‘demand’ (controllable load or demand response, DR) and integrate it into to our existing energy system. Only then we can optimise these growing renewable energy resources and not over-invest in costly and potentially unnecessary network infrastructure which pushes up the already expensive cost of electricity at your door. We need to be ready for growing electricity demand (over 60% increase by 2050 according to Transpower) as we electrify our transport fleets and industrial process heat. And by electrifying our economy, we significantly reduce our carbon emissions with the corresponding positive effect on our environment. 

Just in case you think these are fringe ideas, or those of rabid greenies, start from the point that the Zero Carbon Act passed with unanimous political support (Ok, one MP wasn’t in the House) have a read through the following expert comment

  • Transpower, Whakamana i Te Mauri Hiko – Empowering our Energy Future, Mar 2020
    “A market that is able to deliver clear demand-side signals to enable peak management will be important. Markets and pricing signals for distributed energy resources must incentivise residential and commercial consumers to contribute to peak demand solutions.” 
  • Electricity Networks Association (ENA), Network Transformation Roadmap, Apr 2019
    “Traditional production and use of electricity are changing. Newly affordable technologies are disrupting generation, use, and consumer behaviour – driving unprecedented change and unpredictability in the electricity sector, as well as creating opportunities.”

  • Innovation and Participation Advisory Group (IPAG), Equal Access advice to the Electricity Authority, Apr 2019
    “The democratisation of the electricity industry is underway. We have an opportunity to build on a proud record of technological innovation and service to consumers. It is critical the sector is engaged to ensure all consumers can participate and receive benefits.”
  • Ministry of Business Innovation and Employment (MBIE), Accelerating renewable energy and energy efficiency discussion paper Dec 2019
    “We have been working to identify opportunities that can be realised, and barriers that need to be removed, to help achieve our goals and unlock wider benefits for New Zealanders. We have taken a broad view, looking at emission reduction actions that can be taken now, investments required in the medium-term and in preparation for the future: […] unlocking investments in innovation and infrastructure to reduce the long-term cost of transition, and ensure it is just and inclusive”.
  • Commerce Commission, 2020-2025 default price-quality path, Nov 2019
    “Having considered submissions on the issues paper, we remain of the view that greater transparency of power quality, including on the LV networks, is increasingly important. This is also consistent with draft views expressed by IPAG, that distributors should have greater visibility of the performance of their LV networks, “so they are better able to manage reliability with greater penetration of distributed energy resources, and specify needs which could be obtained from a third-party to support network management.”

So what are our shovel-ready electricity market projects?

We have all the parts we need to make a new electricity market, a ‘flexibility’ market. A ‘flexibility’ market can reduce the ongoing cost of our existing electricity infrastructure for the benefit of all New Zealanders while increasing the return on investment individual New Zealanders continue to make in both home and business DER. And at the same time, reduce our environmental impact through carbon reduction. We can achieve this by using the flexibility provided by thousands of existing, and potentially future millions of distributed energy resources. They can supplement, manage, optimise and reduce the cost of our electricity system while maintaining the growth of ‘output’ required. At the same time, reduce the carbon footprint of our country to the levels needed by the planet. All for a fee paid to the DER provider; the consumer who has invested in his or her own energy needs and is willing to share this resource with the economy. 

The IPAG and ENA reports above list the projects that, if started, can integrate small-scale DER with large-scale electricity infrastructure. They also describe the market and regulatory changes needed to make it work. Incentivising DER uptake will increase the number of tradespeople installing and maintaining equipment. Provision of the Grid Edge software platforms that integrate all parts of the existing and new energy infrastructure provided by the innovative and skilled technology companies of New Zealand will increase both jobs and export opportunities. Finally, these new models of operating this new electricity market will increase competition through new players and break the quasi-monopoly of the current retail electricity marketplace. 

It just needs some coordination and funding. These projects are not white elephants, not bridges to nowhere; they are an investment in New Zealand’s future.

We, Cortexo are ready. Let us all get on with it.

If we expect our kids, now and in the future, to pay the bill for saving New Zealand today then we owe it to them to use that investment to provide for a better and safer environment for future generations.

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