Solar Zero’s demise – What now for NZ’s Flexibility Services?

Solar Zero's Demise - What now for NZ's Flexibility Services?

By Terry Paddy, Managing Director, Cortexo Limited

An Open Letter New Zealand’s Electricity Sector

To the Minister of Energy, MBIE, the Commerce Commission, the Electricity Authority, Transpower and Electricity Distribution Businesses.

The recent liquidation of Solar Zero raises pointy questions for New Zealand’s energy sector. This is a watershed moment, where we reflect on what the future should look like for the electrification of New Zealand.

Are our priorities fostering a future-proof, affordable, and sustainable electricity and infrastructure? Or are we clinging to outdated methods ill-suited for tomorrow’s challenges?

New Zealand’s energy system must evolve to meet future demand. Solar Zero’s story, while a setback, underscores the need for adaptability, innovation, and sustainable business models. It’s a reminder that transformation requires boldness and collaboration.

Lessons from Solar Zero’s Journey

The liquidation of Solar Zero is a tough outcome for the company and its stakeholders. The company pioneered efforts to scale residential solar power and energy management in New Zealand. They represented about 40% of New Zealand’s rooftop solar market with about 15,500 customers, saving them $10 million in power bills

They became Australasia’s largest virtual power plant, producing 16,100 MWh of energy in 3 months alone – in the middle of winter, enough to power over 7,000 homes. However, their business model relied on external funding while they worked toward profitability. Ultimately, their funders pulled out, putting the company into liquidation. Their business model had issues, but it wasn’t the only factor in this story’s outcome. There are challenges in growing flexibility services, and we have to acknowledge the role the rest of the industry played.

For flexibility services to be successful, we need more than just technology. Robust business models are crucial, but so is enhanced grid integration and industry collaboration. We need money on the table from flexibility service users, even if those services are currently fledgling but promise future scale and volume.There are pockets of flexibility innovation, but in this case, the sum of the parts is not greater than the whole. We need a wider coalition of the willing across the entire electricity ecosystem. Only together can we build solutions that are adaptable, resilient, and sustainable to meet NZ’s future electricity demands.

This is not the end of flexibility services but an opportunity to learn and adapt. The questions are clear: Who must collaborate? How can we make solutions scalable? How can we innovate in ways to ensure efficient investment while meeting consumer needs?

Flexibility Services: A Key to New Zealand’s Energy Future

The future of New Zealand’s power grid is inextricably linked to the development and deployment of flexibility solutions. This involves stakeholders across the energy supply chain, from transmission and distribution utilities to consumers who invest in flexible energy resources such as solar and batteries. Flexibility services unlock the management and balance of electricity supply and demand across the entire system from rooftop solar, to Benmore hydro. From the family home, to primary industries.

Flexibility services – such as demand-side management, energy storage, and the participation of distributed energy resources allows for grid optimisation in real-time, integrating renewable energy sources, and ensuring the grid remains stable and secure. 

The Minister of Energy has been very clear in his recent Government Policy Statement to the Electricity Authority. Flexibility is non-negotiable. It’s a crucial factor in ensuring New Zealand’s energy is sustainable and resilient. There’s an expectation from our Government that flexibility services are part of our energy future. 

  1. Demand-side flexibility (‘DSF’) is where consumers shift their demand in time or alter their total demand. Like generation, DSF is an important resource for matching supply and demand. It is also a tool for managing price risk. If demand-side response is available in the market at a lower price, it should displace generation as the preferred source for meeting additional demand.
  1. Efficient DSF will deliver benefits for both consumers (lower bills) and for the system as a whole (more resilience)

Flexibility services aren’t new. New Zealand has long employed them with large industrial players across the Primary Metals, Dairy, or Petrochemical Manufacturing sectors, as well as household hot water “ripple” control. Now, the challenge is coordinating and rewarding flexibility services to include small and medium participants who are quickly coming online. 

The good news is we’re already making strides in the right direction. Virtual power plants are gaining traction, smart grids are enabling real-time management, and the residential solar market has doubled from 2021 to 2024.

Companies like Orion, Our Energy, Counties Power, Wellington Electricity and Meridian are developing solutions, but a standardised, grid-wide approach is needed. Cortexo’s open-source platform aims to make all suppliers, including tens of thousands of residential systems, visible and dispatchable for effective grid management.

There are plenty of upsides to flexibility services. They offer us a chance to lower energy costs, limit costly infrastructure work, and reduce power outages. They come online faster than building large infrastructure, with lower lead times and the resources in the country to do it. Plus the Commerce Commission’s Allowance for investment in non traditional solutions (INTSA) will help fund flexibility projects.

Questions remain however. As an industry, are we prioritizing flexibility solutions? Solar Zero’s demise suggests we’re not doing enough.

The Path Ahead: Innovation, Collaboration, and a Commitment to Adaptability

As we look to the future, we must remember that flexibility is not just a buzzword—it’s a fundamental part of a reliable, decarbonized energy grid for New Zealand. 

The road ahead requires more than just technology. It requires collaboration across the entire energy value chain to deliver efficient, scalable, and sustainable ways to integrate flexibility services into our energy system.

To that end, we lay a challenge at the foot of the energy sector. We must work together to solve the challenges ahead of us. We need innovation, courage and a coalition of the willing to usher in the evolution we need. A modern and industry-wide model of flexibility services that powers New Zealand.

At Cortexo, we’re proud to be a leader in this collaborative effort. We believe flexibility solutions will be the backbone of New Zealand’s energy sector, and are committed to shaping that. We must continue pushing for progress. New Zealand’s energy future is relying on it.

Sincerely,
Terry Paddy
Managing Director, Cortexo Limited

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