Policy and regulationPower and heat generation
New Zealand regulator seeks market changes to support long-duration electricity firming
The Electricity Authority says remaining energy-shortage risks warrant better information and contracting incentives as renewables grow and thermal backup declines.
- Event
- First published on EPC Feed
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- 2 listed below
- Reading time
- 2 min
The Electricity Authority Te Mana Hiko used an October 22 article to explain its consultation on long-duration firming, the ability to generate electricity or reduce demand across weeks or months. It distinguishes this role from grid batteries that balance supply over minutes or hours. The Authority says New Zealand’s renewable generation investment is rising, while limited hydro storage and declining domestic gas availability reduce the traditional thermal backstop during extended periods of low wind, sunshine or inflows.
The regulator says its own assessment and independent analysis by Sapere both find that the risk of a long-duration energy shortage is declining as new renewable generation is built, but that some risk remains. The concern is greater in severe hydro-shortage conditions, especially if demand grows faster than supply. The Authority frames the issue as both a physical supply question and a market-design challenge: assets needed only in rare scarcity periods may earn little in average conditions, and developers must make investment decisions years before those events occur.
Its issues paper identifies five possible interventions for discussion: regular reporting of long-duration firming needs, greater transparency around firming contracts, practical guidance for participants, more standardised contracts and a small mandated sell-side auction if liquidity remains limited. The Authority says the options are intended to improve information, contracting and investment signals without fundamentally changing New Zealand’s energy-only market design. It says the consultation is not choosing which technologies should provide firming.
The Authority also points to a relatively small market with few buyers and sellers, bespoke bilateral arrangements and capability gaps for smaller participants. These features can make price discovery difficult and leave investors uncertain about the revenue available for resources that operate infrequently. The paper seeks feedback on whether these barriers are correctly identified and which, if any, of the options would help reduce them. Submissions close at 5pm on 13 November 2026. The article states a preliminary regulatory view; it does not announce a final market rule change or a decision to procure new generation.
The Authority presents its analysis as preliminary and is asking participants to test both the problem definition and the possible responses. Its consultation page says the Sapere work and its own assessment see declining shortage risk as renewables are added, while retaining a residual risk under severe hydro conditions and faster demand growth. The five options are discussion proposals; the Authority explicitly says the exercise will not select a preferred generation technology.
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