Part 4: Response demand and smarter systems
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Chapter 10: Increasing distributed flexibility
Approximately 45 submissions were received on issues discussed in Chapter 10.
Many submitters want more government leadership to support CER and distributed flexibility
Many submitters felt that government should show leadership and support existing collaborative industry workstreams on distributed flexibility that are already underway. Submitters identified a long list of areas where government could take action to help grow and develop flexibility markets. The most frequently identified areas to support collaboration were innovation funding for collaborative trials integrating distributed energy resources or consumer energy resources (CER) such as rooftop solar, batteries, EVs and smart devices and use of distributed flexibility, support for existing industry processes (including co-funding), and addressing regulatory barriers (high level suggestion).
Another theme was that government should prioritise addressing systemic barriers to uptake of non-network solutions (NNS), including addressing availability of data, and visibility of CER and regulation of smart devices – especially smart capability for EV charging (regardless of form). Some submitters also noted support for Government to accelerate regulatory workstreams including maintaining legislative and regulatory alignment with modern electrical standards (such as AS/NZS 4777) and a review of voltage thresholds for low voltage networks set in the Electricity (Safety) Regulations 2010.
The majority of submitters also supported setting out a future structure of a common digital energy infrastructure (to allow trading of distributed flexibility) supporting co-ordinated action, but highlighted capability building through collaborative trials and learning by doing is needed first and there are other priorities (e.g., those in paragraph 88 above).
There were mixed views of whether Government should provide co-funding for EDBs to support procurement of NNS, and varied views about whether lack of uptake was due to lack of smart data and regulation of smart devices, or due to limitations with the regulatory model determining EDB revenues (Part 4 of the Commerce Act 1986).
Most submitters thought that dynamic operating envelopes would be important for flexiblity
Most submitters thought that dynamic operating envelopes (DOEs) or a similar concepts would be important to flexibility services development. Some submitters fell that the concept should be explored but noted that the detail of DOE design and impacts on consumers must be carefully considered in the New Zealand context before determining if this type of mechanism is required.
Submitters broadly supported approach to smart device standards and cyber security, but had mixed views on automated device registration
Submitters were broadly supportive of the approaches to smart device standards and cyber security outlined in the document. Many submissions from EDBs highlighted the importance of mandating smart EV charging capability regardless of form, to help limit peak demand growth on their networks. Mandates could more generally require EV owners to have smart charging capability with the choice of whether this is provided as a feature of their vehicle or by an external charger. This may be difficult to implement but could be linked to the registration of the vehicle.
There were mixed views on whether government should provide funding for automated device registration, with support for doing or exploring this from around half of submitters. Others cautioned against automated device registration right now – for example, on the basis that the Electricity Registry could be repurposed for this, that registration would be ineffective without other measures, or because of a view that commercial incentives can instead be used to encourage collection of this information.
There were mixed views on the need for extra measures to grow use of flexibility rewarding tariffs
There was mixed support for extra measures to grow use of retail tariffs rewarding flexibility. Gentailers and some EDBs cautioned against further measures – in general suggesting that the retail tariffs were available and/or would develop naturally in response to consumer demand as the Low-Fixed Charge (LFC) is phased out.
However, a range of other submitters of different backgrounds either supported further measures or thought they should be explored. Suggestions covered a variety of possible measures – for example, feed in tariffs, measures to reward consumers for lowering consumption, measures to support aggregators bidding CER into the wholesale market, subsidies for CER devices, and requirements for retailers to tell consumers about their “best plan”. Lack of pass through of temporal cost reflective distribution prices by retailers was noted as an issue by a small number of submitters, noting the need for “simple value propositions and set and forget solutions for customers with regulation that protects the customers best interests.”
A majority of submitters supported measures to encourage investment in battery storage
There mixed views on whether there is a need for measures targeted to encourage investment in battery storage. Some submitters supported measures to create more investment certainty for local battery storage, with some supporting doing so in a way that would not have negative distributional effects (i.e., that would allow poorer as well as richer households to benefit). Submitters suggested a range of options to support uptake, including subsidies, low-interest loans and pricing incentives that reward flexibility. Submitters also noted Government could provide support for batteries in specific situations for example resilience support for impacted communities or on Government housing.
Some submitters thought that focus should be on developing flexibility rewarding tariffs and pricing instead of targeted support for batteries. Some disagreed with further government measures on the basis that this could deter lower-cost grid-scale investments, that existing market mechanisms are available that is, banks’ low interest loans), and that this could reward a particular technology rather than letting the market decide the best solution.
Submitters supported equitable access to solar and batteries
Submitters showed strong support for targeted support to allow low-income households to access the benefits of solar and battery. Various factors would need to be considered though (e.g., how to offer access to solar and batteries for renters, and the need to address other barriers to the development of flexibility). Some submitters however expressed concern with the idea of subsidies to address up-front costs, noting the availability of low-interest bank loans and that this could be inefficient and lead to higher overall costs for consumers.
Most submitters supported measures to reduce ‘soft costs’
A majority of submitters supported measures to reduce ‘soft costs’ and agreed government had a role in enabling a ‘smart systems’ and improving network resilience. Considerations for reducing soft costs included the role of cybersecurity, the role of government in supporting industry capacity and training, and regulatory settings for CER.
Most submitters supported looking at a review of critical data availability
Most submitters supported further regulatory steps to look at data availability, suggesting this was necessary given the importance of data access to help support CER and efficient networks in future. However, a smaller number did not support a review, suggesting that previous barriers to access were now being overcome, including through the Electricity Authority’s coming work programme as well as a future consumer data right.