Government response to the independent electricity market performance review

The Government commissioned an independent review of New Zealand’s electricity market performance following the wholesale electricity price shocks of winter 2024. The review confirmed that while the electricity market is working well in terms of renewable energy generation, New Zealand lacks reliable back-up options to generate electricity during dry years (when we can’t rely on hydro lakes or wind to meet demand). This, combined with our declining gas supply, is keeping electricity prices up for New Zealand households, businesses and industries.

The Government is taking forward a package of actions focused on investing in energy security and strengthening the electricity market, so it delivers better outcomes for consumers:

• Writing to the Crown’s Mixed Ownership Model companies (Genesis, Mercury and Meridian) to note that the Crown is prepared to support capital funding requests for strategic and commercially rational investments that support energy security.
• Launching a formal procurement process for a Liquefied Natural Gas (LNG) import facility.
• Leveraging government energy demand to boost investment in new energy supply.
• Strengthening the Electricity Authority.
• Improving gas market transparency.
• Introducing new rules for market participants and more sophisticated security of supply assessments from Transpower to ensure the lack of dry year back-up supply can’t re-emerge.
• Delivering improvements in electricity distribution business (EDB) efficiency and increasing thresholds for EDB investment in generation.

The Minister for Energy will report back to Cabinet on the procurement process for an LNG import facility in December 2025, with other key work programmes in response to the review reporting back in early 2026.

Read the Minister for Energy’s announcement:

Securing New Zealand’s energy future(external link) — Beehive.govt.nz

Further information on the review and the Government’s response:

Review of electricity market performance