MBIE launches consultation on a new winter energy reliability obligation

New Zealand’s Energy Package is the Government’s vision for abundant, reliable and affordable power. Action 2.5 is core to that programme: a stronger regulatory framework to ensure the New Zealand electricity market responds to dry-year risk.

New Zealand already has one of the most renewable systems in the world, with a strong pipeline of new wind, solar and geothermal projects. But we still need backup in the event of a dry year. The winter of 2024 exposed a serious vulnerability in New Zealand’s electricity market. It has not delivered enough long-duration firm generation that can be called on when lakes are low.

Action is required to ensure we have sufficient back up generation, in turn supporting renewable investment, stronger competition, and downward pressure on electricity prices for industry, businesses and households.

The consultation sets out a proposed new two-layer reliability obligation that will ensure the market invests in the firming capacity and fuel the system requires. It aims to boost winter energy investment and prevent shortages that cause extreme power spikes, like the ones we saw in winter 2024.

The new obligation will work alongside an LNG import terminal and ensure the market invests in the firm capacity and fuel the energy system needs.

The consultation runs for 6 weeks until 21 July 2026.

Have your say: A proposed reliability obligation to manage dry-year risk

The two-layer winter energy reliability obligation forms part of a new stronger regulatory framework for dry year risk. Other changes the Government has agreed to include:

• Giving the Electricity Authority a stronger role in monitoring and responding to dry year risk. The Authority will be responsible for making sure the industry has the right information, tools and incentives to invest in reliable dry year cover.
• Improving available information and reporting on dry year risk so the Government and the sector can better identify and understand evolving risks.
• Updating existing risk management tools relating to dry year cover.