Potential costs and benefits

There is uncertainty about the impacts of options for EV charging due to other factors

There is some uncertainty about the impact of the options in terms of the uptake of smart charging, and related impacts on reduced network investment and costs for consumers. Other relevant factors likely to materially influence smart charger uptake include:

• Technological progress (both in chargers, the EVs themselves, and potentially smart home management systems) and its impact on the upfront cost of installing a fixed charger.
• Market forces – competition and innovation in pricing tariffs incentivising demand flexible enabled charging.
• Other policy work and regulatory system changes (e.g., Package Two of the Energy Competition Task Force work programme that includes a proposal to require retailers to provide time of use tariffs).

The impact on reduced network congestion, wholesale market volatility, and flow-on costs for consumers will also be influenced by factors including:

• the regulation of electricity distribution network asset management and investment by the Commerce Commission
• rates of household electrification (including EV uptake) and therefore increase in demand on networks.

We have identified possible impacts of each option below for public consultation. Regulatory impact analysis will be undertaken following this consultation to inform advice on progressing the proposal.

Costs and Benefits of Option 1 – status quo

Increasing uptake of EVs will increase household electricity demand and could lead to higher costs for all

Total electricity demand across the economy has been forecast to grow between 35-82 per cent by 2050, and from the late 2030s, electrification of transport plays a larger role with increased uptake of EVs.^[1] While the increase in total demand is important, the likelihood of this also significantly increasing peak demand is particularly important. This is because charging of EVs at home, without intervention, is likely to also occur during the existing evening peak, adding congestion at a time of already heightened demand. It could also lead to new and higher peaks, if demand aggregates around times where pricing rates change (e.g., 9pm).

Increased peak electricity demand creates a need for additional network and generation capacity investment. Poorly managed peak demand growth could lead to unnecessary increased costs for all consumers (not just EV owners). The Commerce Commission’s 2025 default price-quality pathway (DDP4) decision (regulating electricity distribution network revenue) noted that bills would rise by about $10 per month from April 2025, partly due to higher levels of investment.^[2] Meeting the current electricity demand peaks already poses challenges, as seen during network constraint events such as on 10 May 2024.

While it is clear that EV uptake is expected to have an impact on the electricity system and this has been modelled, uncertainties around the status quo will affect the extent to which these effects will need to be managed, and ultimately result in increased costs for consumers.

These uncertainties include:

• the rate of EV uptake (particularly due to the impact of other policies such as accelerating the roll-out of public EV chargers)
• levels of uptake of charging units versus 3-pin trickle charging
• retail incentives such as time-of-use pricing encouraging consumers to utilise smart charging
• consumer knowledge of how to use a smart charger effectively and ease of use.

Costs and Benefits of Option 2 – voluntary labelling

We expect voluntary labelling to capture a portion of the benefits of Options 4 and 4A with lower regulatory costs

Product labelling is intended to allow consumers to make informed decisions about their purchases and ultimately make a decision to purchase a product that meets their needs. We anticipate that labelling for smart functionality (and efficiency if appropriate) could improve uptake of smart chargers compared to the status quo, but not be as effective as requiring all chargers to be smart (under options 4 and 4A).

Quantification of the increase in smart charger purchases through labelling is highly uncertain, especially for a voluntary option. Reliance on voluntary labelling would mean consumers would likely only have incomplete information as only some suppliers may adopt and implement labelling across their EV chargers.

Where labelling is implemented, its effectiveness will also be dependent on consumers understanding and acting on the information contained in a label. In this context even incomplete adoption of labelling could support uptake given the direct savings smart chargers can deliver for consumers by enabling off peak charging.

There will be some incentive on suppliers to use a standard label on their product as the demand flexibility market is developing and flexible devices are in their infancy, so it can be difficult to otherwise convey smart functionality in a meaningful way. Therefore, we expect some of the benefits of increased use of smart charging would be realised under this option (covered in detail below under option 4).

To support its efficacy, this option would likely include provision of a standardised label for suppliers to use.

Voluntary labelling would be less costly than mandatory labelling, but this option would still incur the following costs:

• EV charger suppliers and retailers – costs of applying and displaying labels.
• Regulator – cost of developing and maintaining a standardised label, and for delivery of education and awareness.

Costs and Benefits of Option 3 - Mandatory labelling

Mandatory labelling could support informed consumer choice, benefitting users and the wider electricity system

As with option two, mandatory labelling would better allow consumers to make informed decisions, although as with option 2 there is some uncertainty as to the extent to which it would increase uptake of smart EV chargers as effectiveness will also be dependent on consumers understanding and acting on the information contained in a label.

This option would likely be more effective than option 2 because mandatory labelling would create a level playing field across all EV chargers meaning that consumers can more easily compare everything available on the market. This makes them more likely to purchase more efficient chargers with a greater range of functionality – providing benefits to both consumers and the wider electricity system.

We expect that some of the benefits of increased use of smart charging would be realised under this option (covered in detail below under option 4).

Mandatory labelling is also likely to have higher compliance and regulator costs

Including a labelling requirement would add the following additional costs:

• EV charger suppliers and retailers – compliance costs of applying and displaying labels.
• Regulator – costs of education and awareness, and delivery, administration and enforcement of the scheme.

Costs and Benefits of Options 4 and 4A – requiring EV chargers to be smart and efficient (with possible mandatory labelling)

Increasing uptake of EVs will increase household electricity demand

As under the status quo, EV uptake is expected to grow. However, smart charging requirements could help ensure that this additional demand is managed in a way that does not contribute to the ‘peakiness’ of the system demand, meaning lower total system costs.

There is uncertainty about the exact impact of introducing smart charger requirements, since not all EV owners may install these chargers and those that do may not use their smart capabilities.

Widespread uptake of smart EV chargers can have system benefits that ultimately flow through to all consumers

Smart charging can shift when electricity is consumed or reduce demand at peak times. Shifting demand through flexibility can ultimately:

• reduce distribution network costs being charged to all consumers over time (through avoided network upgrades). For instance, EECA modelling shows widespread use of smart and energy efficient EV chargers could save the country $4 billion by 2050^[3]
• reduce peak electricity demand, in turn reducing electricity costs for all consumers through lower wholesale market volatility, and potentially emissions if peak demand is being met by coal or gas generation. Transpower estimates smart EV charging can reduce peak demand by 1.9 GW (18 percent) by 2035.^[4]

Research shows that EVs have a significant ability to influence network peaks (alongside water heating) compared to other controllable energy use, and that smarter control of EVs may be necessary to prevent secondary peaks or herding behaviour as a response to simple time-of use tariffs (e.g., large volumes of EVs automatically charging at 9pm when off-peak prices begin.^[5])

As well as system benefits, consumers can directly benefit from using a smart charger

Smart charging allows consumers to take advantage of cheaper electricity or innovative plans offered by retailers. Many power companies offer time-of-use pricing (with work underway to improve this^[6]), and some are starting to offer innovative EV charging focused plans.

These plans paired with a smart charger can save consumers money on their power bills, by allowing consumers (or other service providers) to charge dynamically in a ‘set and forget’ way. EV charging costs can typically be reduced by 40-50 percent by taking advantage of the cheaper rates available on these plans.^[7]

Ultimately, the proposed requirements would not force customers to purchase and use smart charging. But if a consumer wants to purchase a charging unit, requiring it to be smart will give them the best chance at reducing their energy costs. It would ensure that smart functionality is available should they wish to use it.

Looking towards the future, it is expected that homes will become more electrified and have other ‘smart’ appliances or solar generation that can interact with the electricity system, or Home Energy Management Systems (HEMS) that can manage all of a consumer’s energy use. Ensuring that consumers install smart chargers now will future-proof their energy management in this way, including for any future property owners if chargers are included in a property sale.

Requiring chargers to meet be smart can also help to develop the market and the ability for charging to be managed, as they will be able to respond in a minimum set of ways (e.g., turn off, turn on, turn up, turn down), and provide a minimum set of data to a controller and consumer (e.g., energy consumption).

With the addition of mandatory labelling (Option 4A) we expect to see greater benefits for consumers and the system

As outlined under above, mandatory labelling can be an effective tool at driving continuous improvement (and benefit) over time and better decision making by consumers at the point of purchase.

Under this option, labelling would occur alongside a requirement for smart functionality so the additional impact of mandatory labelling will be less significant. However, labelling could still support consumers to differentiate between chargers with different specific smart capabilities (beyond any minimum requirements) and levels of energy efficiency.

However, requiring EV chargers to have smart functionality may increase upfront costs for consumers

Requirements could ultimately reduce consumer choice. Smart chargers inherently have more functionality than portable charging or standard fixed charging units so may come at a higher upfront cost to consumers.

A (July 2024) cost comparison by EECA found that smart chargers are generally slightly more expensive than non-smart chargers, but there is an overlap in the price ranges. While most non-smart models were $800 - $1,000 and most smart models were $1,000 - $1,700, there were smart chargers available for as little as $680, and non-smart chargers available for as much as $1,300. Consumers also pay for installation, which is approximately $500 - $1000, depending on the suitability of the existing wiring and other factors.

As covered above, while smart chargers may have generally higher upfront costs their functionality will enable demand flexibility services which will lower EV owners’ operating costs.

Regulatory proposals also generally incur cost, both to the government (e.g., resourcing and cost of policy and regulation development, enforcement and compliance) and industry (e.g., administrative and labelling costs or changes in processes for industry to comply with the regulations).

Costs faced by industry may be passed on to customers in the form of higher prices for EV chargers overall. Some of the potential costs faced by industry could include:

• Changing processes (and manufacturing) to comply: updates to software or hardware and product designs may be needed in order to comply with the regulations, this could increase both operating and capital costs.
• Reporting and compliance requirements: administrative costs required by the regulator to ensure compliance e.g., testing and reporting information to the regulator.

A recent process evaluation of Great Britain’s EV charger regulations with a similar objective to this regulatory proposal^[8], outlined the regulatory costs faced by industry. It notes that while the overall trend has been a decrease in EV charger prices over time, a short-term price increase associated with implementation of the regulation (with other possible impacts such as COVID supply chain constraints) was observed in 2022.

Any regulation of EV chargers in New Zealand will be implemented sometime after Great Britain and other overseas jurisdictions that are currently investigating similar requirements. Accordingly, some of the cost effects may be somewhat mitigated because manufacturers may already be responding to existing regulation and the market shift towards smarter technology and demand flexibility enablement. Some uncertainty remains in terms of quantifying residual costs to industry.

Mandatory labelling is also likely to have higher compliance and regulator costs

Including a labelling requirement would add the following additional costs:

• EV charger suppliers and retailers – compliance costs of applying and displaying labels.
• Regulator – costs of education and awareness, and delivery, administration and enforcement of the scheme.

We are also looking to better understand any distributional impacts or unintended consequences of regulation

Regulating EV charger functionalities could affect the import market and New Zealand manufacturers, as well as the choices that consumers have when they are considering purchasing EV chargers.

We see these regulations as improving the market for EV chargers in New Zealand, meaning that consumers have access to the right kind of charging technology that will help reduce their bills and impact on the electricity grid – similar to how energy efficiency regulations ensure consumers are purchasing efficient appliances such as heat pumps, fridges and electronics.

As mentioned above, smart EV charging has already been implemented or is being considered in a number of overseas jurisdictions. With markets moving already towards smart functionality, we see the potential risks here as low; but are looking to better understand consequences we may not have yet considered, including on different types of businesses and households (such as renters versus homeowners).

Footnotes

[1] Electricity Demand and Generation Scenarios: Results summary July 2024 [PDF, 1.9 MB]

[2] 2025 reset of the electricity default price-quality path(external link) — Commerce Commission 

[3] Residential smart EV chargers and demand flexibility(external link) — Energy Efficiency & Conservation Authority

[4] TP Whakamana i Te Mauri Hiko.pdf(external link) — Transpower

[5] Modelling peak electricity demand to 2050(external link) — Sapere (2023)

[6] Energy Competition Task Force(external link) — Electricity Authority

[7] The best power plans for charging your EV(external link) — Powerswitch New Zealand

[8] Electric vehicles regulations 2021: Smart charging process evaluation - main report [PDF 1.2 MB](external link) — Department for Energy Security and Net Zero (UK)

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