Innovation project explores how electricity distributors can unlock more value
As solar panels, home batteries and electric vehicles become more common, electricity distribution networks are facing new opportunities and challenges.
An innovation project funded through the Commerce Commission's Innovation and Non-Traditional Solutions Allowance (INTSA) will investigate how distribution networks can be managed more efficiently to make better use of these technologies and deliver more benefits to consumers.
Powerco, which supplies electricity to around 360,000 homes and businesses across much of the lower North Island and Bay of Plenty, will use the funding to start developing the capabilities to become a Distribution System Operator (DSO).
Managing a network using a DSO model can make better use of electricity resources connected to local networks (such as solar panels or batteries) by enabling them to provide electricity into the network when needed, or to avoid taking electricity from the network when demand is high.
Powerco's programme will build a better understanding of how customers use electricity, identify where the network is under pressure, develop new products and services, and explore ways consumers could have more choice and flexibility in how they generate, store and use energy.
By improving the way electricity demand and local energy resources are managed across the network, DSO capabilities could also reduce the need for some costly network upgrades in the future and help ensure investment is targeted where it delivers the most benefit for consumers.
In the future, this could make it easier for consumers to use, share or potentially sell electricity generated and stored through their own technologies.
Projects funded through the Commission's innovation allowance are intended to support new ideas relating to the supply of electricity that could improve outcomes for consumers.
Since innovative projects involve uncertainty with their benefits not always being known upfront, some projects may never be tested without regulatory support. The allowance helps electricity distributors trial new approaches that could deliver long-term benefits for consumers.
The Commission considers Powerco’s project to have the potential to improve network planning and management, helping reduce the risk of both over-investment and under-investment in infrastructure while maintaining reliable electricity services for consumers. It has approved Powerco to recover up to $8.36 million, representing up to 75% of the programme's forecast costs, through the Innovation and Non-Traditional Solutions Allowance.
The first phase of the programme is expected to run until the end of 2028. Powerco will be required to report back to the Commission on what it has delivered and the lessons learned from the project.