Innovation project explores new ways to meet growing electricity demand

The project is trialling a shared flexibility trading platform that could help electricity distributors make better use of existing resources and possibly reduce the need for costly network upgrades.

The Localflex platform is based on a model already successfully used in the UK and Europe and provides a single marketplace for electricity distributors to access flexibility services when and where they are needed most. These services could include electricity supplied from a ‘virtual power plant’ of batteries in consumers homes or agreements with businesses to reduce electricity use during peak demand periods. 

Traditionally, distributors have had to respond to growing demand by investing in new infrastructure such as power lines and substations. These investments can be expensive, and this cost ultimately contributes to the electricity prices consumers pay. 

The first distributors to trial the platform are Powerco, Unison, Vector, Horizon Networks and MainPower, giving the initiative reach across a broad cross-section of Aotearoa, from Auckland and the central and lower North Island to Hawke’s Bay, Rotorua and Taupō, the Eastern Bay of Plenty, including Whakatāne, Kawerau and Ōpōtiki, and North Canterbury, including the Waimakariri, Hurunui and Kaikōura districts.

Localflex also addresses a key challenge facing New Zealand's emerging flexibility market. Without a shared approach, flexibility providers could be required to engage with multiple electricity distributors through different systems and processes, increasing costs and complexity.

As a single platform that can be used across multiple distributors, LocalFlex could lower barriers to new providers entering the market. This can help attract more providers, increase competition, and give distributors more options for managing demand on their networks.

Given the platform’s potential to reduce long-term network costs and improve standardisation, the Commission approved Horizon, Powerco, Unison, and Vector recovering funding for this project through its Innovation and Non-Traditional Solutions Allowance (INTSA). Mainpower, who is exempt from price quality regulation, joined the project independently to test the platform.