New Zealand continues to increase the size of its renewable energy footprint and transition away from fossil-fuelled generation. The inherent variability of renewables (the sun does not always shine, and the wind does not always blow) creates a well-recognised energy intermittence issue. Solving that intermittency issue is a fantastic opportunity for those developing or investing into firming technologies such as Battery Energy Storage Systems (BESS).

 A BESS captures, stores and discharges electricity. This provides the flexibility to respond to peaks and troughs in market supply and demand, which is a core challenge for developers of generation and users of electricity alike. The price arbitrage opportunity which can be realised by running a BESS (either alone or co-located with generation like a solar farm), coupled with decreasing building costs, presents a compelling business case. There are benefits both at the large ‘grid scale’ end of town and for consumers using an EV or a small battery to manage their household electricity use.  

The Electricity Authority (EA) has released its regulatory roadmap for battery energy storage systems. It is clear that the EA recognises the value of BESS and will continue to enhance the regulatory environment to enable BESS to operate competitively and efficiently as part of the New Zealand’s energy mix. This article comments on some of the highlights and where we see clear signals that New Zealand is “open for business” for further BESS development at scale. 

If you would like to comment on the roadmap, the EA is seeking any feedback by 5pm, Thursday 31 July.

Stable platform with incremental improvements

The roadmap signals that the EA is focused on promoting a competitive, reliable and efficient electricity industry for the long-term benefit of consumers, including to support new technologies such as BESS. The EA has already amended the Electricity Industry Participation Code 2010 (Code) to facilitate BESS into the energy mix. The roadmap also recognises current issues along with credible solutions which are actively being implemented. This is a very welcomed approach, and in our view, the clear and stable regulatory base provides an excellent platform for building and investing into BESS in New Zealand.

Electricity code amendments

BESS sits in a unique position under the Code given it both discharges electricity into the market and takes in electricity while charging. This feature (operating on both sides of the ledger), has created nuances in how BESS operates under the Code which is recognised by the EA. 

Review of Common Quality Requirements

Amendments to the Code came into force on 1 May 2025, updating various requirements. These changes included treating Energy Storage Systems (ESS) (including BESS) that export 30MW or more as “generation” when charging and discharging (although noting this remains under review). We understand that this is intended to help enable the supply of more reserves into the market while reducing transaction costs associated with equivalence arrangements or exemptions.

Further work has been signalled to consider:

• Whether the definition of BESS in the Code remains fit for purpose.
• What performance obligations should apply to an idle BESS which is not charging or discharging.
• Whether ESS should be treated as something other than generation and/or load under the Code’s common quality requirements (it being noted this may require new regulation). Common quality requirements for hybrid plants (i.e. co-located BESS and solar).

Wholesale electricity market enhancements

Price arbitrage underpins the commercial viability of a BESS and as such, smooth interaction with the wholesale electricity market is important. At present, the EA recognises that the tools used to schedule and dispatch market participant offers and bids are complex, limiting the flexibility BESS can provide. Efforts are underway to simplify BESS market participation and further consultation is expected latter this year.

Visibility

The roadmap highlights initiatives to improve transparency and the availability of information to support BESS operations

• Improved Visibility of Pipeline Generation and Load Investments: To support efficient network operation and planning, the EA is introducing monthly publications of generation and load pipeline information.
• Improved Forecasts of Wind and Solar Generation: The EA will implement a new hybrid forecasting arrangement to improve the accuracy of wind and solar generation offers with:
  • A centralised forecast of generation for each wind and solar farm in New Zealand.
  • Generators may submit their own forecasts if approved by the EA.

This system takes effect on 31 July 2025. 

We expect this will be a welcome improvement with visibility of where the peaks and pits are critical to operating a BESS effectively – i.e. when do you hold them (storge energy) and when do you show (discharge) them?

Impact of two-way power flows

BESS technology is introducing interesting challenges, partly due to the two-way flow of electricity at a level which has not occurred before in our energy mix:

• Charges: Updates to certain charging issues related to BESS. For example, charges for shared transmission network connection assets are currently based on the sum of a transmission customer’s maximum injection and demand. As BESS power flows go both ways, the charge for BESS is “double” despite not using additional capacity. From 1 April 2026 charges will be based on ‘the greater of’ injunction and demand. Residual charges are also being updated.
• Upgrades to distribution networks to accommodate two-way energy flows.

Announcements shortly: level playing field measures

The EA has recently announced changes impacting retail solar/BESS with owners who export power into the market at peak times set to receive a fair price. Further decisions are expected in August on the “levelling the playing field” measures which have been under review by the Competition Task Force (watch this space).

Open for business

The potential for developing BESS assets across New Zealand’s national grid is being recognised and is a key step in ensuring resilience in our energy system. Supported by an engaged regulator, we think this represents an exciting opportunity for those involved in, or investing into, development of generation assets and industrial users of electricity in particular.   

As part of our broader coverage, our colleagues in Australia are leading a detailed review and exploring the evolving landscape of BESS. You can access their insights and thought leadership here.

For further information and expert insights on BESS in your region, please contact Peter Callus (New Zealand) and Matt Coleman (Australia). 

This article was written with the help of Breigh Lawson-Stanley, Solicitor in our Corporate and Commercial team.