1.9 million on the table
The first Localflex competitions are now live, and collectively they’ll put around $1.9 million in opportunities on the table. But what does that actually mean?
Our electricity networks need to be able to cope with periods of very high demand. Traditionally, meeting growing peaks can mean investing in more network infrastructure — poles, wires, substations and other assets.
Flexibility gives us another option. Instead of automatically building more, networks can ask whether batteries, EV chargers, solar, businesses, controllable electricity loads and other distributed energy resources can help reduce or shift demand at particular times and locations.
Localflex creates a transparent marketplace where networks can signal what they need and flexibility providers can compete to meet that need. If flexibility can solve a network constraint more efficiently than traditional infrastructure, we can make better use of what we've already got and defer investment until it's genuinely needed.
Ultimately, that's about creating a more efficient electricity system and helping keep long-term costs down for consumers.
Learn by doing
Local flexibility markets are new to Aotearoa New Zealand. We don't yet know exactly how much flexibility exists, where all of it sits, or how quickly the market will develop. And that's okay!
What we heard very clearly from both industry and regulators was that New Zealand needs pilots, trials and demonstrations like Localflex if we're going to answer those questions. We need to put real opportunities into the market, see how participants respond, learn from what works and what doesn't, share those learnings and keep improving.
Collaboration, not 27 different answers
New Zealand has 27 electricity distribution businesses. The future shouldn't require flexibility providers to navigate 27 completely different ways of participating.
Common approaches, standardised products and greater coordination make it easier for flexibility providers to participate and ultimately help build the liquidity required for a functioning market.
As the Electricity Authority noted, no single participant optimising alone will get New Zealand to scaled flexibility. It requires networks, flexibility providers, regulators, market operators, technology companies and the wider sector to work together. That's exactly what we're beginning to see.
Making more of what we've already got
Perhaps the simplest way to think about all of this came through the discussion about existing infrastructure. Before we build more, how much more can we get from what we already have?
That applies not only to electricity network infrastructure but also to the growing number of energy resources already within our communities. Batteries. Solar. EV chargers. Hot water systems. Commercial and industrial loads. Electricity being generated at a home or business, rather than supplied through the grid.
Those resources can become active participants in our electricity system, and their owners can potentially be rewarded for the value they provide. That's a significant market shift!
And flexibility won't ultimately sit off to one side as some interesting energy innovation. The ambition is for it to become another normal part of how electricity networks and markets operate.
And now we get to learn
There is still plenty to solve. Pricing needs to evolve. Network visibility needs to improve. Connecting distributed energy resources needs to become easier. Markets need liquidity. Regulatory settings need to keep evolving alongside the technology and commercial models.
We need to keep collaborating. Keep standardising. Keep experimenting. And keep learning by doing.
The first Localflex competitions are running now, from 19 August to 16 September. Then we'll have something even more valuable than a plan. We'll have real market experience, and that's where things get really interesting!