General policy statement
This Bill is intended to break down existing barriers and provide a fair regime for small-scale renewable electricity generators to encourage greater renewable distributed generation and to help New Zealand in meeting the goal of 90% renewable electricity by 2025.
The Bill will complement the existing Act by increasing the security of New Zealand’s electricity supply, decreasing transmission losses, and promoting economic development. The principle behind the Bill is that it will be fair and transparent and provide certainty for participants while not requiring public subsidies or increasing electricity costs for consumers.
To achieve this, the Bill amends the Electricity Industry Act 2010, instructing the Electricity Authority to update the Electricity Industry Participation Code to establish and provide a regime to encourage fair and reasonable power purchase agreements, including setting a per kilowatt hour payment rate for surplus electricity exported from installations under 10 kilowatts by the small-scale renewable distributed generator and by the electricity retailer. The purpose is to provide certainty for investors looking to generate small quantities of renewable electricity from, for example, solar photovoltaics, wind, biomass, and micro-hydro for their own use with the surplus fed into the electricity grid.
The Bill aims to address the current unbalanced situation where surplus electricity from small-scale renewable distributed generators is fed into the electricity grid under a contract in which conditions, including the contract term and unit price, are set by electricity companies with little power for the small-scale generator.
The Bill modifies the objective and functions of the Electricity Authority and includes new provisions in the Act containing the detail on how to unblock the existing barriers discouraging small-scale renewable distributed generation. The new provisions outline an electricity purchase agreement term of not less than 10 years and require a fair and reasonable price to be paid by retailers to be set and reviewed by the Electricity Authority, as well as providing subsidiary rules to administer renewable installations under 10 kilowatts.
Small-scale renewable distributed generation can improve security of supply by creating a diversity of technology types and locations and, where appropriately sited, help reduce the need for transmission and distribution upgrades. This renewable energy source could play an increasingly important role in meeting electricity demand, as the cost of smaller-scale technologies declines and the price of electricity rises.