Renewable generation gets boost from law changes

  • David Parker
Energy

Unnecessary barriers to electricity lines companies investing in renewable generation have been removed by a Bill amending the Electricity Industry Reform Act passed in Parliament today, Energy Minister David Parker said.

The Bill is a major rewrite of the Electricity Industry Reform Act, which requires separation of monopoly electricity lines and competitive generation and retailing businesses.

“The amendments made by this legislation will contribute to achieving the government’s 90 percent renewable energy target by 2025, which is a major plank in the New Zealand Energy Strategy and in the fight against climate change,” David Parker said.

“Electricity lines companies have an important role to play in developing the country’s renewable energy sources, especially smaller renewable projects in their area.

“The changes to EIRA will reduce uncertainty for lines companies investing in renewable generation by enabling them to sell the energy they generate directly to consumers.”

While lines companies are already able to own some types of renewable generation in unlimited quantities, the new legislation widens the definition of renewables to encompass geothermal, wind, hydro and others. It’s expected that local lines companies will invest in some of the smaller projects that are not of interest to the larger generators.

It also makes it easier for lines businesses to get back into retailing by allowing them to:
• Sell 100% of the nominal output of their generation to their own consumers
• Trade in financial hedges without restriction to manage risks
• Own generation and retail without limit outside their lines area.

The risk of monopoly lines businesses competing unfairly in retail markets is managed by retaining the requirements for corporate separation and compliance with arms-length rules, but the Bill lowers the costs of compliance.

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