A new national analysis finds that almost a quarter of Aotearoa’s peak electricity use could be shifted to off-peak hours.
This could save the country $3 billion in power generation and infrastructure to meet peak demand, according to the report commissioned by the Energy Efficiency & Conservation Authority.
It finds that people and businesses need financial incentives to change their electricity use patterns. The report says we’ll also need wider use of “smart” appliances that can help shift energy use.
The Science Media Centre asked experts to comment.
Dr Le Wen, Senior Lecturer in the Department of Economics, University of Auckland, comments:
“Our power grid mirrors an overbuilt motorway designed to accommodate only a few rush-hour surges. The extra lanes sit largely unused for most of the day, yet the massive investment behind them creates a silent markup on everyone’s electricity bill. This report shows that if we shift 25% of that peak demand, like timing EV charging or dishwashers for the middle of the night, we can stick with our original ‘few-lane’ road.
“For families, this is a massive equity issue. While high-income households can invest in ‘capital-heavy’ solutions like solar or batteries to lower their individual bills, the real win from shifting peak demand is the systemic cost reduction. Demand-side flexibility allows us to defer billion-dollar grid upgrades and avoid paying $187m per year to cover peak demand with gas, lowering the baseline cost for everyone. The more efficient market directly combats energy inequality, protecting those who can’t afford the upfront cost of new tech from rising infrastructure levies.
“It’s easy to ask a household to run the dryer later, but for a dairy factory in Waikato or a steel mill in Auckland, it’s not that simple. In economics, we describe this as inelastic demand, the idea that some users will not significantly change their behaviour even if the price of electricity triples. Heavy industries, such as food processing in Waikato, farming in South Canterbury, or metals in Auckland, are prime examples. For them, the opportunity cost of shutting down a production line far exceeds the cost of expensive peak electricity. Output takes priority over electricity price, because stopping production puts jobs and supply chains at risk.
“The report suggests addressing this by shifting from reliance on price signals to automated flexibility. By using smart energy management systems to manage storable or curtailable loads, factories can continue operating while technology quietly optimises when electricity is drawn. When implemented well, this approach transforms what was once an inflexible industrial load into a national asset, stabilising the electricity market for everyone, effectively acting as a ‘virtual battery’ that helps keep exports competitive and household power bills stable.”
Professor Barry Barton, School of Law, Politics and Philosophy, University of Waikato, comments:
“The study shows that we have alternatives to consider before committing ourselves to expensive network upgrades and gas peakers. We can be flexible in how we use energy. This is especially important now when the foreseeable increases in power prices will mainly be driven by network maintenance and upgrade costs. The report shows that the Electricity Authority, the Commerce Commission and companies need to make sure that everyone profits from non-network solutions, whether at home, on the farm or in industry.”
Conflict of interest statement: “No conflicts of interest.”
Associate Professor Michael Jack, Director of the Sustainable Energy Programme and Co-Director of the Otago Energy Research Centre, University of Otago, comments:
“It is great to see this systematic study of the national potential for demand flexibility across the residential, commercial and industrial sectors and the quantification of the economic benefits. Independent research carried out at the University of Otago supports these findings and has highlighted the potential of demand flexibility for optimizing the efficiency and value of New Zealand’s existing electricity grid infrastructure.
“Our research has also shown that demand flexibility will become even more important as the electrification of other sectors, like transport, accelerates and the percentage of variable renewable supply increases in the future. There is huge international interest in this area, and with our high percentages of renewable electricity, NZ could be a world leader in demand flexibility if we embrace this opportunity early enough.”
Conflict of interest statement: “I have worked closely with EECA on previous projects but have had no involvement in this particular project.”
Professor (Ahorangi) Nirmal Nair, Waipapa Taumata Rau – University of Auckland, comments:
“Strategies like ‘demand-side flexibility’, as proposed in this report, have been widely touted as ways to increase value for electricity retailers and industrial customers in Aotearoa New Zealand for a couple of decades now.
“However, it’s extremely difficult for a retail customer to benefit from demand-side flexibility when the majority of what they are paying is for almost fixed costs, like transportation, retail, regulatory, and GST charges. Expecting them to invest in more technologies to give value to other upstream agents like electricity retailers and distribution companies appears unreasonable, if not unfair.
“Electricity transmission and distribution will increase as we plan for a 2050 New Zealand with more electrified transportation, digitalization and AI. If the main intent of demand-side flexibility is to manage electricity price-hikes for customers, the charges that each customer pays to the various entities of this critical infrastructure need to be revisited.
“For example, New Zealand Aluminium Smelter, the largest electricity customer in NZ, got a great deal when they renegotiated their latest 2023 long-term contract with NZ’s largest gentailer, Meridian Energy, for a supply side demand response during low-lakes and energy insecurity. One could say that this is also a demand-side flexibility product, but for a large-scale electricity customer.
“It will be prudent for EECA to take into account the work already done on demand-side flexibility over the years by the Electricity Authority and its various working groups (another regulatory entity supported through electricity levy), lest it become another ground-hog exercise.”
Conflict of interest statement: “No conflicts of interest. Electricity Transmission-Distribution is a regulated industry and bodies like Electricity Authority and EECA are entities that are supported by levies charged to electricity consumers, so commenting on this adds value to future public investment and regulatory body decisions. Current funding regarding electricity innovation and resilience of energy infrastructure comes from Future Architecture Network, MBIE SSIF and QuakeCore (Te Hiranga Ru – NZ Centre of Earthquake Resilience– TEC Funded CoRE) respectively. Have made independent submissions on electricity infrastructure and markets in the past.”