Resource

Confluence of factors threatening electricity reliability

Commissioned by Mercury and authored by David Reeve and Kieran Murray, this report examines New Zealand’s electricity security of supply and evaluates whether current arrangements meet consumer expectations across the country.

The analysis identifies a growing peak capacity shortfall: peak demand has outpaced firm generation capacity for nearly a decade, while government interventions and the removal of peak pricing signals have reduced incentives for new capacity investment. Reliability standards have not been updated in 12 years, and the Electricity Authority appears to have de-prioritized security in favour of affordability and low‑emissions objectives.

Five interlinked drivers are cited: weakening focus on reliability, unclear weighting of “reliable supply” in statutory objectives, insufficient peak pricing, diminishing firm capacity (e.g. decommissioned gas and diesel plants), and regulatory inertia.

The report recommends strengthening and granting independence to the Security and Reliability Council, enabling expert oversight that is free from regulatory or political influence. In sum, urgent reform is needed to restore investor confidence, update reliability standards, and incentivize investment in firm and flexible generation to secure future electricity supply.

See our related report – Strengthening the Security and Reliability Council.