The Government has announced a package of actions in response to the review by Frontier Economics of the performance of New Zealand’s electricity market. Alongside the announcement, the Government also published multiple documents. Our Energy team has drawn together the key points and detail from various sources to help you navigate the energy package. While the package is broadly relevant to the whole energy sector, this summary will help you skip to matters of particular interest to you.

Quick links

• See the Government’s announcement here.
• See a summary of the Government’s proposed actions here.
• For a summary of Frontier Economics’ recommendations and the Government’s response, see here.
• For a summary of Frontier Economics’ recommendations that the Government is not pursuing, see here.
• See Frontier Economics’ final report “Review of Electricity Market Performance” here.

Key points

• The Government remains committed to New Zealand’s market-based energy system.
• Frontier Economics concluded that the current “energy only” market design is driving strong investment in wind, solar, and geothermal but is not delivering firm fuel supply or long-duration firming.
• To address this the Government is implementing a package of actions, grouped under two workstreams: investing in energy security and building stronger markets. We summarise these actions below.

Investing in security of supply

• Action 1.1: Deliver a Liquefied Natural Gas import facility. On 6 October, the Government will commence a competitive procurement process for an LNG import facility. Cabinet will consider the results of this first phase and determine next steps by the end of the year. For more detail see here.
• Action 1.2: Remove capital constraints on the Mixed Ownership Model (MOM) companies (Genesis, Mercury and Meridian). The Government has written to the MOMs to say that the Crown is prepared to support capital funding requests for strategic and commercially rational investments that support energy security: “The Government is committed to maintaining its legally mandated 51 per cent stake in the MOM companies, and we accept we would need to participate in any equity raise required for major new investments. We are more than willing to do this, if the proposals stack-up.” See letter here.
• Action 1.3: Increase New Zealand’s energy supply through government energy demand. On 1 October MBIE released a Request for Information inviting proposals for how the Government can work in partnership with industry to kickstart new projects that will help boost New Zealand’s energy supply. Leveraging government energy demand will help unlock new investment in energy generation across a range of technologies. The Government uses the UK as an example: the UK uses Crown Commercial Services to bring government customer needs together and enter into long-term agreements which typically last between 5 and 15 years. These agreements offer fixed long-term pricing and support the build of new assets, as well as the UK’s energy security goals. For more detail see here. 
• Action 1.4: Supercharge renewable energy. Ongoing actions via Electrify NZ aimed at doubling New Zealand’s renewable energy by 2050 through resource management changes, the Fast Track approvals process and offshore wind legislation. 

Building better markets to improve affordability

• Action 2.1: Reduce sovereign policy risk for investors. The Government will outline decisions in Q1 2026 on how it will provide greater certainty for investors in key energy projects. Initially, these tools will support investment in oil and gas and LNG infrastructure but the inference is that they may be applied sector wide. Options on the table include:
  • Indemnities if specific policy changes affect a project’s viability;
  • Co-investment (e.g., the $200 million set aside for co-investment in gas fields through Budget 2025); and
  • Public-private partnerships and other procurement contracts - which provide long-term revenue certainty and/or financial redress if the project is closed.
• Action 2.2: Create a more powerful Electricity Authority (EA). The Government expects to introduce legislation in Q2 2026 to strengthen the EA’s powers. For more detail see here. Reforms may include:
  • Raising the maximum penalties for a Code breach from $2 million to $10 million or three times the commercial gain to align with Commerce Commission powers;
  • Criminalising certain business conduct (including knowingly misleading the EA);
  • Stronger powers for the EA to gather information;
  • Faster rule changes to keep pace with market developments; and
  • Enhanced market monitoring and reporting on competition and security of supply.
• Action 2.3: Improve transparency and efficiency of the electricity market. This is building on ongoing work by the EA to give effect to improved disclosure of thermal fuel information, targeted reforms to increase hedge market transparency, measures to enhance hedge market liquidity and enhanced stress-testing on market participants. The strengthened EA will undertake further pro-competition measures where necessary.
• Action 2.4: Improve gas market transparency. The Government will establish a stronger gas information framework to ensure that gas and electricity markets have the information they need to plan for the future. This will include:
  • Reducing timeframes for the Ministry of Business, Innovation & Employment (MBIE) to receive and publish gas reserves and production forecast data so the market has up-to-date visibility of supply from 2026;
  • Directing Gas Industry Company to produce an annual gas supply and demand study that provides forward-looking insights, with the next report due at the end of 2025;
  • Consulting with industry on additional information requirements in the fourth quarter of 2025, with finalised new information requests being released in Q1 2026. For more detail see here.
• Action 2.5: Build reliability and resilience in the market. Earlier actions will support dry year cover in the near to medium term. However, the Government will strengthen the current regulatory framework to ensure that dry year risk will not re-emerge in the future. Enhancements will aim to provide clear investment signals for flexible and long-duration capacity to:
  • Reduce the risk premium in forward contracts by lowering the dry year uncertainty; and
  • Enable independent developers to secure firm contract cover to accelerate renewable build.

Regulatory mechanisms used internationally to support investment and reliability will serve only as reference points. The framework will be designed specifically for New Zealand’s market conditions and long-term objectives and will be developed in consultation with industry between now and Q1 2026. For more detail see here.

• Action 2.6: Improve the business efficiency of electricity distribution business (EDBs), by tasking them to collaborate, standardise processes and make smarter investment decisions. EDBs will also have more freedom to invest in local generation connected to their networks and to Transpower’s grid, strengthening both local resilience and national competition. MBIE and the EA will closely monitor EDB performance, with clear milestones set through to Q4 2026. If networks fail to meet them, the Government will intervene directly with mandated efficiency measures. For more detail see here.

Next steps

The energy package has sparked a wide range of reactions from the industry. There is a lot more detail to come on many of the proposed actions and an opportunity for sector participants to help shape that detail. Please get in touch with one of our energy experts if you would like to discuss any aspect of the package and how it may affect your ongoing or future operations.