Working paper published for Energy Competition Task Force to support PPAs

The Electricity Authority Te Mana Hiko is seeking submissions on a working paper which aims to improve settings in relation to power purchase agreements (PPAs).

It is one of the eight initiatives being considered by the Energy Competition Task Force, which we jointly established with the Commerce Commission in August 2024 to investigate ways to strengthen the electricity market.

PPAs are long-term contracts to support generation. They can provide a route to market for entrant generators and an alternative procurement option for electricity buyers or traders. We know that a deeper and more active market for PPAs will support more investment in new generation such as solar and wind farms.

Our working paper covers some of the opportunities and challenges facing the PPA market in New Zealand, as well as some options to support PPAs to encourage more and faster investment in new generation. New generation puts more energy into the system, strengthens resilience against future shortages and puts downward pressure on prices.

Options considered include setting up a marketplace for PPAs, greater transparency of PPA enquiries between buyers and sellers, and requiring gentailers to make ‘firming’ available for PPA buyers. ‘Firming’ is pricing for energy needs that aren’t covered by the PPA, to manage the risks of variable generation volume—like when the sun isn’t shining or the wind isn’t blowing.

The Task Force is ready to act to make any necessary changes to make sure there are no regulatory hurdles to hinder the uptake of PPAs.

Submissions on the working paper close 5pm 28 February 2025. We intend to hold a workshop for interested stakeholders during the submission period—more details about that will be available soon.

We will consult on any proposed actions relating to PPAs in April 2025 to support decisions by June 2025