NZ faces hefty power price increases — artificial intelligence can combat this: Rob Rogers

NZ could see power prices doubling, as one in five Kiwis already can’t afford their bill.

THREE KEY FACTS

• It’s been years 26 years since far-reaching reforms were introduced for the NZ electricity sector.
• Each year about 40,000 Kiwis are disconnected from the power supply for non-payment, according to Consumer NZ.
• The electricity sector contributes up to 70% of the gross emissions reductions required under the country’s 2050 net zero carbon target.

Rob Rogers is the CEO of SupaPwr, a community energy company that helps organisations, businesses and people harness solar energy and distribute it to their community, using AI-driven software.

OPINION

Boston Consulting estimates New Zealand needs to spend $42 billion over the next six to eight years to keep up with the nation’s electricity needs.

That’s an enormous number, especially for a country with a huge national debt and a cost-of-living crisis.

If this debt were funded at the Official Cash Rate, it would cost every Kiwi household over $1000 more a year for power. Unfortunately, for a variety of reasons it’s going to cost a lot more. By following the present pathway, New Zealand will soon see power prices doubling, just as they have been doing lately all over the world.

To see how bad things can get — San Diego’s power prices rose 63% in the past year.

To add fuel to the fire, even with that enormous investment in generation, transmission and distribution of power, we still won’t have decarbonised NZ, meaning the cost and climate impact of fossil fuels will still be weighing heavily on our country.

So, how do you solve it?

Simon Mackenzie, CEO of Vector, correctly articulated in a recent article that a big part of the problem is we’re using a “10-years-past-its-use-by date” approach to manage the power sector.

This incumbency and lack of change is costing NZ billions of dollars, means one in five Kiwis already can’t afford their power bill, not to mention the huge carbon footprint implications. We should all be annoyed it is not being handled correctly.

Mackenzie suggested big regulatory changes to fix the problem. Prima facie, this seems like a good idea. But the problem with this is the time lag it will inevitably take to implement, if ever.

This fact probably makes it much less of a great idea, especially when we have climate change and cost-of-living issues right on our doorstep, right now.

For an alternative viewpoint: Energy hardship – we need to know the size of the problem we’re trying to solve – Meridian Energy

So, what can we do?

We live in the age of artificial intelligence (AI) and in some parts of the world, we’re already seeing really smart use of this.

For example, in San Francisco it feels like every second car is a driverless Waymo taxi. This is a hugely complex use of AI, and you might correctly wonder — if we can do that, surely we can solve power? And you’re right — it takes a lot less AI power than that to substantially solve the power grid issue.

In NZ we already have companies like ours using AI-powered ability to make enormous power sector impact right now, even without big regulatory changes.

If all of us in NZ found out what’s possible and put it into action now, we could solve a big chunk of the problem.

If we also made a couple of small but important regulatory changes, we could enhance this even further.

For example, if the market allowed flexible billing options such as MTR (multiple trading relationships), and if the regulatory and market framework formalised the way flexibility solutions are paid for, this would hyper-accelerate the ability of nimble “next-generation” operators like SupaPwr to solve the grid problem and radically reduce the investment our country needs to make.

These relatively simple changes have already had some degree of scoping and piloting, and need only an accelerated path to finalisation and going live. These are quick and easy wins.

It’s a great idea to have “Titanic-turning” change to really solve the problem, but while we wait for the bureaucrats to catch up, we can already do a lot.

We just need everyday, resourceful Kiwis to find out about the resources we already have, and get active making the change happen, one community at a time.

We, the people (with a bit of help from AI) can turn the Titanic, all on our own.