New Zealand is well placed to take advantage of falling costs in wind and solar and attract investment into renewable generation, according to electricity market expert Professor James Bushnell.
ERGANZ hosted Bushnell for an address to electricity sector leaders in Wellington last night. His presentation focussed on how the electricity market liberalisation that took place around the world three decades ago helped improve investment decision-making compared to centrally planned systems.
With the global electricity sector entering another major global investment cycle, well-functioning markets remain one of the most effective mechanisms for attracting capital, encouraging innovation, and delivering renewable generation.
Bushnell explored three ‘shocks’ that are reshaping electricity systems around the world: the decline in the cost of renewable generation, particularly wind and solar; the emergence of increasingly affordable battery storage; and the return of strong electricity demand growth driven by electrification, data centres, and industrial decarbonisation.
Bushnell said New Zealand's ‘hydro backbone’ and growing battery capacity meant the country was well-positioned to take advantage of these global clean energy trends, driving substantial investment in new renewable generation and storage to meet growing demand from Kiwi households and businesses.
“These attributes make New Zealand potentially a really globally competitive supplier of electricity,” Bushnell said.
Bushnell argued the value of market-based decision-making increased as investment choices become more complex because markets direct capital towards the most efficient solutions.
He also challenged the view that the growth of intermittent renewable generation requires a larger role for central planning, arguing that efficient pricing and investment signals become more valuable as electricity systems become more dynamic.
An expert on electricity market design and regulation, Bushnell is a Professor in the Department of Economics at the University of California, Davis, and a Research Associate with the National Bureau of Economic Research (NBER). His research over several decades has explored electricity market restructuring, competition, reliability, investment incentives, and the economics of the clean energy transition.
He is widely regarded as one of the leading authorities on how electricity markets can support efficient investment while maintaining reliable supply.
Professor Bushnell's presentation can be downloaded below.
