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The Customer and Product Data Bill is currently working its way through parliament. This bill will introduce a consumer data right (CDR) into New Zealand and will apply to electricity retailers - the concept is commonly referred to as open electricity. The intention of open electricity is to promote greater competition and give customers (both individuals and businesses) the ability to better understand, control and manage their energy usage.
CDR will mandate that energy retailers in NZ enable their customers to share data - such as their contact details, electricity usage and payment history - with other organisations and withdraw their consent to share the data at any time. Implementing your CDR obligations will be complex and will require the deep involvement of your legal, risk, technology, compliance and transformation teams, who must each understand the regulations, rules and standards, as well as your unique data, integration, technology, customer experience, security, identity, privacy and risk implications. We at the Middleware Group have found the depth of change this demands of an organisation is rarely fully understood at the start.
New Zealand isn't the first country to pursue a CDR, nor is electricity the first sector in NZ to tackle it. We have learnt a lot from initiatives overseas such as the EU's InterConnect project and the UK's Smart Grid initiative, as well as Australia's CDR experience.
The banking sector in NZ has proactively defined and implemented open banking over the last few years in preparation for CDR, so they have a huge head start in enabling the required information flows, consent management and payment processing. We worked across banks to develop these open standards, conformance tests and shared industry engagement/testing platforms we call our 'Sandbox'. These became the standard for the industry, and since then we have helped the largest banks implement their open banking capabilities in an accelerated, standardised way to avoid re-inventing the wheel. As the CDR standards are evolved these organisations will be able to cost-effectively keep up to date, a key aspect of managing the total cost of ownership (TCO) of open standards going forward.
More recently, we've worked with the health sector in NZ to define and implement API standards, starting on their journey to open health in advance of CDR mandating it.
Having worked with a wide range of industry organisations from the very beginning of their open journey, we know this stage is when organisations often question why this is needed, whether it will happen and what the real benefits might be.
We thought we would share three examples of why we think open electricity (which we see as a subset of open energy) will make a big difference to New Zealand.
Energy poverty
Analysis from the PHCC (Public Health Communications Centre) released in November 2024 indicates at least 360,000 households live in energy poverty. This means they are unable to afford energy to provide a basic standard of living such as cooking, heating and lighting. This causes knock-on impacts to health & education which can create long-term impacts to the social and economic wellbeing of New Zealanders.
We have liaised with the instigators of a UK project who applied open energy concepts to a social housing estate to empower residents to see, manage and control their own energy consumption costs. This had some remarkable results. It was seen that rent arrears fell significantly as residents could now manage their own finances better. Vandalism on the estate reduced, a sign that the community was stronger, more empowered and proud of what they had achieved. As a result of this project, these positive findings were fed into strategic plans for future social housing developments, enabling them to combat energy poverty on a large scale by design.
This project was run before open banking was available in the UK, but demonstrates that in New Zealand we now have new opportunities to help people connect their financial management and energy management seamlessly. With many banks now offering green loans, this has applicability beyond social housing and energy poverty too.
Energy efficiency
While consumers are concerned with their individual energy bills, energy suppliers are trying to get better at predicting and potentially managing electricity demand. This is to both avoid grid emergencies where demand and supply are mismatched, and also to make the industry more efficient overall.
This is potentially a win-win for consumers and the energy industry, and a key enabler for smart appliances that can automatically respond to grid events and pricing conditions to load shift their energy demands.
However, to enable this functionality open standards need to be agreed early. Appliances can have a lifespan of 10-20 years, so even if you delivered the APIs (the technology which implements the open standards) today, there could be a 5 to 10 year delay before sufficient appliances are compatible to make an impact. You can avoid this delay by fast-tracking the standards up front, ensuring appliances can be 'future-proofed' to support these standards before the APIs are even delivered.
We have dedicated ourselves to finding and realising these cross-industry benefits and opportunities for New Zealand, and essentially, our Open Banking Sandbox, built on our Open Everything Engagement platform (from our subsidiary Glueware), does exactly this for the banking industry.
Energy resiliency
With many homes installing solar which could have the ability to run off-grid in an emergency, there is the opportunity to enable communities to be more resilient during natural disasters. After all, communities could likely sustain themselves for much longer if freezers, water pumps and cooking facilities were still operational in a disaster.
Our open energy research lab in the Wairarapa is able to self-island (detect a grid outage, automatically isolate itself and go off-grid in an emergency), providing daytime solar power to critical appliances - without a battery. This is a very cost effective resiliency solution, but most are not installed with this capability. We can even charge our electric motorcycle on emergency power, so can even enable resilient transportation in an emergency as EVs become more common.
Imagine if the emergency management authorities had access to a real-time map of which homes had resilient systems and could prioritise/organise responses based on the facilities available for that community. This is incredibly useful when considering medically dependent consumers or critical civil defence services.
Resiliency is a good example of a set of use cases which would not traditionally make it onto the 'must do' list as these events are infrequent despite their high impact. However, with the industry coming together to develop the foundational capabilities for open energy, the incremental effort to include resiliency may be quite small. This is a good example where New Zealand has the opportunity to take a global leadership role, exporting open standards and associated expertise and technology to generate overseas investment back into New Zealand organisations.
The good news is that we've already tackled open banking and open health, and seen there are common standards, capabilities and services every industry will need. Duplicating these for each industry makes no sense to us or for the outcomes NZ is trying to achieve, so we have dedicated ourselves to finding and realising those cross-industry benefits and opportunities for NZ. This is the essence of our Open Everything strategy for NZ.
Now that open electricity has been prioritised for CDR , the energy industry has the opportunity to leverage the experiences of other jurisdictions and the unique experience of open banking and open health in NZ. At Downstream in March, we will be sharing our insights of how new industries tend to respond to open standards and associated regulation and how, with the right leadership, better outcomes for participating organisations and NZ consumers can be realised.
There is opportunity for New Zealand to be world-leading in proving some of this innovation, and collaborating globally to cement this leadership position internationally. Our call to action for the energy sector as CDR is enacted is for those organisations wishing to lead in customer innovation to grab this leadership opportunity so we can help solve real problems for New Zealand.
We look forward to seeing many of you at Downstream in Christchurch. If you have any questions or would like more information, please reach out to info@middleware.co.nz
By Lee Mauger and Tina Groark, at the the Middleware Group.