Yesterday, the Government released its Energy Package (the Energy Package), which proposes various reforms aimed at improving the resilience, affordability and sustainability of New Zealand’s energy system (summary document found here). The announcement follows the release of the Frontier Economics report commissioned by the Government (the Report), which identified structural challenges in the electricity market and recommended substantial reform.
The Energy Package sets out both immediate interventions and longer-term strategic initiatives, while reaffirming the Government’s commitment to a market-led approach to energy sector development.
The Energy Package is structured around two distinct workstreams:
- Workstream One focuses on near-term interventions to secure fuel supply, accelerate renewable generation and strengthen national energy resilience.
- Workstream Two sets out a broader market reform agenda, aimed at reducing investment risk, enhancing regulatory oversight and building a more transparent and efficient energy market.
Workstream One
LNG import terminal
New Zealand’s electricity system remains vulnerable to dry year risk, compounded by declining domestic gas reserves. To address this, the Government will begin procurement for an LNG import terminal, providing reliable, on-demand access to fuel for long-duration firming.
A Registration of Interest process will open on 6 October 2025, inviting market participants to signal interest and propose delivery options. The Government expects to make further decisions in December 2025.
Unlocking capital for Mixed Ownership Model companies
The Government has moved to address the Report's finding that Mixed Ownership Model (MOM) companies (Genesis, Mercury and Meridian), being some of New Zealand’s largest electricity generators and retailers, have been limited in their ability to raise equity capital.
Ministers have communicated a clear expectation that MOM companies should actively identify and bring forward new generation projects. The Government has indicated it will take a supportive and commercially minded approach to proposals that are viable and backed by other shareholders.
Leveraging Government demand to accelerate supply
The Government will look to use its own energy demand as an anchor to accelerate the delivery of new supply, through the offer of long-term purchase agreements.
On 1 October 2025, the Government issued a RFI seeking proposals across all technologies and fuels. The RFI will remain open for six weeks and is designed to identify a broad range of potential projects and commercial arrangements that could contribute to New Zealand’s energy supply. Responses to the RFI will directly inform the Government’s procurement strategy, with further guidance to be issued to the market by December 2025.
Accelerating renewable energy delivery
To meet New Zealand's target of doubling its renewable energy by 2050, the Government is removing barriers to the delivery of renewable energy. The following suite of reforms are underway:
- targeted changes to the Resource Management Act (RMA) as an interim measure, and new legislation to replace the RMA, are expected in Q4 2025;
- updated national direction under the RMA, including national policy statements prioritising energy infrastructure expected to be in place by the end of 2025;
- fast track legislation, which has already listed 22 renewable energy projects with more expected to follow;
- new legislation enabling offshore wind development is scheduled for Q1 2026, establishing a framework for consenting and investment; and
- a streamlined connection processes to support integration of new generation with the grid will be led by the Electricity Authority (EA).
Workstream Two
Reducing sovereign policy risk
The Government has acknowledged that sovereign policy risk has discouraged investment in long-duration firming and fuel infrastructure. To address this, it will utilise a suite of tools to provide greater certainty to investors, which may include:
- indemnities: Financial redress if specific policy changes adversely affect a project's viability.
- co-investment: Direct Government equity or loans for strategic fuel security projects (e.g. the $200 million provisioned in Budget 2025 for co-investment in new gas field development).
- public-private partnerships and long-term contracts: To offer revenue certainty and protection against early closure.
These tools will initially support investment in oil, gas and LNG infrastructure, but may be applied more broadly across the sector. Further decisions are expected in Q1 2026.
Strengthening the Electricity Authority
The Government has committed to transforming the EA into a more powerful and agile regulator. The proposed reforms are discussed here.
Improving market transparency
Identified as a cornerstone of efficient and competitive markers, the Government will direct the EA to implement a range of reforms to improve visibility and reduce risk, including:
- improved disclosure of thermal fuel availability;
- targeted reforms to hedge market transparency and liquidity; and
- enhanced stress-testing for market participants.
These measures are intended to support more informed investment decisions and ensure the electricity market remains open, dynamic and fair.
Reforming the gas market
The Report identified that poor and delayed gas market information is undermining confidence and distorting investment signals. To address this, the Government will establish a stronger gas information framework, which we discuss here.
Ensuring long-term reliability and resilience
While earlier actions in the Energy Package address near and medium-term dry year risk, the Government has committed to strengthening the regulatory framework to ensure that considerations of reliability and resilience are incorporated to New Zealand's renewables-led system.
Enhancements to the current regulatory framework will aim to provide clear investment signals for flexible and long-duration capacity to back a renewables-led system in order to:
- reduce the risk premium in forward contracts by lowering uncertainty; andenable independent
- developers to secure firm contracts and accelerate renewable build.
The EA, with its increased powers will be tasked with overseeing these new requirements.
Consultation on the framework will begin shortly, with implementation expected to be phased in from Q1 2026.
Increasing efficiency across electricity distribution businesses
The Report noted inefficiencies, duplication and uneven investment in New Zealand’s 29 Electricity Distribution Businesses (EDBs) all of which contribute to higher household electricity bills. We discuss this further in our article here.
MBIE and the EA will monitor performance against clear milestones through to Q4 2026. If progress is insufficient, the Government may intervene directly with mandated efficiency measures.
Conclusion
The Government's Energy Package sets out a broad programme of reform, aimed at improving the resilience, affordability and sustainability of New Zealand’s energy system. As implementation progresses, stakeholders across the energy sector will be watching closely to understand how these changes may affect project development, market dynamics and long-term investment strategies. We will continue to monitor developments and provide updates as further detail becomes available.
If you would like to discuss any aspect of the Energy Package or its potential implications, please get in touch with our energy team.