Source
https://www.rewiring.nz/delivered-cost-of-energy — original source (opens in a new tab; the file is not redistributed)
Rewiring Aotearoa (2024) — Delivered Cost of Energy
Distributed-energy valuation argument — quantifies why behind-the-meter solar is worth MORE than wholesale price
A market-design economics paper arguing that comparing rooftop solar to the wholesale electricity price (or grid-plant LRMC) understates its value, because behind-the-meter generation also avoids delivery-chain costs grid-scale plant does not. Headline: distributed resources carry a value advantage of up to ~13% over grid-based generation (avoided distribution losses 2–8% + retail hedging ~5%), plus network-deferral value. The NI-load-bearing contribution is the self-consumed-vs-exported asymmetry: a self-consumed kWh avoids the full delivered cost (~6–13% above wholesale), while an exported kWh is worth only ~wholesale (loss-adjusted). Author is an advocacy non-profit; the ~13% is their estimate with their own caveat that hedging/deferral values are hard to source publicly → data_quality: medium.
Summary
Rewiring Aotearoa argues that New Zealand’s cost-only frameworks for ranking generation (wholesale price / LRMC / LCOE) systematically undervalue distributed energy resources (rooftop solar + batteries), because they ignore the delivery-chain costs that behind-the-meter generation avoids but grid-scale plant does not. Decomposing a residential power bill into its components (Generation 32% / Distribution 27% / Retail 13% / Transmission 10.5% / GST 13% / Metering 3.5% / market ~1%), the paper assesses which components a behind-the-meter kWh actually avoids — concluding distributed resources deliver up to ~13% more value per kWh than grid-based generation. It distinguishes self-consumption (avoids the full stack) from export (worth ~wholesale, loss-adjusted), and calls for regulators (EA, EECA, ComCom) and energy-system models (EDGS, ENZ) to correct a supply-side bias against distributed resources.
Key claims
- claim: "Distribution losses between the GXP (grid exit point) and the customer's premise run 2–8% (EDB loss factors typically 1.01–1.08); rooftop solar connects at the low-voltage network so avoids losses at the HIGH end (~8%). A behind-the-meter kWh therefore has an immediate value advantage of up to 8% over a wholesale (grid-edge) kWh from avoided distribution losses alone."
source_location: "p.3 + 'Wholesale cost of distribution losses 2%–8%' p.8 + Key energy system questions p.11"
- claim: "Retail hedging is estimated at ~5% of the average wholesale cost of energy; behind-the-meter solar reduces the volume a retailer must hedge. Combined with avoided distribution losses, distributed resources have a value advantage of up to ~13% over grid-based resources, PLUS any value from deferring network upgrades."
source_location: "p.3 'Based on this information…up to 13%'"
- claim: "Network-deferral value: Orion estimates the long-run average incremental cost of delivering network services during coincident peak demand at $77/kVA per year — value that should accrue to a distributed resource reliably producing at peak (i.e. requiring a battery). Some industry estimates put the long-run cost of distribution investment at ~$110 per kW of network expansion per annum."
source_location: "p.3 (Orion $77/kVA) + p.10 (~$110/kW/yr)"
- claim: "Residential power-bill component breakdown (Electricity Authority national graphic, accessed Sep 2024): Generation 32% / Distribution 27% / Retail 13% / Transmission 10.5% / GST 13% / Metering 3.5% / Market governance 0.5% / Market services 0.5%. ⚠ SUPERSEDED (temporal shift, not an error): the PRIMARY Electricity Authority split is now held verbatim at [[url_023_ea-power-bill-breakdown|URL_023]], carrying the end-June-2026 figures Generation 38.5 / Distribution 24.5 / GST 13 / Retail 11 / Transmission 8 / Meter 4.5 / Levies 0.5; between this Sep-2024 snapshot and Jun-2026 the shares shifted — Generation rose 32→38.5%, Distribution fell 27→24.5% (the EA refreshes the split each end-June). This verbatim Sep-2024 reading is retained as the as-accessed figure — annotated, not replaced."
source_location: "'Fixed vs variable costs' p.6 (EA graphic)"
- claim: "Self-consumed vs exported solar are valued differently: a kWh of REDUCED consumption (self-consumption) avoids distribution losses, retail hedging, retailer profit margin tied to retail price, and avoidable distribution-investment costs — at least 6–8% above the wholesale price, likely more. An EXPORTED kWh should be paid at least the wholesale price adjusted upward for distribution losses (it still reduces LV losses), but does not avoid the full stack without a battery."
source_location: "'Key energy system questions' pp.11–12 + 'What about rooftop solar export?' p.12"
- claim: "Variable market levies 2024/25: Transpower $0.23/MWh; distributor $0.19/MWh; retailer $1.23/MWh. Market ancillary services (instantaneous reserve, frequency keeping) ≈ $30M/yr for the whole market, recovered through retail prices."
source_location: "p.9 (levies) + p.8 (ancillary $30M)"
- claim: "Behind-the-meter generation is now widespread: over 60,000 power stations sited on residential rooftops in NZ, 13,000 commissioned in the last 12 months (to Sep 2024). The Low User Fixed Charge regulations (which inflated the variable tariff component since 2003) are being phased out, complete by 1 April 2027 — after which variable rates will better reflect true avoidable costs."
source_location: "p.6 (60,000 rooftops) + p.7, p.9 footnote 22 (LUFC phase-out 2027)"Neobiome Intelligence relevance
The methodological key to NI’s solar economics (D21). The engine currently treats grid import as physical shortfall (D18); this source supplies the value layer: a self-consumed solar kWh is worth the full delivered cost (wholesale + ~6–13% avoided delivery costs), while an exported kWh earns only ~wholesale (loss-adjusted, or the buy-back rate). That asymmetry is exactly what makes battery self-consumption economic and frames the grid-vs-off-grid breakeven — so an NI economic layer should value local-met load at the delivered cost and exports at wholesale/buy-back, not both at the same rate. The EA bill-component breakdown (Gen 32 / Dx 27 / Retail 13 / Tx 10.5 / GST 13 / Metering 3.5) decomposes what a grid kWh actually costs, and the 77/kVA peak-deferral figure is a (location-specific) value a peak-reliable community battery could capture. Caveats: advocacy-authored; the ~13% is an estimate (hedging/deferral hard to source); figures are component percentages, not a single /kWh — pair with RD_018 (MBIE QSDEP) for absolute prices.
Research targets
Documents to retrieve
- RT_233 — Orion “Methodology for deriving delivery prices” (1 April 2024, Appendix G): the primary behind the
77/kVA coincident-peak long-run incremental cost — candidate for an NI network-deferral / peak-battery value cell. → **RESOLVED OT_125** (Orion "Methodology for deriving delivery prices" retrieved & read verbatim, 2026-07-17): Appendix G's six-step derivation of the **77/kVA/year** coincident-peak LRAIC (69 upper-HV +8 lower-LV) is now held as the source of record for the figure this page carries second-hand. ⚠ Primary shows the $77 is the gross avoided cost — Orion’s realised export credit is only ~⅓ of it (§7.1) — so the network-value cell must pick the gross-deferral vs realised-credit layer (~3× apart).
Research gaps
- The self-consumed-vs-export value asymmetry method is itself supplied by this source; the open gap is a single defensible NZ $/kWh delivered cost (this paper gives only component %s) — pair with RD_018.
Resolved
- RT_234 (RESOLVED → URL_023): the Electricity Authority residential bill-component breakdown — the primary national split — is now held and read verbatim at URL_023 (end-June-2026 figures: Gen 38.5 / Dx 24.5 / GST 13 / Retail 11 / Tx 8 / Meter 4.5 / Levies 0.5). ⚠ Those supersede this page’s Sep-2024 secondary quote (Gen 32 / Dx 27 …) — a genuine temporal shift, annotated on the bill-component key_claim above, not deleted.
Connections
Links to
Referenced by
Sources (6): OT_066 · OT_068 · OT_125 · OT_153 · RD_037 · URL_023
EDT domains (1): D01: Renewable Energy & Storage Systems
SSI indicators (1): I01: Financial & Economic Self-Sufficiency