As we approach the 2026 election year, there is a heightened awareness of the critical importance of secure and affordable electricity for our economic future. We can expect to see a strong focus on the energy sector to ensure the lights stay on while we continue to decarbonise.

We set out below important policy, regulatory and market developments to come in 2026 and highlight some of the challenges and opportunities we foresee along the way.

Energy policy and regulation galore

Despite repeated calls for a bipartisan approach, there seems to have been no progress in 2025 on reaching political consensus on key energy policy. The energy strategy expected at the end of 2024 also remains undelivered. That said, Government and regulatory bodies have been busy in 2025, and we will see some important policy decisions and legislation between now and the election. These include the following:

• A decision on whether or not to proceed with procuring LNG infrastructure for an LNG import facility will be made by the end of 2025. 
• Changes to the National Policy Statements for Renewable Electricity Generation, Electricity Transmission, Electricity Transmission Activities and a new National Policy Statement for Infrastructure to streamline energy infrastructure development are anticipated to be finalised in late 2025.
• Decisions are expected to be made on the regulatory proposals for natural and orange hydrogen development in late 2025 or early 2026.
• A new regulatory framework will be established to ensure the dry-year risk will not re-emerge (consultation is to take place between now and Q1 2026).
• Decisions on the Code changes necessary to introduce mandatory non-discrimination obligations on the gentailers and on a (yet to be published) market making review consultation are expected in Q1 2026.
• Decisions on how the Government will reduce sovereign policy risk for investors in key energy projects such as oil and gas and LNG infrastructure are due in Q1 2026.
• Introduction of new legislation to strengthen the Electricity Authority’s (EA’s) powers is expected in Q2 2026.
• The statutes set to replace the Resource Management Act 1991 – the Natural Environment Act and the Planning Act – are expected to be passed before the election. 
• The draft offshore renewable energy legislation is currently being amended to create clearer rules for how seabed space is allocated [1].  Originally expected to be passed in mid-2025 with first feasibility permits targeted for 2026, we expect the legislation to be enacted in 2026.

The energy pipeline: 2026 and beyond

Transpower’s and the EA’s pipelines are good indicators of the types of energy projects we can expect to see in 2026. Solar projects continue to dominate the immediate future, making up 57% of connection enquiries to Transpower as of 10 October [2]. 

The EA’s generation investment pipeline lists potential new electricity generation projects in New Zealand through to 2036. For 2026, a total of 3.58k MW of projects are “expected to be commissioned” (although only 907 MW of these are actively pursued or committed). Consistent with Transpower’s connection pipeline, 57% of the EA’s 2026 pipeline consists of solar projects, 20% onshore wind and 18% BESS. Looking further ahead, based on the EA’s data, there will be an uptick of onshore wind projects commissioned in 2027-2028, with the popularity of solar continuing through to 2029.

So where is the much-needed firming in light of our dwindling gas reserves? The EA’s 2026 pipeline lists only 861 MW of firming (BESS, geothermal and hydro) compared to 2.71k MW of intermittent technology. There is, however, a significant increase in BESS expected in 2028. 

The Government’s energy package included several actions intended to firm up supply. As noted above, we will know more by the end of this year about the likelihood of LNG imports. The Mixed Ownership Model (MOM) companies, Genesis, Mercury and Meridian, will be digesting the Government’s removal of capital constraints announced in the energy package and we may see some capital funding requests for firming projects in 2026. Channel Infrastructure’s plans for a Marsden Point Energy Precinct also offer both fuel and energy security benefits, and we await more announcements from the Government in 2026 around the creation of a Special Economic Zone in that area. 

In the meantime, we will hear from the Commerce Commission regarding its final authorisation of the Huntly strategic energy reserve arrangements before February 2026 and, if approved, this will contribute to dry year cover over the next ten years. 

Potential headwinds in 2026

One of the most significant headwinds in 2026 will be for major electricity consumers managing electricity supply and costs. While hoping the measures implemented in 2025 will lower costs, major electricity consumers will be thinking strategically about how to manage these risks. This may include co-generation or sleeved Power Purchase Agreements (PPAs) as we have seen with the expected RFP from Health New Zealand for a sleeved PPA for up to 10% of its annual volumes.

Turning to developers, a new dashboard from the EA shows the barriers to new electricity generation projects in New Zealand. It compares how developers felt about certain barriers as at April/May 2025 compared to how they felt in the 2023 survey. Key takeaways are that consenting for solar projects is rated as significantly more difficult than in 2023, securing offtake is the second most significant challenge, but Overseas Investment Act requirements are no longer considered a major barrier.

In relation to consenting, there are 26 renewable energy projects currently listed or referred to access the Fast-track Approvals Act process. Only four are in progress and no decisions have been made yet, but we expect to see a flurry of fast-track activity next year before the election.

As for offtake agreements, the Government will be hoping that its actions around leveraging Government energy demand will catalyse growth in the PPA market. As mentioned, Health New Zealand is separately looking at sleeved PPAs and the Energy Competition Taskforce is considering the PPA market within the level playing field workstream. Banks remain supportive of renewable energy projects, but a lack of adoption of PPAs may constrain the availability of debt capital (and increase reliance on equity) to finance development. A government revenue stream via PPAs would typically be seen as more creditworthy than a corporate revenue stream and may lead to more favourable debt sizing criteria for developers and sponsors. 

The insurance market is also challenging. Natural disasters and weather events are driving insurers to tighten coverage, raise deductibles and impose sub-limits. Sponsors and banks increasingly require comprehensive insurance packages for bankability. Rising costs and narrower coverage can delay financial close or force restructuring of risk allocation in project finance deals.

Opportunities in 2026

The energy sector will continue to present multiple opportunities for a wide range of parties in 2026. We set out below some key opportunities beyond continued investment in solar, wind and BESS:

• As noted above, there is an obvious opportunity for the MOM companies to capitalise on the support offered by the Government for new firming investments.
• Assuming the Huntly strategic reserve arrangements are authorised, the Commerce Commission expects Genesis to follow through promptly on its commitment to design hedge products for third parties. This provides an opportunity for independent retailers and generators, industrial customers and financial intermediaries to manage their risk.
• Biomass and biogas opportunities are set to become increasingly important as alternative fuels to coal and gas, and the Government last week outlined its support and plans to accelerate the bioenergy sector [3]. 
• We expect to see continued M&A activity in the renewable energy sector. The sheer number of projects in the pipeline provides ample opportunity for project acquisition or consolidation.

Please get in touch with one of our energy experts if you would like to know more about what is currently happening or is expected in the energy sector and how we can help.

Footnotes 

[1] Clearing the path for offshore wind investment | Beehive.govt.nz
​​​​​[2] What's the latest with grid connections? | Transpower
[3] See the Government’s Wood Energy Strategy and Action Plan and Statement on Biogas here.