Hodgson today released a discussion paper outlining proposals to regulate lines companies' charges and conditions for connecting generators to their networks. The proposed regulations will allow generation of 10kW or less to connect to local lines free of charge. For generation above 10kW, lines companies may seek reasonable payment for any new assets needed to cope with the extra load.

Generators and lines companies will also have access to an independent arbitrator to determine disputes.

Hodgson said 15-20 percent of New Zealand's electricity came from smaller stations connected to local networks, as opposed to the major power schemes which connected directly to the national grid. This "distributed generation", included local hydro schemes, landfill gas, small geothermal, diesel, gas, wind and solar generation and cogeneration plants.

"Distributed generation has many benefits and the government wants to open up more opportunities for it to grow as there is considerable potential for more small-scale power projects, and increasing interest from electricity companies and other investors."

Hodgson said distributed generation increased supply security by locating generation closer to load and reducing dependence on major plants and long-distance transmission. There were also reduced transmission losses and fewer environmental impacts than for major plants.

Hodgson's statement echoes that of TrustPower boss Keith Tempest who told EnergyReview.Net that his company was actively investigating several new small hydro or geothermal schemes around the country to complement TrustPower's existing distributed non-thermal network.

Hodgson said he expected regulating line charges for distributed generation would help the expansion of renewable generation, "which is frequently located away from the national grid and often connected to local lines".

"This is another way we can make progress towards a sustainable energy future," he concluded.

Submissions on the discussion document close by November 3.