As we add more renewable energy, our power grid becomes more beholden to the weather. This increased volatility means we’ll need an even greater surplus of power to keep electricity affordable.

The hard truth is more energy generation shouldn’t be the whole solution.

Taking a step back from the relentless focus on how we can power New Zealand’s predicted growth in energy demand, the question arises: what if we change the demand?

This was the bright idea of Lloyd Mandeno, a pioneering Kiwi engineer who ran one of New Zealand’s first hydropower stations at Ōmanawa Falls in the 1920s.

Mandeno had just invented what was possibly one of the world’s first water storage heaters – a galvanised-iron cylinder, insulated with 15cm of pumice, with a 350W heating element.

While electric hot water on demand was an instant hit with people, it was also an instant hit to the power system. Tauranga residents were all taking hot baths at the same time of day and overloading the power station.

The simple but ingenious solution was a two-way switch above the stove labelled “stove” and “water heater”. It meant that if the stove was on, the water heater was off – and vice versa. This reduced demand on Mandeno’s power station because people couldn’t cook and bathe at the same time.

This was New Zealand’s first-ever technology for electricity load management. By the 1940s, many electric power boards had installed control systems that sent electric “ripple” signals down the power lines instructing water heaters to switch on or off, and many more would be installed.

“Ripple control” of household water boilers is still a major part of our electricity system today. The amount of potential demand that can be shifted through smart hot water management is about the same size as the entire Huntly Power Station.

This is called “demand-side flexibility”; ways we can change the patterns of energy demand when our power supply needs it most.

With a dominant focus on new ways to generate electricity, this principle has not developed much further. Yet technology has offered us new ways to build on the idea.

For example, electric vehicle smart-charging can become a form of “ripple control” for cars. The grid can send a signal to these chargers to stop using electricity at peak times and instead do most of the charging while New Zealand sleeps.

Batteries, now widespread and getting cheaper to produce, will eventually allow households and businesses to store power collected at off-peak times, when it’s cheaper, and use it later, when prices are high.

Smart heat pumps could respond to an external signal from the grid, such as the price of electricity, and turn it down a degree or two when the spot price reaches a set level to insulate the user from paying peak energy prices.

This will become more important as the weather-dependent supply of renewable energy means wholesale volatility is expected to continue to increase.

As more households adopt smart energy technologies, demand-side flexibility will create huge benefits for the country. The more energy consumption that can be deferred or avoided, the less we as consumers pay for it.

A cost-benefit analysis by energy adviser Sapere concluded that there were $6.9 billion of net benefits on the table from New Zealand developing distributed energy resources such as demand-side flexibility.

Fortunately, many energy retailers have now recognised the benefit of customers providing demand-side flexibility to the electricity system.

If your house can be flexible with power use, your retailer should reward you through lower electricity prices. In some cases, like exporting power from a battery or a solar panel, you will get paid.

We have a way to go yet to make sure the electricity market provides consumers with this level of choice.

For example, your power bill includes charges from other companies involved in the energy supply chain, such as distribution costs from the local lines company. Many of these charges don’t yet reward customers for deferring energy use.

It is incumbent on our energy system to ensure customers reap the benefits of demand-side flexibility, to incentivise uptake of these technologies. For a consumer, installing a battery and solar panels comes with an upfront cost – and it must be worth it in the long run.

Then, as these technologies become cheaper and more commonplace, New Zealand homes will become automatically responsive to our energy supply and reduce the overall amount of power our country needs to produce. This will help keep electricity spot prices down and create a more stable energy system for all.