There’s a cost upfront.

The AE-1, launching this month, comes in three flavours:

The pricing substantially undercuts Tesla’s Powerwall home battery, but Toki says he doesn’t view it as a direct competitor, given Tesla doesn’t have an electricity retailer licence so can’t offer the same ability to arbitrage pricing.

There’s also a one-off $1500 installation fee with no DIY option. The system has to be put in by a licensed electrician.

Then there’s a $20 per month subscription fee for access to Aotea Energy’s software, which lets you access power at wholesale pricing.

Wholesale energy, network charges, metering and levies are passed through at cost. Buying an AE-1 battery involves leaving your existing power retailer and making Aotea Energy your new retailer. Each month it will send you a bill, which will be minus whatever you manage to sell to the grid.

Barrier to success

“Necessity is the mother of invention,” Toki (Ngāti Rehua, Ngāpuhi) says, who grew up on Great Barrier Island (the Māori name of the island is Aotea).

With no centralised power, residents use (increasingly expensive to run) diesel generators or solar.

In the case of Toki – who founded a skincare brand on the island – that meant experimenting with batteries, which led to him founding Aotea Energy in 2022, initially building prototype batteries and software for peer-to-peer sharing.

He now has 18 staff, spread across offices in Auckland and Christchurch, including a high-powered hire: Antoine Riboulon, who serves as chief operating officer.

Before an 18-month career break, which brought him to New Zealand, Riboulon spent five years working on energy products for Tesla in California and Texas, rising to global head of operations for Tesla Autobidder – the firm’s energy trading and control system for its utility-scale batteries.

Financial backing has come in the form of convertible notes (loans that can be converted to equity) in “the six figures” from Sir Stephen Tindall’s K1W1 and entrepreneur Vaughan Fergusson, the founder of point-of-sale software firm Vend (sold in 2021 to Nasdaq-listed Lightspeed Commerce for US$350 million).

Aotea also received a loan from Crown clean energy innovation agency Ara Ake, whose $6m per year funding was axed in 2026.

The Energy Efficiency and Conservation Authority is now administering Ara Ake’s outstanding $5.5m in repayable grants – which were between $450,000 and $500,000 for most recipients, repayable once revenue hit $1.5m or there was a $10m or higher capital raise.

A bracing environment, but less so than before

“Over the past 12 months, our whole fleet has paid an average of six cents per kilowatt hour across the full trading period. On average, that works out at about $2700 in savings a year, with a payback period of between three and six years,” Toki said.

The past year, with plentiful rain, has been a benign one for wholesale or “spot” power pricing, which actually fell in a number of regions. Power bill increases have been blamed on higher lines charges.

Power retailer Flick Electric (now owned by Meridian) launched last decade with an app that allowed consumers to access wholesale power prices.

Savings of $500 a year were promised for its spot price plan, but cold and dry winters in 2017 and 2018 saw spot price spikes. Some Flick consumers complained to media they were paying $100 more per week for sustained periods.

Regular power plans have the cost of “hedging” built-in, smoothing the impact when wholesale pricing spikes way above what retail consumers usually pay.

Wholesale prices were also volatile in 2021 (when Flick stopped taking new customers for its spot price plan) and again in autumn 2024.

Wholesale pricing is updated every half hour, making for a potentially intimidating environment, even with the help of user-friendly software on your phone.

Toki says his firm has war-gamed how its system would fare during the spot price spikes of recent years.

“August 2024 was an extreme tail-risk event; a perfect storm of low hydro reserves, low wind, and thermal supply constraints,” he told the Herald.

During that month, wholesale spot prices averaged about $500 per megawatt-hour (MWh), compared with a standard baseline of around $125/MWh, Toki said.

“We’ve used the August 2024 spot pricing event as a stress test for our model and compare our figures against that period whenever we generate a customer bill report,” he said.

“As the wholesale market fluctuates every 30 minutes, even during a high-priced month, the spot price rises and falls throughout the day.

“AE-1’s software continuously hunts for the lowest available rates within those 30-minute windows, allowing the battery to charge at the cheapest relative intervals and run the home off stored energy during peak spikes.

“While no retail model is completely immune to extended macro-pricing events, the AE-1 acts as a dynamic shock absorber against wholesale market exposure.

“Because these events are short-lived, the substantial savings generated across the rest of the year far outweigh a single difficult month, ensuring customers still come out well ahead on an annual basis.”

Long-time Flick Electric chief executive Luke Blincoe has accused the big gentailers of trying to squeeze his company out.

In 2023, he made a formal complaint to the Commerce Commission that Flick had been denied access to “shaped” hedge contracts that cover blocks of time, reducing the risk of huge half-hourly risks. It was rejected.

Today, there are more protections for small retailers, however.

The Electricity Authority’s new “level playing field” rules for future hedging contracts came into force in July.

The new measures require gentailers to offer hedge contracts to independent retailers on the same terms as they offer to their own retail businesses.

They also allow the Electricity Authority to watch retail prices closely and monitor progress.

This new regime is designed to improve competition and give retailers confidence they are not being discriminated against when purchasing wholesale electricity.

Customer turned investor

“I had been looking into the whole solar, batteries, smart home space for a while. I had a coffee with Tama and shared his view on how to make the grid smarter by orchestrating it from network edge storage,” Fergusson told the Herald.

“The team had very early Vend vibes: big goal, limited resources and a smart team who weren’t afraid to give it a shot.”

“The desks in the [Auckland] office are mostly doors on trestles. I loved how the focus was on putting everything into making an amazing product,” Fergusson said.

Aotea Energy’s Auckland office occupies the space used by American Magic for the 2020/21 America’s Cup.

“We are rolling out AE batteries at our lodge in Raglan. We’ll have a small fleet of them there linked into a solar project we are doing. The network there suffers from brownouts and cuts more frequently than we like, so we’re hoping we can pump a bit of stability back into the community.”

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.