Serial entrepreneur and visionary Elon Musk last week introduced the first truly disruptive technology in the domestic electricity markets since, well, the lightbulb.

He unveiled the Powerwall, which is a simple idea: use a lithium-ion battery to store energy when electricity is cheap and then use the stored power when prices are high. More impressively, the Powerwall can also be combined with home solar panel systems, allowing households to store free energy from the sun.

There is nothing revolutionary in this but Mr Musk’s genius is that he appears to have solved the main problem holding wider adoption of rooftop photovoltaic cells back: the cost of storage.

The Powerwall comes in 7 or 10 kilowatt-hour sizes, is housed in a relatively compact package and costs $US3500 ($4600). Before this, rooftop solar adopters either had to pay a small fortune for a bulky battery storage system or where possible sell excess energy back into the grid to get their photovoltaic investments to stack up.

Of course, you would expect nothing less from the man who co-founded PayPal, established the world’s first private space transport company and who leads Tesla Motors, which has transformed electric vehicles from nerdish hobby horses into must-have luxury goods.

In fact, it is Tesla’s investments into battery technology and manufacturing that have made the Powerwall a possibility, allowing the batteries to operate in high-density arrays without overheating and by manufacturing them on such a scale that the market price is within reach of most households.

Those costs may even fall further when Tesla’s Gigafactory 1, a vast battery-making facility situated in the Nevada desert, becomes operational in 2017.

Lithium supplier potential

It is an innovation that many proponents of the green economy have been waiting for; the kind of change that has the potential to kickstart the de-carbonisation of the economy. But while this initiative ticks a lot of green boxes, it is important to remember it is still reliant on the resource estate.

Lithium is predominantly extracted from mineral springs and brine pools in South America, with Chile and Argentina accounting for about 96% of global production. As demand rises, so too will the price of lithium, particularly as supply remains constrained.

New Zealand could potentially be a lithium supplier, thanks to volcanic geology. While much of this resource is unproved at this stage, a recent GNS Science-sponsored study showed it was possible to extract almost all the lithium contained in the geothermal fluid used by the Wairakei power station, near Taupo.

Should the process prove commercially viable, various geothermal areas across the North Island could, in theory, end up producing lithium that will eventually be used in electric cars such as the Tesla Roadster and home energy solutions like the Powerwall.

Unfortunately “in theory” is where New Zealand lithium industry is likely to stay due to the regulatory environment, specifically the Resource Management Act.

As it stands, the RMA tasks councils with managing the resource consent process on projects like lithium extraction. Yet the competence of local government in this area is questionable due to the fledgling nature of lithium extraction and the fact that not many councils outside Taranaki and the West Coast have much experience in assessing mining consent applications.

This is likely to cause significant delays, as councils will have to painstakingly work through the likely impacts of lithium mining on the environment, or hand the process off to the Environmental Protection Authority.

As a result, the first firm to apply for a lithium mining consent will have to bear a disproportionate share of the costs than other firms that follow. Should the consent be granted, groups ideologically opposed to mining could still challenge the decision in the courts, as happened with Bathurst Resources.

Furthermore, the RMA requires local councils to take a host of other factors into consideration when considering resource use application, such as identifying outstanding national landscapes, which they are ill equipped to perform.

Meridian Energy, for example, was forced to abandon its plans to build a $2 billion windfarm in Otago after the site was deemed to be a significant landscape. And just to make process more complicated, the lack of central policy guidance means most councils are left to deal with consenting decisions on their own.

This discourages investors from putting their money to work in New Zealand and instead incentivises them to look elsewhere. This is why central government needs to get off the sidelines and play the active role in mining regulation.

Robust framework needed

As it stands, only four national policy statements and five environmental standards are in place covering policy areas that have public good characteristics like telecommunications, freshwater management and electricity transmission. None of this policy guidance covers a single major export industry, not even a highly technical one like mining, a sector where the state should have a high level of interest because it owns a significant share of the mineral estate.

By developing nationally consistent policy toolsets and rules for the mining sector, officials in Wellington could significantly reduce the red tape in the system. Even where the projects should not proceed because of environmental concerns, clearer rules would mean companies get a “no” earlier in the process – well before they have spent millions on planning costs, as was the case with Meridian.

Until this kind of regulation is introduced, any notable use of the country’s considerable resource estate is unlikely, even one as green as the Powerwall. The reality, as uncomfortable as it may be to some, is that this is still a resource dependent age, even when it comes to technologies like lithium-ion batteries and photovoltaic cells.

What is needed is a robust but efficient regulatory framework that enables resource-rich New Zealand to participate in innovations such as the Powerwall while simultaneously maintaining high levels of environmental protection.

I cannot tell you what this future regulatory structure will look like when, or indeed if, it lands but I can tell you what it doesn’t look like: the Resource Management Act.