New Zealand’s bountiful hydro, wind and geothermal resources made it a pioneer in renewable electricity generation. Yet these sources form just part of the picture.
Although most of the electricity powering our daily lives comes from renewable sources, electricity is only one form of energy used in New Zealand.
Currently, 86 percent of the country’s electricity comes from renewables. But when considering the total amount of energy New Zealand consumes, only about 40 percent of it comes from renewable sources. The remaining 60 percent is generated by oil, gas and coal.
Within the next decade, New Zealand aims to grow the share of renewable energy across its entire economy to 50 percent while boosting its proportion of renewables-sourced electricity even higher.
Achieving both goals will involve increasing renewable electricity generation. Then, for instance, fossil fuel-powered vehicles can be replaced by vehicles that use electricity from renewable sources instead.
A 2023 report by engineering consultancy GHD said New Zealand was relatively well placed to move toward a fully renewable energy system if key barriers such as grid access and consenting were removed.
Several countries – including Costa Rica, Norway, Iceland, Paraguay and Uruguay – already generate close to 100 percent of their electricity from renewable sources. But even in those cases, fossil fuels still play a major role in transport and other parts of the energy system.
But the challenge ahead, says University of Auckland professor of engineering Andy Philpott, is bigger and more complex than simply adding more wind farms or solar panels.
How to hit the renewable electricity goal
Achieving 100 percent renewable electricity generation will depend on a mix of technologies. Those include long and short-term storage, stronger infrastructure, and market settings that can deliver reliable capacity.
Hydroelectricity has long been the core of New Zealand’s power system, providing 57 percent of annual electricity needs. But recent dry years have shown it can become vulnerable when rainfall is scarce.
Geothermal energy adds reliability by generating steadily around the clock, but it is location-specific and can come with land and atmospheric impacts.
Wind contributes just over 6 percent of electricity generation and solar less than 1 percent. Both are growing rapidly, yet both are intermittent sources of power.
“Solar is only available when the sun’s shining, so you need storage or some way of shifting that power to the evening or morning,” says Philpott.
Hydrogen may have its place in the mix, but it’s not going to solve everything, he adds.
Professor Andy Philpott. Photo: Supplied
Taken together, though, these technologies offer multiple pathways to reducing greenhouse gas emissions.
Philpott says New Zealand should create a pathway that combines the best features of each technology: solar and wind when it’s available, hydrogen where it’s needed, batteries to fill gaps in intermittent generation, and thermal backup on standby.
“The danger is chasing a silver bullet technology. We shouldn’t rule anything out.”
Adopt available technologies and develop new ones
Philpott is a director of the University of Auckland’s Green Energy Engineering Centre, which is at the forefront of science across electrical engineering, material science and energy systems.
Groups within the centre are developing inductive power transfer, distributed generation, advanced battery materials, optimised hydrogen electrolysers, digital twins for industrial processes, and optimised power systems.
But the time between laboratory breakthroughs and widespread use tends to be long.
Right now, New Zealand relies on technologies that are driven by overseas production. Solar panel costs, for instance, have fallen dramatically thanks to mass production in China, making them the cheapest form of new electricity in many regions.
Although local research is crucial, much of the transition will depend on importing mature technologies that have become affordable through global adoption.
Creating a secure system of supply
New Zealand’s power grid is unusually exposed to weather-driven variability. The country cannot import electricity to cover shortfalls, and droughts can deplete hydro storage.
“Since we cannot import electricity, there is always the risk of an energy shortage,” says Philpott.
This makes the question of how New Zealand designs a secure renewable energy system more complicated – and more important.
Wind and solar generation often occur when demand for energy is low, meaning that energy cannot always be used unless technologies exist to store it for later consumption.
That requires investment in batteries, transmission, and backup systems, along with smarter ways of managing demand.
A smart-grid system linking suppliers with smart devices in homes and businesses could automatically optimise energy use.
“Demand flexibility” would allow electric vehicle chargers, heat pumps and hot-water cylinders to increase their energy use at times when demand is low and energy is cheap and to reduce it when demand is high.
National grid owner and operator Transpower estimates that every gigawatt of peak demand avoided would save consumers about $1.5 billion. It says widespread use of such “smart chargers” for EVs could save $4 billion in network costs by 2050.
New infrastructure is also necessary. Connecting new wind farms and solar power systems in remote areas will mean new transmission lines, which require consents and construction.
Incentivise investment in sustainable energy
Behind the technical challenges sits an economic one: how New Zealand’s electricity market incentivises investment in new capacity.
New Zealand operates an “energy-only” electricity market, meaning that providers are paid based on the energy they generate. There’s no separate payment for building generation capacity.
As a result, to ensure there is enough capacity to cover demand almost all the time, energy prices sometimes rise to high levels.
Avoiding those price spikes would require additional remuneration from some form of capacity mechanism, according to Philpott.
Overseas, capacity markets are one means of achieving this. Here, either a regulator or state authority purchases generation capacity from an energy supplier to ensure energy generation is available as needed, while regulating prices to remain below some acceptable level.
There are strong economic reasons to clean up our electricity system, says Philpott.
For one, the European Union has been planning to impose carbon border tariffs in 2026 on products that use fossil fuels in their production.
“If we don’t act, then our exports will end up paying at the border instead. It’s more efficient in the long run for New Zealand to reduce carbon upfront,” says Philpott.
• The world is facing unprecedented environmental challenges. Planetary Solutions, an initiative of the Sustainability Hub at Waipapa Taumata Rau, University of Auckland, and Newsroom, explores these issues – and the practical ways we can all be part of the solution.