A new Concept Consulting report commissioned by the Electricity Retailers’ Association of New Zealand (ERANZ) has brought together data on New Zealand's electricity generation over the past 20 years and confirmed billions have been invested in renewables despite uncertainty in our energy system.
ERANZ Chief Executive Bridget Abernethy says the report shows gentailers have invested heavily in renewable generation since 2010 – despite minimal demand growth due to energy efficiency improvements and the reduction of industrial demand.
“The report highlights the factors that have created uncertainty for investors, including the future of Tiwai, changes in ETS policy, fluctuations in gas supply, and concerns about transmission capacity.
“Even with these challenges, gentailers are rapidly developing new energy sources and replacing thermal generation with renewables to pave the way for New Zealand’s low-carbon future.”
Abernethy says elevated spot prices are a recurring market feature. As the report points out, new generation investment is incentivised when there are sustained wholesale prices above the cost of supplying new generation.
“High spot prices reflect scarcity and signal the need for more generation. That increase in generation is what we are seeing now. The idea that gentailers are avoiding investment in generation simply isn’t backed by the evidence from this report.”
The report also found that, in addition to already completed projects, there is a significant amount of future generation in the investment pipeline.
“New entrants beyond the established players, supply an increasing share of this generation, indicating that competition remains strong in New Zealand’s generation sector.
“While not all proposed projects will get built over the next few years, it does show how committed the industry is to adding options for new renewable generation.
“Around 5,000 GWh/yr of new renewable generation will be built in the coming years. If the average house uses 8,000kWh of electricity annually, that's enough to power 625,000 additional homes,” Abernethy says.
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Download the report: Past-and-future-generation-pipeline-Concept-Consulting-web.pdf
Media enquiries: Rob Zorn, ERANZ Communications Lead: 021 726 273 | media@eranz.org.nz
