New Zealand Energy Scenarios TIMES-NZ 3.0

Steady

The Steady scenario isn’t static, but the economy and the energy sector change less in this possible future than they do in the Shift scenario.

In the Steady scenario, our farming exports find growing markets overseas and are a mainstay of the economy. Industrial activity (including manufacturing) is a steady source of income and data centre growth is based on planned deployed capacity reaching 315MW by 2030.

New technology (including wind turbines, batteries, solar panels and EVs) decreases in price over the next twenty years – but at a slower rate than in the Shift scenario. Demand for passenger vehicle travel (cars, vans, utes) grows roughly 30% by 2050 (in line with Ministry of Transport projections). There is some community resistance to renewable electricity projects such as wind and solar farms.
Domestic reserves of natural gas decline sharply (in line with government projections), and no new domestic gas reserves are uncovered. However, LNG can be imported via a floating terminal to meet demand.

In climate policy, successive governments centre the Emissions Trading Scheme (ETS) and do not bring in complementary measures to cut greenhouse gas emissions, except those which are already in progress. This means there are no new subsidies or incentives for clean tech and no new penalties for high-emitting activities. Carbon price and forestry settings (for offsetting emissions) are unchanged and the carbon price stabilises at $52/tonne by 2035(in line with current government carbon price projections). 

Shift 

In the Shift scenario, New Zealand’s economic make up shifts significantly, with a notable reduction in its dependence on farming exports. Clean technology costs fall faster than in the Steady scenario (making wind turbine, solar, battery and EV prices cheaper). Demand for energy used by meat and dairy processing plants falls because of lower international demand for these exports. Tech industries such as data centres and advanced manufacturing grow at a fast rate, more rapidly increasing total electricity energy demand.

In this scenario, New Zealand doesn’t import LNG, and (as in the Steady scenario) domestic gas reserves fall sharply. Biomass and biogas become more readily available as alternative fuel options.

Nationally, sustainability and cooperation is prioritised. Successive governments’ policies strengthen the ETS, and carbon prices rise to $260/tonne by 2050, in line with the Climate Change Commission’s demonstration path. Policy measures support reduction of private cars, and alternative fuels such as biomass or biogas. Public sector, business and consumer behaviour becomes more focussed on long-term sustainability, and consumers are more willing and able to make upfront investments that improve their long-term energy efficiency. 

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We give the model information on the New Zealand energy system as it is today, along with plausible possibilities for future technology and fuel options, including fuels such as liquid natural gas.

It then finds the lowest-cost pathway to evolve the country’s entire energy system to meet expected levels of energy demand. For example - demand for energy to drive transport, manufacturing, residential heating, and commercial activity. It is built to account for all the complex linkages and interactions between different parts of the energy system.

The model doesn’t tell us how to run the energy market. Instead, it can help inform conversations about important trade-offs and uncertainties, and the implications of different energy decisions and policies. 

It also reflects the impacts of factors that are largely beyond New Zealand’s control – for example the cost of energy-related imports.

TIMES-NZ 3.0 relies on detailed assumptions about New Zealand’s entire energy system. These assumptions have been reviewed by external sector experts and include original research by EECA to fill gaps in existing data.

The scenarios (including any government or industry projections used) are not forecasts. We have made best efforts to capture as much information as possible regarding possible futures and to ensure that both the assumptions and model outputs are plausible. However, many assumptions are still required, and there is no certainty that any of these assumptions will be realised. 

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The Steady and Shift scenarios reflect varying assumptions about four critical uncertainties, which users told us were most important to understand when making energy decisions. Each scenario represents a plausible and realistic pathway, although neither will exactly represent the future.

The four critical uncertainties are:

• Economic structure - Whether our economy continues to be based on the primary sector and traditional manufacturing or undergoes a structural shift towards  tech and advanced manufacturing. In both scenarios, the level of economic activity is broadly similar.
• Global technology progress - The pace of price reduction for clean technology, which could be driven by factors such as whether there is freer or more restricted trade cooperation between New Zealand and the rest of the world.
• Individualistic or cooperative - The extent to which New Zealand leans into national and international sustainability targets and cooperation, and makes investments which have a longer payback period. Changing this variable translates into lighter or stronger-touch climate policies and a lower or higher carbon price. It also affects the ability and willingness of consumers and businesses to make upfront investments that improve their long-term energy efficiency. 
• Role of gas - While domestic gas reserves fall quickly in both scenarios in line with current government projections, the scenarios differ on whether or not liquified natural gas (LNG) is available and how much feedstock is available for alternative fuels such as biogas and biomass. 

Other uncertainties, such as population growth rates, remain the same between scenarios. In these cases, we assume current or anticipated trends where possible.

Visit the TIMES-NZ documentation site(external link)

The third iteration of NZ Energy Scenarios (TIMES-NZ 3.0) incorporates extensive feedback from stakeholders and users of previous versions. It provides new future scenarios with updated assumptions based on the latest energy developments. The results and other outputs have been expanded, and extra functionality has been added to help people explore the data using the model.

The scenarios are not intended to explore every plausible future – instead, they are designed to help people explore the four critical uncertainties which users of the model told us were most crucial to understanding energy choices.

Visit the TIMES-NZ documentation site(external link)