Energy in New Zealand
Energy is required in our day-to-day lives for things such as transport, to power businesses and run our homes. Energy comes from a range of sources – while some of these are renewable, we are still reliant on fossil fuels to produce around 70% of our total consumer energy requirements.
Energy in the future
Explore what our New Zealand Energy Scenario modelling tells us about our potential future energy system.
The video below imagines what the future could look like, based on outcomes modelled from our TIMES-NZ New Zealand Energy Scenarios data. This modelling, which has been developed by EECA in partnership with the BusinessNZ Energy Council (BEC) and The Paul Scherrer Institute, is a technology-based optimisation model that represents the entire New Zealand energy system, encompassing energy carriers and processes from primary resources to final energy consumption.
Where our energy comes from
Most of New Zealand’s energy is supplied by fossil fuels, including 99% of transport energy, and around 60% of industrial energy. Much of our electricity is generated from renewable energy sources (80-85%), which is promising for reducing our reliance on fossil fuels in the future.
Our large share of renewable electricity is largely due to favourable geography, including being an island nation with mountains, lakes, relatively consistent wind and rainfall, plus access to geothermal resources. The percentage of New Zealand’s electricity generated from renewable energy sources varies each year depending on the amount of rainfall, and to a lesser extent, the amount of wind.
Reaching our emissions targets
To reach net-zero carbon emissions by 2050, there is a need to address the 70% of energy currently sourced from fossil fuels. This is important, as about 40% of New Zealand’s total greenhouse gas emissions come from energy used for activities such as driving cars and trucks, travelling by plane, burning gas and coal for manufacturing, or creating electricity.
We need businesses to play their part by switching to renewable energy sources where possible. EECA works closely with businesses to help plan their transitions to renewable energy, including providing financial and technical support for decarbonisation projects.
What matters in an energy source?
There are a range of factors that can help businesses compare energy sources and understand how useful they are in practice.
- Energy density – The amount of usable energy contained in a certain volume or mass of primary energy. This matters when there is a need to transport energy from its source to its end uses and when considering storage of energy. For example, biomass has a lower energy density (both by mass and volume) than coal, so a larger amount is needed to produce the same amount of energy.
- Storage conditions – Requirements needed to store the energy (does it need to be stored in a tank, at a particular temperature and/or pressurised), the space required, and/or the efficiency of the storage operation (understanding how much of the energy stored can be recovered).
- Distribution – Understanding how easy the energy is to transport from sources to end uses. For example, determining what infrastructure is needed and whether there are energy voltage or other network impact losses along the way.
- Dispatchability – The extent to which energy can be generated and whether there are constraints. For example, solar and wind power only generate energy when there is sufficient sunlight or wind.
- Scalability – Understanding how much of the energy source is available and can realistically be used or whether there are limitations or constraints in its supply.
- Environmental impacts – Understanding the impact on the environment that the energy has. Use of fossil fuels impact the environment through release of greenhouse gases into the atmosphere as well as hazardous air pollutants, including sulphur dioxide, nitrogen oxides, particulate matter and carbon monoxides. But low-carbon renewables may also have environmental impacts, either from their direct use (e.g. particulates from biomass), construction of infrastructure needed to deploy renewables (e.g. wind turbines or solar PV), or indirect impacts from technologies associated with their use (e.g. electrification often uses lithium-ion batteries which requires extraction of necessary metals and minerals, construction and operation effects as well as disposal at end of life).
- Production costs and financing options – All energy sources come at a cost. For some sources the cost is mainly upfront in constructing facilities, with very little ongoing cost. For others, the costs might be more balanced, or even weighted towards operating costs. Understanding these costs and financing options is important when considering different options.
- Energy return on investment (EROI) – The ratio between the amount of energy required to extract or produce fuel and the amount of useful energy this fuel makes available to deliver other services – such as transport, heat or light. The graph below illustrates the EROI of renewable energy sources commonly used in New Zealand.
Energy return on investment
For an energy source to be useful it needs to deliver significantly more energy than it takes to extract it. If an energy source’s EROI number is low it means it is difficult to extract in relation to the output we get from it. If the number is high, it is relatively easy to extract. To be worthwhile, an energy source needs to have an EROI above a range of 7-14.
Historically, fossils fuels have had a high EROI, but as oil and gas resources are depleted, they are becoming more energy-intensive to extract. This means their EROI is decreasing. On the other hand, several renewable energy sources are now on par or better than fossil fuels in terms of EROI. Hydro schemes have a wide range of EROI values because there can be very large differences between hydro schemes in the amount of energy and materials required to construct them, and also in the volume of energy generated due to variances in inflows and hydraulic head.
Demand flexibility as a solution
As New Zealand moves towards achieving 100 percent renewable electricity generation, the challenge of managing renewable energy sources that aren’t always available or predictable becomes more pressing. But decarbonising New Zealand’s energy system is not just about strengthening renewable energy supply – it will also require addressing increasing energy demand as New Zealand is increasingly electrified.
Enabling demand flexibility means that, in the future, New Zealand households and businesses can help to balance the electricity grid by reducing or increasing their energy use when there is more or less renewable energy available. This prioritises renewable energy use, and ultimately lead to a more sustainable and reliable electricity system.
To help meet the challenge of increasing demand, EECA has partnered with industry (represented by the Electricity Engineers’ Association (EEA)) on the FlexTalk project, which is trialling a communications protocol, OpenADR, to enable actively managed EV charging in real-time New Zealand homes.
This project is an important step in investigating how to integrate demand flexibility within our distribution networks to optimise energy use. Although the scope of this project is for EV charging, the same protocol (OpenADR) may be used in the future to request demand flexibility from other devices such as hot water cylinders and heat pumps.