The future of New Zealand’s energy supply is a key topic for voters. Political leaders on energy share their perspectives.
Questions about security of supply in New Zealand’s energy sector, particularly electricity, aren’t new.
Many consumers will remember the low lake levels leading to severe power shortages in the 1990s, with water heating cuts and other restrictions, and the breakdowns in supply into Auckland from transmission failures.
Those with even longer memories will recall 1973 and 1974, when street lighting was switched off, window displays were banned in department stores and television transmission ended at 10pm.
Further back still, the regular brownouts of the 1950s were an important catalyst for the dam building projects along the Clutha and Waitaki Valleys over the next 20 years.
Security of supply is front and centre among consumers’ concerns; they expect the power to be there when they
flick the switch, power companies say.
In the last general election, the Labour and the Green parties put forward a policy designed to lower prices by creating a Government-owned central purchasing agency. The agency would buy electricity from generators and sell it on to distributors (lines companies) who would then retail it to customers.
Domestic power bills were to fall as a result.
Perhaps, but even if that arrangement worked, many critics said, generators who don’t make profits won’t have any incentive to invest in new plants, and that will ultimately threaten the security of supply.
To test the current political opinion about power supply, representatives of four political parties were asked this question:
“Given that the electricity/energy sector is a key driver of the economy, what measures need to be undertaken to ensure long term security of supply?”
National’s Minister of Energy and Resources, the Hon. Simon Bridges says: “Each year the World Energy Council (WEC) releases its Energy Sustainability Index, which assesses the overall sustainability of a country’s energy system and how well it manages trade-offs between three competing dimensions: energy security, energy equity and environmental sustainability.
“In 2014, New Zealand was ranked 10th against 129 other countries. That’s a good indication of where we sit internationally and confirms that the range of measures we’ve taken in recent years have created much more stability and certainty around New Zealand’s energy supply.”
Mr Bridges says the 2010 reforms to the energy sector “mean price increases have reduced and look set to remain steady in the short term. Major new generation has been built – the majority based on renewables, mainly geothermal or wind.
“About 80 per cent of our electricity is now generated from renewables and the Government’s goal is to increase that to 90 per cent by 2025. More than a million smart meters have been installed in homes and businesses, enabling more efficient monitoring and management of supply.
“Technological advances will see greater use of solar panels, electric vehicles and smallscale generation, creating new opportunities for consumers to manage demand and help manage the need for further costly generation and transmission investment. They also offer the prospect of reducing New Zealand’s dependence on imported oil.”
Labour’s energy spokesperson Stuart Nash says: “We rank 16th in terms of Energy Security, 28th in Energy Equity and 42nd in Environmental Sustainability. These are not global positions that we should be proud of. In terms of equity (a measure of the accessibility and affordability of energy across the population) Australia is third.
We can do a lot better. “I want to change the role of Government from regulation to innovation. The Commerce Commission can strike down non-competitive practices, the Electricity Authority is an industry watchdog, so the Government can help drive innovation by planning for a disruptive future that is hard for many to imagine, but is not that far away in my view.”
On the topic of renewable energy, Mr Nash says: “The Government should create the environment for solutions to emerge and flourish: solar, photovoltaic, electric cars. All ministerial cars could be electric. The Government could require all new state houses to have solar panels. Cut the price of solar panels for the most disadvantaged.
CR1 (the car that normally transports the Prime Minister) should be an electric car. Model the behaviour and live our global brand.”
Mr Nash says Labour would also put a price on water: “Philosophically, if a party gains an economic return from the use of water then they should pay a price for water. What I need to do is to understand the implications of that for consumers.”
Gareth Hughes, energy spokesperson for the Green Party, says:
“Simon Bridges shouldn’t take all the credit (for the positive WEC ranking). There’s been flat and even declining demand and increased efficiency.
Two hundred thousand houses have been insulated (as a result of a combined National- Greens initiative begun under Labour). There’s also 25 megawatts of consented renewables.
Compared to other countries we are in a reasonably strong position.”
The Greens’ policy is to decarbonise the economy by producing 100 per cent of our electricity from renewables, building a smart grid to facilitate this, and reducing our reliance on foreign oil by speeding up the transition to electric cars.
“Transport emissions account for a fifth of total emissions. You address that through electric vehicles, sustainable biofuels, wood pellets from forestry waste and so on.”
In addition Mr Hughes proposes “Two steps: one would be to support the smart grid, and develop it to first world standards, and the second is that we have the opportunity to do distributed generation where households can sell back to the national grid power they have generated but can’t use. The Government is actively discouraging this idea, which is a great shame.
“Another area we are turning our attention to is the development of the network. Distribution has been responsible for two thirds of the price increases over recent years.” He questions whether 29 lines companies are too many and asks what can be done to achieve greater economies of scale.
The Greens favour pricing water, but not for generators, as they feel this would only be passed on to consumers in higher prices.
The Māori Party says security of supply “must not come at the expense of the environment, and the protection of natural and physical resources must always be provided for.
“We [must] … address some of the challenges around climate change and support a greater investment in energy infrastructure, particularly in the use of renewable energy. We see renewable energy (wind, solar and water) as a way to address the reliance on fossil fuels but we also believe there must be a real push to reduce the use of
fossil fuels and not just supplement it.”
The Māori Party wants “a renewable energy strategy developed in consultation with hapū and iwi” and supports a range of other measures including subsidising locally made wind generators and solar panels for middle and low-income homes, continuing funding home insulation for low-income whanau, using solar panels in government buildings, hospitals and schools. They also back subsidising solar heating, planting new forests, caps on greenhouse gas emissions, and more affordable public transport.
What about renewable energy?
All Parties shared their stances on renewable energies. The Māori Party wants a moratorium on off shore oil drilling while iwi are consulted, and the Greens are totally opposed to drilling.
Labour and National both support it with appropriate safeguards. All parties are agreed that the era of coal fired power stations is over, but there is debate over the use of gas.
Labour and National see it as a valuable part of the supply jigsaw, and therefore won’t commit to a policy of using energy only from renewable sources.
National and Labour share the goal of having 90 per cent of generation coming from renewable resources by 2025.
The Greens want 100 per cent by 2030. Labour’s Stuart Nash says “100 per cent renewables would be fantastic – but we are not in an ideal world, and while I know it’s achievable, I doubt it is practical.”
Ironically the Greens doubt this too, but for different reasons: “We want 100 per cent renewables in an average year.
Officials’ advice is that we are not on track to do that”, Mr Hughes says.
“On current policy settings we aren’t going to get to 90 per cent either.”
The Māori Party haven’t specified a target but support a focus on renewables as this “will allow hapū and iwi
to have a say about natural resources within their rohe [tribal boundaries]”.
Mr Nash, who became energy spokesperson after Labour’s defeat in the 2014 election, is currently meeting industry leaders learning about the sector and exploring opportunities for Labour to work with the industry. He’s been quoted as saying that the Power New Zealand policy “was good in the circumstances of 2004, but by 2014 the market had moved on.” He has to move carefully in making this statement because Labour has not yet officially abandoned the policy, and won’t until it has a replacement.
National was against the Power New Zealand plan, as were all the generators, but it’s worth noting that the Green’s version of the plan was different from Labour’s. As Mr Hughes says, “It was the Labour position to base prices on the historic cost of capital. The Green’s positon was to use contracts and tenders to set the price. If the generators made a profit they would have the incentive to invest (in further plants).
Right now both demand and prices are relatively steady and there is no major new generation likely to be built in the near future. And there are plenty of new technologies coming to the market which may create significant changes in the behaviour of both consumers and suppliers.