Cameron Burrows says electricity prices for New Zealand families are the lowest they have been since 2012. Photo / Christine Cornege, File
Cameron Burrows says electricity prices for New Zealand families are the lowest they have been since 2012. Photo / Christine Cornege, File
Opinion
OPINION
The electricity sector has a key role to play in delivering on New Zealand's ambitious net-zero climate goal – from powering our electric vehicles to providing the clean fuel for manufacturing, converting carbon-intensive sectors to clean electricity is key to reducing our emissions.
To get to that future stateit's important to be clear about what's happening today - and in that regard, New Zealand is well placed compared to other countries.
Far from power prices increasing faster than inflation, as suggested by Bryan Leyland (NZ Herald November 9), prices for Kiwi families are currently the lowest they have been since 2012.
The price our businesses and families pay for power is among the 10 cheapest in the developed world – making it easier to convert from petrol and coal to clean electricity.
And our energy sector is one of only nine worldwide to have been given the top AAA rating by the World Energy Council this year.
Our electricity is cheap and clean when compared to our international counterparts. We're already over 80 per cent renewable, with more sustainable wind, solar and geothermal generation coming on board all the time.
No one likes paying their power bill. As with most bills, there are other things we'd all rather spend our money on – but New Zealand has a high-performing electricity sector that is delivering good outcomes for Kiwis.
Of course, there is always room to improve. We know the transition to a more renewable system could be bumpy, so it is important to evolve our market settings so they remain fit for purpose and deliver the best outcomes for consumers.
However, calls for fundamental reform of the sector – like the suggestions by Bryan Leyland – risk throwing the baby out with the bathwater and losing all the progress we've made.
This winter we have had a period of higher than usual wholesale power prices, particularly due to gas shortages and low lake levels – which has been challenging for some businesses facing higher operating costs in the context of lockdowns and Covid-19.
Since then, rainfall has helped significantly ease both water shortages and wholesale prices – with spot electricity prices now sitting around 35 per cent below their 10-year average.
Over this period, electricity retailers have had a key role to play in shielding most households from these ups and downs in the wholesale market. In fact, the average annual power bill for households is down almost $200 since 2014.
Not only is the electricity sector delivering low prices for Kiwis, we're also committed to meeting and managing the growing demand for renewable electricity.
The increase in renewables in recent years has been significant. Consumption of renewable electricity in 2020 was 7.7 GWh higher than 15 years ago – that's enough to power more than 1 million homes.
It's a great start, but we need a whole lot more renewable energy over the coming decades to help deliver on our net-zero climate future.
The electricity sector is investing significantly to meet that demand – both in building new renewable infrastructure and maintaining existing assets. With new projects coming online the proportion of renewable electricity we use is expected to reach 95 per cent in the next few years.
Cameron Burrows. Photo / Supplied
The good news is the price of new renewables is falling dramatically – so building more will help keep prices low for Kiwi consumers. We just need to get the settings right to ensure that happens as easily as possible.
A recent report for the Electricity Authority reported that it is cheaper to build new electricity generation than to buy it on the market, but there are constraints that can prevent that build from happening – including the need for additional transmission lines to ensure the electricity can get where it needs to, and issues around the Resource Management Act (RMA).
Just like our housing market, challenges in getting a consent under the RMA can hamper efforts to build the infrastructure we need to transition to a low-carbon economy and meet demand. RMA decisions should account for the climate change benefits of renewable energy projects as we chase the big prize of net-zero emissions and continued affordable power prices.
We're doing well, but we've still got a huge journey to transition to a net-zero economy.
We need to be relentlessly focused on the improvements that will help deliver the electricity grid of the future – not endlessly relitigating the reforms of the 90s.
• Cameron Burrows is chief executive of the Electricity Retailers' Association of New Zealand, which represents companies that sell 90 per cent of New Zealand's electricity to Kiwi households and businesses. ERANZ's members supply over 90 per cent of New Zealand's electricity to Kiwis.
