Electrifying Industry - NZ’s Renewable Electricity Advantage

Marc England, CEO of Genesis Energy

New Zealand’s sustainability challenges require innovation, systems level change in the energy system, and a cohesive, collaborative relationship between government and business.

Around the world many countries are de-carbonising their electricity systems. Ours is already around 85%, among the most renewable in the OECD. This provides us with the opportunity to use electricity to help decarbonise high emitting sectors such as transport and some manufacturing processes. But whether that happens is yet to be decided.

At the heart of a successful transition to a low carbon future, the country needs a 30-year national energy strategy that enables the right sequencing and prioritisation of actions and ensures low cost and reliable energy supply for all New Zealanders. There are many different sources of energy – wind, solar, geothermal, hydro, gas, coal, and petroleum. Understanding the interconnectedness of those sources across the economy is imperative to an effective national energy strategy.

If we get it right, we can mobilise investment and markets to accelerate our transition and deliver a dependable, low cost and low emissions energy system that will transform our society and economy for a prosperous and sustainable future.  Get it wrong, and we will have high electricity prices and a higher carbon energy system overall.

New Zealand is currently aiming for 100% renewable electricity by 2030. It’s a path full of potholes and obstacles. It’s important to remember that around 85% of New Zealand’s electricity is already renewable and that electricity accounts for just 5% of total emissions. By chasing a 100% goal, we risk being distracted and focusing on an aspirational rather than achievable target. Becoming 100% renewable may be possible one day, but it shouldn’t be our primary focus now. At Genesis, we have recently run four models with different dynamics, and all reach the conclusion that New Zealand will be able to get to around 96-98% renewable electricity by 2030 given the current trajectory and the rate of investment in the sector. So, do we focus on squeezing out the last drop of carbon from electricity, or on the 40% of emissions coming from other industries that can be electrified?

Genesis’ business spans a number of technologies and energy markets which gives us a unique vantage point from which to contribute to the discussion. It also means we are looking at what we need to do to play our part in the country’s transition, just as you will, no doubt, be doing in your own business. Genesis has  set ourselves a target to reduce carbon emissions by 1.2 million tonnes by 2025 and to reduce emissions from generating electricity by 36%. The targets are tied to the international benchmark of limiting global warming to below 1.5°C.

We’re doing this through our Future-gen strategy which has the objective to economically displace baseload thermal generation with 2650 GWh of new renewable generation by 2030. We’re moving at pace and in the last few months of 2021 signed agreements for new wind and geothermal generated electricity while also confirming an international partner to help build grid-scale solar. We are also looking at alternative fuel options for Huntly Power Station. One of those is biomass, which we’ll trial in 2022.

Government and business have important, complementing roles. In addition to developing the national energy strategy, Government will likely set frameworks to help consumers bridge important gaps, as we have seen with the EV incentives this year. Aside from businesses making changes to the way they operate, we need to engage our customers and enable them to also reduce their emissions, bridging the gap between what the Government can realistically do and what business can affect. Changing consumer behaviour is not easy, but if business can  provide customers with context, information and tools to help them become informed and make decisions, we will move toward a tipping point that we need to reach sooner rather than later.

For example, our Energy IQ platform tells customers when generation is low or high carbon throughout the day, so they can plan their usage. For our customers who own EVs, we offer a plan with rates that are 50% lower at night, and we have new features rolling out next year that will let them know the most cost effective and emissions friendly times to charge. And late last year we launched the Climate Change Hub on our website to provide customers and stakeholders with insights, ideas, inspiration and practical guides on how energy can help address climate change. This is another way to help our customers understand the changes we all face as the country transitions.

I’m sure many of you are also looking at how to help your customers make changes and forums like the Aotearoa Circle  have an important role to play in bringing businesses together to share knowledge, experience, challenges and solutions to create and maintain the momentum needed for a successful transition.

Lastly, when we think about the world transitioning to a low carbon future, we should consider the global opportunity for New Zealand to develop expertise and IP around how we decarbonise large energy-consuming sectors. Renewable electricity is on most countries’ radars, and it won’t be long before we lose our advantage. How do we maximise the opportunity of our head start?

With the right mindset, incentives and public-private models, we could develop an export earner for the future by learning how to electrify industry ahead of everyone else. While the world focuses on decarbonising electricity, we can  be working on the next industrial advantage for New Zealand - the electrification of industry.