By Ralph Sims

Renewable energy sources currently supply around 40% of total energy demand in New Zealand. Increasing this share is critical to reducing the current level of greenhouse gas emissions to meet our international obligations and the 2050 net zero target under the Zero Carbon Act. However, reaching 100% renewables will be a huge challenge.

Fossil fuels remain a competitive option in many instances, in spite of the ETS (emission trading scheme) and the carbon price rising to over $60/t CO2. Constraints other than costs will also need to be overcome as outlined below. Not discussed in this article is the parallel objective for the demand side to improve the uptake of energy efficiency and conservation measures, coupled with necessary behavioural changes.

A reduction in energy demand will partly offset the potential growth of demand for electric vehicles, industrial heat, etc. It will also enable the more rapid deployment of cost effective, low-carbon, renewable energy systems to meet that future demand.


Most renewable energy resources in New Zealand provide electricity generation. The typical share of 80 to 85% of total generation is higher than in most other countries, even though many of these have had government subsidies and other policy measures in place for many years to encourage greater deployment of renewables and increased investment by the private sector. Similar subsidies have been unnecessary to date in New Zealand, due to the abundance of natural renewable energy resources that can be captured and converted to electricity and other energy forms of heat and transport fuels.

Wind, for good example, needs no subsidies—with many good sites throughout New Zealand experiencing mean annual wind speeds (MAWS) of around 10m/s. A wind turbine installed on such a site here will generate three times the electricity in a year than if the same wind turbine was located in Denmark, Germany, UK, USA etc., where even the best sites typically only have a MAWS of around 7m/s[1]. Wind power currently provides around 5% of total annual generation in New Zealand and since, on good sites, it is now cheaper than electricity generated from gas-fired power plants (on a levelised cost basis), several new wind farms are being constructed. Around 2000 MW of proposed wind farms has also been consented and if all is actually built, it will quadruple the existing capacity.

Hydro power plants have been operating in New Zealand for over 100 years. Originally they were small scale (such as in Reefton in 1888 and Parihaka in 1898) with the first large-scale dam constructed at Mangahoe in 1924. Run-of-the-river schemes such as on the Waikato River followed, and today hydro contributes around 55% to 60% of total generation. Good annual rainfall usually keeps the rivers flowing and the hydro lakes full, though there is a risk of additional dry years in the future as a result of climate change. Developing any new large-scale projects such as the Clyde Dam is unlikely in the future, but many small and mini-hydro opportunities still exist. For example, Palmerston North City Council now generates around 1 MW of electricity after installing small turbines into the city’s water supply pipeline below the storage dam.

Solar radiation levels in most parts of New Zealand are not as good compared with Spain, Kenya, Australia etc. Even so, as the cost of solar panels continues to decline and their efficiency improves, more domestic (1-10 kW) and commercial (10-150 kW) rooftop installations are anticipated. Investments in large solar farms (1 – 5 MW) are also gaining in popularity with a few already operating. Beneath the solar photovoltaic (PV) panels, sheep can graze or crops can be grown on the land (known as “agrivoltaics”), with some plant species benefitting from the shade and shelter the panels provide. At the domestic scale, investing say $10,000 in a 3 kW rooftop solar PV system can give a far better return on investment than from investing in say KiwiSaver. My own PV system in Palmerston North, not the sunniest place in New Zealand, is even more profitable since I also charge my electric vehicle (EV) on surplus solar power that I would otherwise have exported to the grid for a revenue of 8.5c/kWh. Therefore my “fuel” cost for the 150km trip down to Wellington is only around $1.70. Also with a solar water heater and a wood burning stove installed in my house, our electricity bills average only around $50/month. At present, solar power contributes only around 0.5% of total generation in New Zealand electricity mix, but its share is steadily increasing.

Geothermal power currently provides around 18% of generation, having first been established at Wairakei in 1958. New technologies, such as reinjection of the fluid after heat extraction, have improved the efficiency and working life of a field. It is one of the cheapest forms of generation, with existing commercial plants totalling around 1010 MW capacity and a further 300 MW consented. It generally provides baseload power and is defined as “renewable” even though the life of some fields may be limited. Also around 60g CO2/kWh generated is released from the fluid during operation of the plant[2]. Only around 12% of the energy in the hot fluid is converted to electricity, so a lot of residual heat is available. Applications for this heat, and also from the direct use of geothermal heat without electricity generation, include aquaculture, timber kiln drying, wood pulp plants, and heated greenhouses.

Another form of geothermal heat energy, from shallow ground-source heat pumps, is used widely in Sweden and elsewhere. They extract low-grade heat from below the ground surface (and not from the air, as do conventional air-to-air heat pumps) and concentrate it inside buildings. Cooling is possible in summer by reversing the process. They are not yet common in New Zealand at the domestic scale due to their high installation cost and our relatively lower heating and cooling  demands for buildings (though specialist installers exist). At a larger scale, Christchurch Airport successfully installed them a few years ago for heating and cooling of the terminal buildings.

Biomass is another prolific source of renewable energy available for producing heat, electricity or liquid and gaseous fuels. The largest available source is the large volumes of forest residues left on the ground after logs have been harvested and extracted. In Scandinavian countries, Austria, UK, Germany and elsewhere, these arisings are chipped and collected as a by-product during the harvest operation. After natural drying, the wood chips are commonly used for fuel in co-generation plants, with heat and electricity (up to 400MW generation capacity per plant) co-produced and sold to domestic and industrial consumers in the nearby town or city suburb. In these countries and elsewhere, crop residues, such as cereal straw, are also commonly utilised for heat and power as is municipal organic waste in waste-to-energy plants, rather than the waste going to landfills.

Other forms of biomass such as animal manure, sewage, vegetable process residues, and even green crops purpose-grown for energy, are commonly used as feedstock in large, community-scale anaerobic digestion plants to produce biogas (mainly methane, the same major gas as in natural gas). Compressed biogas has potential to displace LPG for cooking and barbecues and can also generate electricity when used as an engine fuel to power a generator.

In New Zealand, as well as firewood used in domestic stoves, several sawmills use sawdust and wood chips to heat drying kilns; greenhouses use woodchips to displace coal or gas for heating; some milk processing plants have finally been converted from coal to woody biomass; and the Kinleith wood pulp plant has used bark residues for many years to provide sufficient heat and 40 MW of power to meet the on-site processing demands (with some surplus power exported to the grid). This system also avoided the cost of having to transport and dispose of the waste bark away from the site. Currently in New Zealand 1.1% of electricity generation is from woody bioenergy and 0.6% from biogas plants, including those running on landfill gas.

In the UK, the 3900MW Drax power station, that generates almost half the annual electricity demand of New Zealand, has converted four of its six boilers (totalling around 2700 MW capacity) from coal to wood pellets, with 7.5 milion tonnes a year imported from the West coast of Canada. Having produced a detailed report on the potential for bioenergy electricity generation in New Zealand for ECNZ in 1989, it is interesting to note that some three decades later, Genesis Energy are finally analysing its potential for the Huntly power station.

One benefit of using bioenergy is that the biomass, just like fossil fuels, can be stored until needed. If used for power generation, then, unlike for wind or solar which are variable, the electricity is dispatchable, although the generation plant can take some time to reach the desired working temperature. This varies with the type of bioenergy plant which include combustion and a steam turbine; gasification to producer gas (hydrogen and carbon monoxide); pyrolysis to bio-oil for subsequent refining; and anaerobic digestion to biogas (Fig. 1). Overall, biomass and bioenergy systems include a wide range of resources, conversion processes and energy utilisation[3]. It is perhaps due to the complexity of biomass and bioenergy why it is so poorly understood, and often excluded from a discussion around renewable energy.

Figure 1. The various pathways and processes by which the range of biomass sources can be converted to useful heat, electricity or transport fuels.

Ocean energy is another renewable energy resource often forgotten.

  1. Wave energy remains in the early stages of development, the main problem experienced by many demonstration project designs being having to withstand the extreme forces imposed by large waves during storms.
  2. Such forces are not a problem for tidal current turbines that are usually tethered just below the surface, but the strong currents, such as in the Cook Strait or Kaipara harbour[4], can make repair and maintenance a challenge and the sea creates a harsh operating environment.
  3. Tidal range projects have proved to be successful in northern France and South Korea where the range in height between high and low tides is around 8m. An advantage of these projects is that the time when power generation occurs is driven by the tide times, so is easily predictable. New Zealand has a tidal range of only around 2m, so this technology is not viable whereas wave power and tidal currents could be once reliable technoligies evolve.

An indication of the levelised costs of electricity generation (c/kWh) and process heat ($/GJ) from renewable energy sources over the life of the plant is compared with typical costs for power plants and heat plants fuelled by coal or gas (Fig. 2). The wide range of costs shown by the horizontal bars is due to differences between locations. Some sites are more sunny or windy than others; geothermal resources vary in temperatures and connection costs to the grid; the collection, storage and transport costs of biomass resources vary with terrain and distance to the plant.

Figure 2[5]. Indicative levelised cost ranges for renewable electricity and renewable heat generation, showing lowest costs on sites with good resources and higher costs on poorer sites, and compared with fossil fuel fired plants.

 Mitigation potential.

New Zealand will need to reduce dependence on fossil fuels given that one product of combustion is the long-lived greenhouse gas carbon dioxide (CO2). Around 40% of New Zealand’s total greenhouse gas emissions come from the energy sector, mainly in the form of CO2 produced and then released to the atmosphere when oil, gas and coal are combusted. Over half of our total CO2 emissions, presently around 35Mt/yr, arise from transport vehicles that burn diesel and petrol fuels; over one fifth is from industry burning coal and gas to provide process heat; electricity generation is responsible for around 10% from gas- and coal-fired power plants as well as from geothermal plants when CO2 is released during extraction of the hot brine; using gas for heating and cooking in commercial and domestic buildings is around 10%; and the remainder arises from primary production and industrial processes such as cement manufacture. Displacing fossil fuels with renewable energy sources will reduce these emissions.

The exception is where the CO2 released can be captured and sequestered (CCS) permanently. This has been successfully achieved in gas fields where the CO2 is separated from the natural gas and reinjected (for example, the Sleipner gas field off the coast of Norway[6] and a coal-fired power generation plant in Canada[7]). More recently, a project in Iceland aims to permanently store the captured carbon in basalt rock[8]. There is also research underway where the CO2 can be chemically removed from the atmosphere and converted into a useful fuel. At this stage however, the cost, energy inputs, and water demands involved limit the potential for CCS technologies and CO2 removal as future solutions in most regions. An exception is where there is an economic benefit such as the extraction of additional gas or oil from a field as a result of reinjection or if the carbon price rises significantly.

Combustion of biomass for energy produces CO2 just the same as for fossil fuels. However, assuming crops and forests are grown to replace those harvested as is usually the case, then a similar amount of CO2 to that released is reabsorbed during photoynthesis of these growing plants. For this reason, internationally, bioenergy is considered to be carbon neutral. Where energy crops are specifically grown, harvested and used to produce liquid biofuels, (such as sugarcane in Brazil and maize grown in USA to produce ethanol, or oilseed rape (canola) grown in Europe for biodiesel), depending on the circumstances, there are arguments against this carbon neutrality. For example, deforestation in Indonesia to grow more palm oil for biofuel is obviously a harmful practice. Currently around one third of all food produced is not consumed.

Forestation to absorb CO2 as the trees grow is included as an offset when accounting for New Zealand’s emissions by reducing gross emissions to net emissions. This can only be a temporary offset measure during available land constraints but can be enhanced if the timber produced is used for buildings, which then locks up the carbon for several decades. Even degradable bioplastics can be produced from biomass sources to displace plastics and other synthetic materials presently produced from oil, coal and gas.

Integration of renewable energy

Regardless of the potential for CCS and forest sinks, New Zealand should replace fossil fuel use with renewable energy sources as rapidly as possible. This huge transition is challenging but not impossible and can be aided through transforming existing facilities from running on fossil fuels to renewable energy. For example, converting a coal-fired boiler to run on biomass can involve modifications to the fuel handling equipment and the firebox, particularly since biomass typically has a higher moisture content and lower heating value (MJ/kg) than coal.

Using hydrogen as an energy carrier has recently become popular again, having come and gone again a few times in recent decades. In terms of mitigation, “green hydrogen” produced using renewable energy is the only option since the most common source of hydrogen globally is produced from the steam reformation of the methane (CH4) component of natural gas, giving the co-product of CO2. Splitting water into hydrogen and oxygen using electricity is known as electrolysis. If the electricity is generated by renewable energy, then no emissions are involved.

Massey University conducted a small project more than a decade ago with a rural community known as Tararua whichwished to better utilise their local renewable energy sources. The ideal site for a wind turbine was around 2km from the various buildings and installing a cable to bring down the electricity from the hill was costed at over $20,000. So in association with Callaghan Innovation, an electrolyser was installed next to the turbine; a gas pipe was selected and buried after testing a few types for potential losses of the small hydrgen molecules though the walls; and a fuel cell to convert hydrogen to electricity (the same as being used in a hydrogen-powered vehicle) was installed under the floor of the wool shed[9]. When the wind blew, hydrogen was produced and stored in the pipeline until electricity was needed, which is when the fuel cell fired-up to back-up any electricity being generated from the solar PV and micro-hydro systems. Since then, just like solar panels, the cost and efficiencies of electrolysers and fuel cells have improved.

Transport is the major challenge in New Zealand with emissions continuing to increase each year. Electric vehicles using renewable electricity are part of the solution, not only light duty vehicles but also trains, buses, heavy duty vehicles and even electric planes. (A two seater Pipistrel with  400km range is already flying around New Zealand skies). Blending drop-in biofuels into petrol, diesel and avgas (aviation fuel) is has also been already used widely. In New Zealand, one company, Gull, has included a small percentage of ethanol in its retail petrol, and Z Energy produces biodiesel from tallow esters in its Wiri plant for sale to some larger customers. Green hydrogen fuel is also an option for vehicles, being pursued by Toyota for example.

With regard to the national electricity grid, energy storage needed for reliability, affordability and sustainably as the shares of variable wind and solar renewable energy systems increase in the mix. In normal situations any daily peaks in power demand that occur when there is little wind and cloudy skies can be met by more hydro generation, the water stored in the lakes acting like an energy storage “battery” that is quickly and easily dispatchable to meet fluctuating power demands. Daily peaks can also be offset by demand-side management where electricity users, such as for cool stores or domestic water heating (using “ripple control”), can be cut off for a few hours without adverse effects. The owners can then be rewarded for being willing to temporarily cut their demand. Similarly, the grid could become more flexible overall as a result of many distributed generation systems such as solar PV systems with batteries and electric vehicles connected with their batteries fully charged, able to dispatch power to the grid when needed, giving a revenue source for their owners. Coupled with time-of-use charges to encourage off-peak demand by appliances, daily fluctuations in power demand can be managed through the “smart-grid” concept. There is debate around the electricity wholesale market being totally restructured as new technologies evolve, but the electricity industry, regulators and policy makers are reticent to undertake this change.

The major problem within the Government’s ambition to move closer to 100% renewable electricity is the unreliability of hydro power in low-rainfall years. The total lake energy storage capacity is only a little over 10% of New Zealand’s annual electricity demand, hence can only act as a relatively small seasonal “battery”. Snowmelt in spring and summer supplements the rainfall precipitation entering the lakes, so seasonal shortages in hydro supply tend to be during winter when electricity demand is highest. Gas-fired and coal-fired plants then have to generate more power to compensate, resulting in higher greenhouse gas emissions. The recent running of the Huntly power plant on imported coal, created higher CO2 emissions than gas-fired plants, which were constrained, and the significant spikes in wholesale power prices as a result, has been well documented[10].

The government’s MBIE is evaluating solutions to this seasonal problem of dry years through its “NZ Battery Project” with those involved aiming to provide advice on energy storage options. A leading candidate is the pumped hydro storage of Lake Onslow with water pumped up into the lake when power is in surplus and prices are relatively cheap, then stored there as a “rechargeable battery” ready for use to generate hydro power when needed as back-up supply. The storage capacity of 5000 – 8000 GWh would be much greater than the present total energy storage capacity of all existing hydro lakes. The cost and technical constraints are currently being evaluated together with who would own and operate the system since being only a back-up, it would not be commercially viable. Other options being assessed include large-scale battery installations as has been demonstrated with a 150 MW store in South Australia[11] and hydrogen produced using excess renewable electricity and then stored for use to generate electricity when needed.


Overall the potential for increasing the shares of renewable energy in New Zealand is good. Resources are available and projections are that renewable electricity will rise to over 90% of total generation within a decade without government intervention because wind, geothermal and solar have become cheaper generation options than building new coal- or gas-fired plants. Interest in renewable energy heating systems is also increasing, using bioenergy, geothermal heat, or renewable electricity for running high temperature heat pumps and other electro-thermal technologies. Transport will be slower to wean itself off fossil fuels but there is potential to reduce CO2 emissions through electric vehicles, not to forget walking and cycling which can be argued are also forms of renewable energy.

Increasing the 40% share of renewable energy is becoming increasingly urgent but growing it to 100% renewables will require huge effort. Various government policies and incentives to change behaviour are evolving such as the vehicle feebate scheme and support funding is available from EECA for organisations wishing to move away from coal for heating. So that’s a start, albeit a small step. The Climate Change Commission has clearly identified the potential for increasing the share of renewables, realising that good resources are available. However, our high dependence on fossil fuels implies that displacing them with 100% renewable energy will be very difficult.

If we cannot reach 100% renewables for various reasons, then nuclear power is also a low-carbon electricity option that should not be ignored for the future. At present it is not ideally suited to match New Zealand’s energy demand due to the high capacity of the present economic design of reactors currently being installed in several countries. A viable plant typically has a capacity around one fifth of New Zealand’s total electricity capacity. There would also be a need for investment in the specialist infrastructure needed to import nuclear fuel and export nuclear wastes for treating. However, nuclear power plant designs are also evolving and several countries are now designing and installing plants far lower in capacity and costs. Even though nuclear fuels can be re-processed to some degree under certain conditions[12], nuclear is not truly “renewable” energy within the usual definition. But instead of aiming for 100% renewables, watch this space!


[1] The power output of a wind turbine is directly proportional to the cube of the wind speed; 10*10*10 is almost three times higher than 7*7*7.

[2] By way of comparison, coal-fired power plants typically emit around 900-1000 g CO2/kWh, natural gas plants around 500-600 g CO2/kWh, and wind and solar very little, even when calculated on a life cycle basis.

[3] See for example:  The Brilliance of Bioenergy: In Business and In Practice – 1st Edition (

[4] Consents were obtained for installing 200 1MW turbines but recently lapsed after 10 years.

[5] Concept for the figure based on a similar presentation of indicative costs in IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation, 2011.

[6] 20 Years of Monitoring CO2-injection at Sleipner – ScienceDirect

[7] Carbon Capture and Storage is a Part of Canada’s Coal Emissions Phase Out « (

[8] Scientists in Iceland permanently store Carbon dioxide into rocks to combat climate change – THE INNER DETAIL

[9] A Masters’ thesis by Peter Sudol outlining the process can be found here:

[10] See for example Climate change: New Zealand burns most coal for electricity in nearly a decade – NZ Herald

[11] Tesla (TSLA) wins contract for new giant battery in Australia – Electrek

[12] Nuclear Fuels and Reprocessing Technologies: A U.S. Perspective (Technical Report) | OSTI.GOV

Ralph Sims is an Emeritus Professor at Massey University. He is an expert in Renewable energy deployment and policies.

Disclaimer: The ideas expressed in this article reflect the views of the author and not necessarily the views of The Big Q. 

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