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Energy sector jointly considers the future

Energy sector jointly considers the future of energy for New Zealand

The NZ Business Council for Sustainable Development (the Business Council) has today published the energy supply and demand scenarios produced by an industry wide study, which is being facilitated and jointly sponsored by the Business Council.

The study was instigated earlier this year as the initial part of a project to develop a long term energy industry perspective on what a sustainable energy sector might look like and to help the industry manage the transition from the existing asset base to the next generation of technology.

Peter Neilson, Chief Executive explains the role of the Business Council in this project: “To provide a catalyst for discussion about the energy future for New Zealand we have brought together nine energy providers to develop a consensus view. This report is based on their assumptions about how the market will develop. The overwhelming view of the industry participants is that there is an absence of co-ordinated thinking to ensure a sustainable balance of future energy supply. We believe that this work provides an excellent opportunity to test the Government’s assumptions and stretch targets for energy efficiency.”

Nine energy companies have provided input to the development of the scenarios. At this stage demand side energy users, the Government and other stakeholders have not been involved. The principal conclusions drawn by participants are:-

The growth in demand for energy is likely to be faster than the scenario that is being used by the Government for its energy planning The most likely scenario will require increased use of primary energy sources (gas and coal) combined with an increased take up of renewable energy (wind and hydro) sources. A significant step change in security of supply and price is occurring after a relatively stable period underpinned by Maui Gas and low prices.

Unlike some other reviews, this joint working group is more optimistic about the potential of renewables in the future energy mix. Four supply scenarios for future electricity generation were developed and are consistent with investments being made by the energy sector. These are:-

Renewables based mainly on wind, requiring a significant scale up from past wind power investment rates Indigenous Gas, requiring an order of magnitude increase in exploration activity if short- term requirements are to be met and other alternatives not implemented. LNG, a substitute for Indigenous Gas but with high capital cost and long term commercial implications and:- Coal, the development of indigenous coal fields and installation of modern low emission coal fired power stations.

An assessment of the existing generating mix and the four supply scenarios was made against the sustainable development criteria provided by the International Implementing Agreement definition of sustainability, these being:

security of supply; affordability; and environmental protection.

The review found that a combination of two or more of the scenarios would be required to achieve a balanced sustainable development outcome, no single scenario meeting all three criteria.

Neilson concluded: “The Business Council will be facilitating the next stage of this project which will be a visioning exercise to identify sustainable energy scenarios for New Zealand looking out to the next 40 to 50 years. This will obviously need to involve dialogue with the Energy Efficiency and Conservation Authority (EECA), Ministry of Economic Development and our large user Business Council members to better understand the difference in demand forecasts and meetings are being planned to achieve this.

The Business Council is a group of some 50 businesses, with a combined workforce of over 60,000 New Zealanders, who believe that the role of business in sustainable development is to operate profitably while promoting economic growth, social equity and environmental management.

The report can be downloaded from our website

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