Speech to Downstream Conference 2015Energy and Resources
It’s great to be back at this conference and to be New Zealand’s Energy Minister for a third year.
Time flies when you’re having fun – and it’s been a real privilege working in such an exciting sector that is always changing and is enhancing New Zealanders lives and lifestyles in new and exciting ways.
Policy continuity and Competition
Of course it is important to think about where we have been over even just the small amount of time I have been your Minister. We have seen off some crazy ideas that for a time created negative sentiment and real uncertainty.
Today – without being in the slightest bit complacent – I think we can say we are in a position of much greater policy and regulatory certainty and stability.
That is generally good for the sector and consumers alike.
As I think I have said to many of you before, I am a fan of the World Energy Council’s so-called trilemma as a good set of criteria by which to judge a country’s energy system. How does the system measure up in terms of security of supply, environmental sustainability and energy equity or competiveness?
In New Zealand the answer is we stack up strongly if not perfectly.
Competiveness has been an area where critics have tried to attack. But last year was a record year for new electricity retailers entering the market, and significant discounting and other competitive offerings are now routine and putting real downward pressure on electricity prices.
Rest assured enhancing competition will continue to be a strong focus for the Ministry of Business, Innovation and Employment (MBIE), the regulator and myself.
It’s evolution not revolution however that is the order of the day.
Customers and technology
Turning then to the themes of this conference, customers or consumers and technology, your choice of topics could not be more appropriate and in-sync with my thinking.
Whether it’s a case of great minds thinking alike or one of us copying the other, there is no question that an invigorated focus on consumers and capturing the benefits of technology and innovation are exactly where I think the sector should be concentrating.
I am convinced that over time – albeit imperceptible to those not watching closely – new technologies and innovations are transforming everything in energy and, for that matter, in my other key portfolio of Transport as well.
This is then, in turn, driving a process of placing yet more power in the hands of consumers, which is very exciting.
Whether we are talking smart meters, smart grids and their evolution, PVs, EVs or the ‘internet of things’, a virtuous cycle of technological innovation and consumer use is compelling yet more change and pro-competitive and consumer phenomena.
Examples are starting to abound. Take Flick Electric’s use of smart meters to charge consumers based on spot price, enabling them to reduce power bills by using appliances at off-peak times.
Or Genesis Energy’s MyMeter app which allows consumers to monitor and manage energy use and again helps work out how to save money on power bills.
We are in the early stages to be sure but I believe that Government and the energy sector together can position New Zealand ahead of the curve and, in so doing, as I have said, really enhance New Zealanders lifestyles.
A great example of this partnership comes in the form of the Smart Grid Forum which I announced about this time last year to advance the development of smart electricity networks in New Zealand.
The Forum has already made good progress, late last year publishing a Vision for Smart Grids in New Zealand which considered future scenarios involving technological innovations in our market.
The Forum’s vision is that: “In 2050, New Zealand will have leveraged the opportunities made available from emerging smart grid technologies and practices to the benefit of electricity consumers and New Zealand’s prosperity as a whole.”
This is a vision to which I am sure we all subscribe.
New Zealand has supported a market-led roll out of smart meters, as opposed to a regulatory or subsidised approach. As a result we’ve avoided some of the problems experienced in other jurisdictions.
But by the same token, in order to rise to the occasion, sector coordination is also desirable so that initiatives pursued will create national benefits.
The Forum is a great place for this and, for example, working with the Electricity Networks Association (ENA) and MBIE, has developed scenarios of likely and more optimistic levels of uptake of new technologies such as EVs, solar panels and increased use of small-scale generation.
Aligned with this, the ENA is developing an engineering and economic model of all distribution networks in New Zealand – “Transform” – to assess the investment needs caused by disruptive technologies and the strategies required to manage them.
I look forward to seeing the results of this work later this year.
Our renewable advantage
In saying all this, let’s not forget what great advantages we have today in New Zealand relative to most of the world.
Surely somewhere near the top of the list is our rich endowment of abundant energy resources.
We are a world leader in geothermal energy, have world class wind resources, extensive hydroelectricity, forestry resources as a source for bioenergy, and of course sedimentary basins known to have working petroleum systems.
The Government has made a concerted and very successful effort in regard to petroleum exploration and development, and the same is true when it comes to renewables.
Whether it’s utilisation at home by Contact at Te Mihi or Meridian with wind, or the great work Hawkins is doing with two new geothermal power projects in Indonesia or the 1 MW of PV solar Powersmart has installed in Tokelau, with similar projects going on right now in Tuvalu and the Cook Islands.
What flows from our resources is undoubted experience and expertise.
I believe the time is right to have a good look at further developing the economic potential of our renewable advantage.
I appreciate at home flat demand means new domestic projects aren’t on the immediate horizon. But that doesn’t mean that there are no opportunities locally.
Some of you will know that I am a firm supporter of EVs, which offer the prospect of multiple benefits from reduced emissions, increased use of our renewables resource, improved fuel efficiency and reputational advancement as well.
I know many of you are already doing work in this intriguing area, from Northpower who has been actively promoting EVs and recently completed a study showing its electricity network could easily handle tens of thousands of EVs charging overnight, to Mighty River Power recently announcing it will change around 70 per cent of its fleet to EVs or plug in hybrids over the next four years.
For me the cross-portfolio appeal as Energy, Transport and Associate Climate Change Minister is obvious, and I have tasked the Ministry of Transport to provide advice on whether the Government can play a role in facilitating early uptake of EVs and, if so, what options are available.
More broadly, together with the sector, I want to take every opportunity to promote New Zealand’s renewable advantage and expertise internationally.
The time is ripe. Globally the value of the renewable energy industry is growing. The United States Department of Commerce believes that, worldwide, the renewables sector will reach US$7 trillion in expected cumulative global private sector investment between 2012 and 2030.
As discussed, many factors are pushing this growth, from new technologies and innovations to increased momentum on climate change as evidenced by policy pronouncements from the United States and Chinese governments last year.
Indeed, in China this confluence of trends is driving major new investment such that renewable energy production is growing so fast that by 2020 this one country will account for almost 40 per cent of global renewable energy deployment.
What is going on in the world plays to our country’s strengths. We have a window to take the opportunities presented to us.
I am doing that and I know many of you are as well. As an example, in April I will be leading New Zealand’s delegation to the World Geothermal Congress.
This is a terrific chance to leverage our expertise on the world stage in front of thousands of dignitaries and business people.
But none of us, certainly not me, have a monopoly on good ideas. It is crucial we think hard about how we can convert international interest into investment and economic return.
I am open to ideas about how Government and industry can work together for New Zealand to achieve this.
Thank you very much and have a great conference.