Speech to Electricity Networks Association

Energy and Resources

Good morning. It’s great to be here again and speak with you.

The past few months have been momentous for climate policy in New Zealand. As you know, the Government has now set New Zealand’s emissions budgets for the first three budget periods, and have released our ambitious package of measures to help slash emissions. We’ve also outlined the first investments made from the newly established Climate Emergency Response Fund (the CERF).

These actions are helping us to secure New Zealand’s long-term energy future and ensure we seize the economic opportunities that come with the transition to a low-emissions world.

The inaugural Emissions Reduction Plan lays out a suite of initiatives to decarbonise our economy and help us meet our emissions budgets.

The Emissions Reduction Plan is a plan for the whole of New Zealand. The Government will play a key role in getting the system settings right and accelerating the use of low-emissions practices and technologies. But we cannot do it alone.

The energy and industry chapter of the plan outlines five key areas where we are driving change, this includes: –

  1. Using energy efficiently and managing demand for energy
  2. Ensuring the electricity system is ready to meet future needs
  3. Reducing our reliance on fossil fuels whilst supporting switching to low emissions alternatives
  4. Reducing emissions and energy use in industry, and
  5. Setting a strategy and targets to guide us to 2050

I am confident that our programme of actions within each of these areas can drive emissions reductions while maintaining security of supply and extending access and affordability to more New Zealand consumers.

I want to see Government and the sector working in partnership to seize opportunities to transition toward our decarbonisation goals, because the scale of change required means we all need to pull together.

On that note, I want to spend a moment talking about our Government Investment in Decarbonising Industry Fund (or GIDI Fund)

I recently announced that the GIDI Fund will be extended and expanded with an additional $650 million over four years, so EECA can expand the number and type of projects that receive money, including high impact decarbonisation projects of national significance.

The Fund will now include targeted investment at a regional level for projects that optimise low emission fuel use, funding for electricity transmission and distribution infrastructure upgrades to support fuel-switching, and funding for the early adoption of high decarbonisation energy technologies. It’s a huge win for our businesses, which are looking at innovation to stay ahead of the curve.

The original $69 million GIDI fund has been a huge success, having helped fund 53 major industrial decarbonisation projects – all contracted for completion by April 2024. I am aware of the role distribution companies have played in supporting industrial consumers, as well as the State sector, transition away from large thermal fuel boilers. This is really critical support in our decarbonisation efforts and I want to thank you for your continued efforts.

It will be important for distribution companies to take a customer-focused approach to support increasing process heat connections and learn from the great work to date.

I am really excited to see what further projects this new phase of GIDI funding will unlock.

On the need for changes to the electricity system, we know that fossil-fuelled generation currently plays an important role in supporting the security of supply in a dry-year and during peak demand, such as on cold winter evenings. We need to manage an orderly transition to a more sustainable and renewable electricity system. 

With this in mind, Budget 2022 provides for approximately 5 million dollars over two years to develop measures that support a reliable and affordable electricity supply while accelerating the move to a highly renewable electricity system, and to explore the potential for public sector procurement of renewable electricity via long term power purchase agreements (or PPAs).

To plot the next steps to slash emissions in the energy sector, we need to do more to address strategic challenges, and signal pathways away from fossil fuels.

We are investing to develop major strategies to achieve our vision for a net-zero economy in 2050, where energy is accessible and affordable, secure and reliable, and supports New Zealanders’ wellbeing.

Budget 2022 provides almost $18 million dollars over three years to support the transition to a low-carbon economy through the development of an energy strategy, a regulatory framework for offshore renewable energy, and a roadmap for development and use of hydrogen.

We also have work currently underway to improve demand response capability in New Zealand. Demand response has the opportunity to serve two key objectives in the energy transition: managing intermittent renewable supply and managing peak demand. These are both essential to the success of delivering energy security and affordability alongside decarbonisation. To enable greater demand response in energy-using products and services, I will explore options to amend the Energy Efficiency and Conservation Act 2000 to include requirements related to the demand response capability.

Finally, I want to touch on an important change happening to our electricity market right now – the phase-out of the Low Fixed Charge (LFC) regulations.

The phase-out of the LFC regulations was a recommendation of the 2019 Electricity Price Review. The Review recognised the regulations as a barrier to distribution pricing reform and all the benefits that can bring. The Government agreed to a five-year phase-out and the first step of the phase-out was taken on 1 April this year.

The benefits of efficient distribution pricing reform have been known for a long time. It affects how consumers use electricity, how distributors and others manage load, when distributors invest in poles and wires, and investment decisions for new technology, such as distributed energy resources or demand management. This will be one piece of the puzzle to support increasing demand from EVs and minimise associated costs.

As the regulations are phased-out, I will be keeping a close eye on the innovative solutions that distribution businesses bring forward to meet the challenges we will face. It’s an exciting opportunity for the sector to more actively consider non-network solutions which have the possibility to deliver longer-term benefits to consumers compared to more traditional solutions of adding more poles and wires.

I am aware that there is plenty of work already underway to identify these opportunities and I look forward to hearing more about these.

To wrap up, I want to acknowledge that this is a challenging time for the sector. You are working to deliver the electricity system of the future for New Zealand. The move towards a decarbonised economy, and the increased electrification that involves, will be a challenging transition.

However, I am confident the sector is taking the right steps to meet these challenges. The ENA’s ‘Network Transformation Roadmap’ is a good example of how the industry is identifying its role in helping to achieve a low-carbon future that will benefit all New Zealanders. Good planning and collaboration between distribution companies and other stakeholders is essential to achieving decarbonisation.

Thank you again for inviting me to speak here today.