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Johnson, Deborah Lynne --- "Electricity and the environment - current trends and future directions" [2008] NZJlEnvLaw 7; (2008) 12 NZJEL 195

Last Updated: 16 February 2023


Electricity and the Environment — Current Trends and Future Directions

Deborah Lynne Johnson*

Electricity is a vital resource in New Zealand. There can be no sustainable management of natural and physical resources without energy, of which electricity is a major component.1

Electricity has been essential to the social and economic development of New Zealand. As the electricity sector has evolved, it has greatly contrib- uted to the wellbeing of many people’s lives and has become an integral part of the fabric of New Zealand society. New Zealand is a country richly endowed with an abundance of renewable energy resources such as wind, water, and geothermal, which currently provide 67 per cent of electricity supply. Increasingly, legislation and policy is encouraging electricity generation from renewable sources, with the New Zealand government setting a target of 90 per cent electricity generation from renewable sources by 2025. Meeting that deadline will require a signifi- cant investment in new electricity generation projects within the next 15 years, quicker processing of major renewable generation proposals, and investment in new technology such as marine energy. Furthermore, demand-side management is fundamental to ensuring New Zealand reaches its sustainable energy goals.

*Geography (Hons), Otago University, Dunedin. MSc (Hons) Environmental Management, The University of Auckland. This paper was prepared as part of the MEnvLS at The University of Auckland 2008. The author would like to thank Mitchell Partnerships for financial assistance in taking this paper.

1 Genesis Power Limited v Franklin District Council [2005] NZEnvC 341; [2005] NZRMA 541 (EC) 556 (“Awhitu”).


Electricity first flowed in New Zealand in 1861 with the construction of a private electric telegraph line between Dunedin and Port Chalmers.2 Since this time, electricity has been fundamental to the social and economic development of the country. As the economy has grown, so too has its demand for electricity. From 1970 to 2002 New Zealand’s “energy intensity” grew from 3.9 PJ per

$1,000 million of GDP to 4.8 PJ per $1,000 million of GDP.3 The New Zealand economy and the welfare of the population are dependent on a secure supply.

Electricity consumption in New Zealand in 2007 was approximately 39,000 gigawatt-hours4 (“GWh”)5 at a cost to consumers of $NZ5.2 billion.6 This electricity is used for a variety of activities ranging from domestic uses (home heating, cooking, and hot water) through to large-scale industrial uses such as at the Rio Tinto aluminium smelter in Southland (approximately 6,500 GWh per annum) and the Norske Skog Tasman pulp and paper mill in Kawerau (approximately 1,000 GWh per annum).7

Between 1990 and 2005 electricity generation in New Zealand increased by 33 per cent and Gross Domestic Product (“GDP”) increased by 54 per cent.8 Today New Zealand’s total primary energy consumption is increasing by around 2 per cent each year.9 As New Zealand’s demand for electricity continues to grow, government guidance and policy is increasingly advocating electricity development from renewable sources.

This paper reviews the electricity sector in New Zealand; in particular, the development and structure of the sector, electricity demand, supply and generation, environmental effects of electricity generation, legislation and policies, and the future direction of electricity generation in New Zealand to ensure security of supply, achievement of renewable targets, and to promote the sustainable management of natural and physical resources.

  1. Parliamentary Commissioner for the Environment, Electricity, Energy and the Environment

(PCE, Wellington, 2003) 15.

  1. Ministry of Economic Development, New Zealand Energy Outlook to 2025 (MED, Wellington, 2003) viii.
  2. Ministry of Economic Development, New Zealand Energy Strategy to 2050 (MED, Wellington, 2007) 106.
  3. Electricity demand is measured in two ways — in energy terms (the amount of electricity used over time (Gigawatt-hour, GWh)) and in power terms (the rate of electricity flow at any instant in time (Megawatt units, MW)). One GWh equals 1,000 MWh.
  4. Ministry of Economic Development, New Zealand Energy Data File (MED, Wellington, 2008) 112.
  5. Ibid.
  6. Parliamentary Commissioner for the Environment, supra note 2. 9 Ministry of Economic Development, supra note 3, at 16.


2.1 Historical Developments

In the early 1900s the focus for the New Zealand government in respect to the electricity sector was to facilitate the development of a grid of high-voltage transmission lines throughout the country and to ensure sufficient electricity generation and distribution to meet demand.10 At this time three pieces of legislation were passed that were central to this national approach11 — the State Supply of Electricity Act 1917, the Electric-power Boards Act 1918, and the Municipal Corporations Act 1920. Together, these three Acts gave the government a monopoly over electricity generation, divided the country into distinct districts (with each district having an Electric Power Board (“EPB”)), and ensured electricity was supplied to as many consumers as possible. The Electricity Act 1968 refined the system and established the Electricity Supply Authority (“ESA”).12

2.2 The Birth of the New Zealand Electricity Market

New Zealand’s electricity sector underwent considerable restructuring from the mid-1980s.13 The Electricity Corporation of New Zealand (“ECNZ”) was set up in April 198714 under the State-Owned Enterprises (“SOE”) Act 198615 to own and operate the generation and transmission assets of the Ministry of Energy. The first steps to privatisation of the electricity industry occurred in 1988 when Transpower New Zealand Limited (“Transpower”) was set up as a subsidiary of ECNZ to run the national transmission network.16

The New Zealand Electricity Market (“NZEM”) opened in 1996 after the split of the Electricity Corporation of New Zealand into two main generators, ECNZ and Contact Energy.17 However, this new regime displayed some significant problems due to the continued domination of the market by ECNZ

  1. Ibid.
  2. Jeremy Gray, Electricity Generation and Supply: sustainable management and the way ahead (LLB Hons dissertation, The University of Auckland, 2006) 9.
  3. Ibid, at 10.
  4. Barry Barton, “Developments in Electricity Law and Policy in Europe” (1998) 2 NZJEL


  1. Ministry of Economic Development, Chronology of New Zealand Electricity Reform (MED, Wellington, 2005) 1.
  2. The State-Owned Enterprises Act was a component of the government’s move to improve the performance and accountability of the public sector. Ibid.
  3. Transpower eventually took full ownership and control of the national transmission network which it retains to the present day. Barton, supra note 13, at 11.
  4. Ministry of Economic Development, supra note 14, at 2.

and the consequent lack of competition.18 In 1999, in a move to make the market more competitive, the government further divided the remainder of ECNZ into three SOEs — Genesis Energy, Meridian Energy, and Mighty River Power, while Contact Energy was privatised.19 The government also passed the Electricity Industry Reform Act 1998 to address the lack of competition in the distribution market. This resulted in the separation of distribution and supply functions which until that point were both carried out by the energy companies.

2.3 The Electricity Commission

In 2000 a Ministerial Inquiry was launched into the electricity industry to assess whether electricity was being delivered in an efficient, reliable, and environmentally sustainable manner.20 The report released on the Inquiry21 recommended industry self-regulation.22 In September 2003 the Electricity Commission was established as a Crown entity following an amendment of the Electricity Act in 2001, enabling the government to create its own Electricity Governance Board (“EGB”).23 This was in response to government concerns over the management of the electricity industry and the security of supply in dry years.24

The Electricity Commission formulates, administers, and enforces the Electric- ity Governance Rules (2003)25 and the Electricity Governance Regulations 200326 (“EGRs”). The set of rules are designed in accordance with s 172O(1)(a)–

(b) of the Electricity Act 1992. The Commission draws direction from the

  1. This era saw unduly high prices, high costs, and excessive capacity. Barton, supra note 13, at 2.
  2. Ministry of Economic Development, supra note 14, at 12. 20 Ibid, at 14.
  3. Ministry of Economic Development, Inquiry into the Electricity Industry (MED, Wellington, 2000).
  4. Barry Barton et al (eds), Regulating Energy and Natural Resources (Oxford University Press, Oxford, 2006) 140.
  5. Electricity Amendment Act 2001, s 16.
  6. A severe electricity shortage in March – June 2003 due to low hydro lake levels illustrated the system could not guarantee security of supply.
  7. The Electricity Governance Rules (2003) are based on rules agreed upon by industry participants and were made by the Ministry of Energy under the Electricity Act 1992.
  8. The Electricity Governance Regulations (2003) clarify the responsibilities of the Electricity Commission.

Electricity Act 1992 (s 172N), as amended by the Electricity Amendment Act 2001 and 2004, as well as from the Government Policy Statement on Electricity Governance (“GPS-EG”) released in 2004 after the Ministerial Inquiry.

(a) Objectives

The Commission’s principal objectives are to:27

The Commission has multiple roles, including policy advice, enforcement, arbitration, market administrator, forecasting supply and demand, developing and publishing minimum hydro levels for security of supply, contracting for reserve energy, and improving the ability of consumers to manage price risks in the market.28

(b) Government Policy Statement on Electricity Governance

The GPS-EG was updated in May 2008 to be consistent with the New Zealand Energy Strategy (“NZES”)29 and the New Zealand Energy Efficiency and Con- servation Strategy (“NZEECS”)30. The GPS-EG sets forth the government’s expectations of the Commission, including a detailed list of actions that the Commission is expected to give effect to, pursuant to s 172ZK of the Electricity Act amended 2004.31 The priority areas to meet government objectives and outcomes, as outlined in the GPS-EG, include:32

  1. Electricity Act 1992, s 172N(1).
  2. Parliamentary Commissioner for the Environment, A Review of the Environmental Performance of the Electricity Commission (PCE, Wellington, 2008) 8.
  3. Ministry of Economic Development, supra note 4.
  4. Energy Efficiency and Conservation Authority, Energy Efficiency and Conservation Strategy: Towards a Sustainable Energy Future (EECA, Wellington, 2001).
  5. Ministry of Economic Development, Government Policy Statement on Electricity Governance (MED, Wellington, 2002) 3.
  6. Electricity Act 1992, s 172O(1)(a)–(b).

(i) Security of supply

The GPS-EG states that “[i]n the Government’s view, security of supply is vital to achieving its objective of sustainable economic development”.33 The key requirements identified for achieving security of supply include:34

The importance of security of supply was recognised by the High Court in the Upland Protection Society v Central Otago District Council case where the Court stated:35

This Court recognises the notorious fact that there is an ongoing risk of the demand for electricity not being matched for supply. This past winter and previous winters there have been low levels of stored water in the hydroelectric systems. The Court also takes cognisance of the notorious fact that where supply cannot match demand in electrical systems there has to be a partial shutdown of the distribution networks. For these reasons it is in the public interests for power supply companies to increase generating capacity. The question is not whether generating capacity should be increased but rather by what means and where.

Characteristics of New Zealand’s electricity system that can affect security of electricity supply include reliance on hydroelectric power for approximately 60 per cent of electricity supply,36 location of main hydro stations a long way from the demand centres, inability to import or export electricity, and a small market

  1. Ministry of Economic Development, supra note 31, at 15. 34 Ibid.
  2. Upland Landscape Protection Society Incorporated v Central Otago District Council at [64] (HC, CIV 2008-412-000302, 16 September 2008, Fogarty J).
  3. Hydro flows are variable and therefore the country faces unpredictable shortages of hydroelectric power.

making the economic scale for new generation large relative to the size of the system and the annual increase in demand.37

Before the Electricity Commission was set up, the government had already contracted for the 155 MW reserve generation plant at Whirinaki, Hawke’s Bay to be set up to ensure there is sufficient electricity38 in a one-in-60 dry- year event39 (when hydro lake inflows are abnormally low).40 Whirinaki was completed in 2004 and an agreement between the Commission and the government on the output of the plant came into effect from April 2005. The government has retained ownership of the plant, but the station may only be operated in accordance with instructions issued by the Commission.41

2.4 Current Shape of the Electricity Market

Today the NZEM is split into four separate areas, namely: generators, high- voltage transmission network owners, distribution network owners, and retailers.42

There are five main electricity-generating companies in New Zealand, the three SOEs (Meridian Energy, Genesis Energy, and Mighty River Power) and two private-sector companies (Contact Energy and TrustPower), plus a number of small, independent generators and on-site cogenerators. During the 2007 year the major generating companies provided over 92 per cent of New Zealand’s electricity generation43 as follows: Meridian Energy (30 per cent); Contact Energy (27 per cent); Genesis Power (18 per cent); Mighty River Power (12 per cent); and TrustPower (5 per cent). The remaining 8 per cent of generation was split between on-site cogeneration and other independent generators.44

Figure 1 illustrates total electricity generation capacity and the generation resource mix of the main generating companies in New Zealand in 2007. Meridian Energy, Mighty River Power, and TrustPower primarily generated electricity from hydro sources while a significant portion of Genesis Energy’s

  1. Ministry of Economic Development, supra note 4, at 61.
  2. Whirinaki also acts as a back-up in case of a major generation or transmission breakdown. 39 Following a substantive review of the reserve energy policy in 2007, the “1 in 60 dry year”

has been replaced by “winter energy margin” (the margin between forecast capacity to supply in a mean hydro year and forecast demand); see Parliamentary Commissioner for the Environment, supra note 28, at 15.

40 Ministry of Economic Development, supra note 6, at 19. 41 Ibid, at 95.

42 Electricity Commission website <> . 43 Ministry of Economic Development, supra note 6, at 96.

44 Ibid.

generation was from gas and coal. Contact Energy relied primarily on hydro and gas, and to a lesser extent, geothermal resources.


Figure 1: Total electricity generation capacity and resource type by company (2007).45

Most of New Zealand’s electricity is generated at remote locations and therefore requires an efficient transmission system to transport it to the main demand centres. Transpower own and operate the high-voltage transmission lines used to transport electricity around the country from most of the major power stations to local distribution lines, enabling moment-to-moment matching of electricity generation to demand across the country. The national grid also conveys electricity directly to major users such as the Tasman pulp and paper mill, Comalco, and New Zealand Steel.46 Power transmission between the North and South Islands is via a high-voltage direct current (“HVDC”) link (part of which is a submarine cable running under Cook Strait) from Benmore power station in the South Island to Haywards substation in the North Island.

A key constraint for electricity transmission in New Zealand is the distance of generation sources to the major demand centres. New Zealand is a long and relatively thin country, with major generation sources and demand centres separated not only by large distances, but by ocean. Thus, New Zealand relies on a high-quality transmission network that allows generators to transport their

  1. Ibid, at 103.
  2. Ibid, at 99.

electricity from generation source to end-users without significant losses. New Zealand’s high-voltage transmission network runs mainly on 220 kV and 110 kV lines and the HVDC submarine cable joining the North and South Islands. As demand grows, the network can become stretched or constrained and there is a need for a grid upgrade, or for electricity to be generated closer to demand areas.

Transpower submits proposed grid upgrade plans to the Electricity Com- mission for assessment, which includes considering alternatives to specific investments. Transpower may recover the costs of grid investments that have been approved by the Electricity Commission.47

There are 28 lines companies that own the local distribution network through- out New Zealand.48 The ownership of distribution companies is a mix of public listings, shareholder co-operatives, community trusts, and local body ownership, while most lines companies are owned by trusts. The size of lines companies varies, with one company (Vector) making up one third of the sector, while the largest four companies (Vector, Powerco, Orion, and Unison) supply 60 per cent of all contractors.49

There are approximately 1.8 million electricity customers in New Zealand served by 10 retail brands (including the five major generators). Each retailer has a varying-sized customer base, ranging from 20,000 to 650,000 customers each with retailers competing to meet consumers’ electricity needs.


3.1 Overview

Total electricity consumption in New Zealand in the year ending March 2007 was 38,545 GWh, around 3 per cent higher than the previous year’s figure of

  1. Ibid, at 95.
  2. Ibid, at 97.
  3. Ministry of Economic Development website < 13497.aspx> .

37,394 GWh.50 The industrial sector is currently the biggest user of electricity in New Zealand as shown in Table 1, using approximately 43 per cent of all electricity produced in 2007. The residential sector uses approximately a third of electricity, while the commercial sector uses just under a quarter.51 During the 2006–2007 period, consumption in the residential sector increased by 4 per cent, the commercial sector increased by around 7 per cent, and the industrial sector remained the same.52

Table 1: Electricity consumption by sector for the March 2007 year.53

% of Total Consumption





Figure 2 shows how the proportion of usage by the different sectors has changed significantly over time. In 1974 the industrial sector used 37 per cent of all electricity, by 1986, prior to the electricity reforms, the share of the industrial sector had increased to 44 per cent.54 Total usage in all three sectors has doubled over the last three decades.

(a) Residential sector

Between 1974 and 2007 total electricity use in the residential sector increased by around 71 per cent (from 7,439 GWh to 12,731 GWh).55 This increase can largely be attributed to the increase in population and number of households in New Zealand during this period. Approximately 45 per cent of electricity in the residential sector is used for water heating, 20 per cent for space heating, and the remainder for appliances such as refrigerators, lighting, and cooking.56

(b) Commercial sector

Electricity use in the commercial sector 57 is dominated by services that provide a comfortable working environment within buildings (space heating and

  1. Ministry of Economic Development, supra note 6, at 97. 51 Ibid.
  2. Ibid.
  3. Ibid.
  4. Ibid.
  5. Ibid, at 109.
  6. Ibid.
  7. The commercial sector includes non-manufacturing businesses such as hotels, restaurants, and social and educational institutions.

cooling, and lighting). Total electricity use in the commercial sector increased by approximately 259 per cent between 1974 and 2007.58



Figure 2: Electricity consumption by sector (MWh) 1974 to 2007.59

(c) Industrial and primary production

Electricity use in the industrial sector is dominated by a relatively small num- ber of large industrial users (seven firms used approximately 52 per cent of electricity in the sector in 2000).60 Electricity consumption in the industrial sector increased by 180 per cent between 1974 and 2007 (6,004 GWh to 16,824 GWh). The primary production sector 61 used approximately 7 per cent of total electricity in New Zealand in 2000.62

To meet the demand for electricity, New Zealand’s electricity needs are currently supplied from a mixture of resources, as shown in Figure 3 for the year to March 2008. Hydro is the dominant generation resource, providing virtually all

  1. Ministry of Economic Development, supra note 6, at 109. 59 Ibid, at 113.
  2. Parliamentary Commissioner for the Environment, supra note 2, at 25.
  3. The primary production sector includes agriculture, forestry, commercial fishing, mining and exploration.
  4. Parliamentary Commissioner for the Environment, supra note 2, at 25.

of the South Island supply and a significant portion of the North Island supply. In the North Island, thermal power stations make up a substantial component of electricity generation, while contributions from geothermal and wind generation are comparatively small, but increasing. Wind-generated electricity in particular is growing, but presently makes a relatively small contribution to overall supply in New Zealand (less than 2 per cent).

On average, electricity supply produced in the South Island exceeds South Island electricity demand; therefore electricity generally flows from the South Island to the North Island through the Cook Strait cables. The last major hydro development in the South Island was the Clyde Dam in 1992/1993 and since this time demand growth has outstripped electricity generation development. The average level of transfer to the North Island has thus declined over time and reverse transfer has become more common when inflows to South Island hydro lakes are low.


Figure 3: Electricity supply mix (year ending March 2008).63

Electricity generation in New Zealand has changed significantly over the last 30 years as availability and costs of resources and technology have changed. As illustrated in Figure 4, hydro facilities have consistently generated the main share of electricity. Figure 4 also highlights the increasing importance of gas to generate electricity in New Zealand since the mid-1970s (when the Maui gas field was developed).

In the year ending 2007 hydro generation provided approximately 55

  1. Ministry of Economic Development, supra note 6, at 106.

per cent of New Zealand’s electricity (see Table 2), 74 per cent of which was generated in the South Island.64 A further 12 per cent of electricity was generated from other renewables (such as geothermal, wind, and biomass) and waste heat sources, while the remaining 33 per cent came from fossil-fuelled plants (oil, gas, and coal).


Figure 4: Annual electricity generation in New Zealand (1974–2007).65 Table 2: Electricity generation by fuel type (2007).66

Fuel Type
% of Total Generation


  1. Includes output of cogeneration plants for these fuel types.
  2. “Others” includes electricity generation from biogas, waste heat, and wood, including cogeneration.

  1. Ibid, at 96.
  2. Ibid, at 98.
  3. Ibid.

3.2 Electricity Generation Types

Hydro generation first occurred in New Zealand over 100 years ago with the commissioning of the Waipori scheme in 1903.67 By the early 1950s over 1,000 MW of installed capacity was provided from hydro energy. Following the installation of the HVDC transmission line between the South Island and the North Island, hydro capacity in the South Island increased rapidly with developments such as the Benmore power station (540 MW) in 1966, Manapouri power station (700 MW) in 1971, and the Clyde dam (432 MW) in 1992. By the mid-1990s hydro capacity had reached over 5,000 MW and remains around this level today.68

Hydro power stations continue to dominate electricity supply in New Zealand, producing around 55 per cent of annual electricity requirements in 2007.69 Actual contribution to supply from hydro can vary considerably from year to year depending on hydro inflows, and hence the weather. Given the dominance of hydro supply, New Zealand is vulnerable to energy supply shortages during hydro droughts. In 1992, 2001, 2003, and 2008 low levels of inflows into the South Island hydro lakes required power savings campaigns and at times resulted in shortages of electricity.70

While hydro remains the major electricity supply source in New Zealand, the country is also very dependent on thermal power stations (see Figures 1 and 2, and Table 1), with thermal gas plants71 providing 26 per cent of the country’s electricity in 2007.72 In this same year, 59 per cent of New Zealand’s natural gas was used for electricity generation. In addition to the significant contribution thermal power stations make to meeting overall electricity demand, thermal generation provides critical back-up to seasonal and shorter-term hydro supply.

The offshore Maui gas field was discovered in 1969 and dominated New Zealand’s gas supply over the next 30 years. In February 2003 the redeter-

  1. Ibid, at 90.
  2. Ibid, at 91.
  3. Ibid, at 96.
  4. Ibid.
  5. Contact Energy Limited (Otahuhu B, Taranaki combined cycle, and New Plymouth) and Genesis Energy (Huntly including the new e3p combined cycle plant) are the main thermal generators in New Zealand.
  6. Ministry of Economic Development, supra note 6, at 96.

mination of Maui gas reserves found there was considerably less economically recoverable gas left in the field than previously thought (370 PJ of economically recoverable gas left, equating to less than three years’ supply at previous high rates of extraction).73 As a result, the New Zealand gas market has changed substantially over recent years and is now likely to be characterised by a diver- sified range of gas fields and gas operators.74 Three new gas supplies (Kupe, Pohokura, and additional Maui reserves) are being pursued but these will not be sufficient to supply the historical rates of supply on their own.

New Zealand has extensive coal resources, mainly in the Waikato and Taranaki regions in the North Island, and the West Coast, Otago, and Southland regions in the South Island.75 Coal use for electricity generation (including cogeneration) reduced by 43 per cent between 2006 and 2007 (5,103 GWh to 2,921 GWh respectively), primarily due to Genesis Energy’s new Huntly e3p gas combined cycle plant coming online displacing much of the generation from the older coal-fired Huntly units.76 Coal accounted for approximately 7 per cent of electricity generation in New Zealand in 2007.77

New Zealand has limited oil production, and electricity generation from this source is very expensive (in excess of $100/MWh). The Whirinaki reserve oil- fired plant was used infrequently in 2007.

New Zealand has an excellent geothermal resource (both high temperature78 and low temperature) as it is located along the “Pacific Ring of Fire”. Wairakei was the first geothermal power station in New Zealand, opening in 1958 with a capacity of 162 MW (increased in 2005 to over 176 MW by the addition of a binary plant). Wairakei remains New Zealand’s largest geothermal power station.79

  1. Ibid, at 18.
  2. Ibid, at 69.
  3. Ibid, at 24.
  4. Ibid, at 96.
  5. Ibid.
  6. High temperature systems are confined to the northern and central parts of the North Island.
  7. Wairakei is due to be replaced by the new 230 MW Te Mihi plant in 2016.

Today geothermal generation remains an integral part of New Zealand’s electricity landscape providing just under 8 per cent of total electricity genera- tion in 2007.80 This was a net increase of approximately 16 MW from 2006.

New Zealand has an excellent wind resource as it sits in one of the major atmospheric circulatory zones known as the Roaring Forties.81 The first grid- connected, large-scale wind turbine with a capacity of 225 kW was opened in Wellington in 1993, while the first wind farm in New Zealand, Genesis Energy’s Hau Nui (8.65 MW), was commissioned in 1997. Wind generation from wind power has grown substantially in the last 15 years in New Zealand; by mid-2008 eight wind farms were installed with a total capacity of over 320 MW, 151 MW of which came online during 2007.82 Wind energy generation increased by 50 per cent since the 2006 year, contributing 2.2 per cent of New Zealand’s total electricity generation in 200783 and meeting the needs of approximately 145,000 average New Zealand households.

Biomass is mainly used in New Zealand to provide process heat in the wood-processing industry and for residential space heating. Landfill sites in Wellington and Auckland have been successfully used for electricity generation for some time, and more recently, sites in and around Hamilton, Christchurch, and Palmerston North have been commissioned bringing the combined landfill gas generation capacity to over 20 MW nationwide.84 A government standard now requires all operative landfills with a total capacity of over 1 million tonnes of refuse to control landfill gas.85

Biogas (primarily methane) from sewage treatment plants, farm wastes, and the food processing industry has been used on-site for decades to produce electricity and heat for local consumption or for vehicle fuel.86 Electricity and heat for the digestion of sewage waste is currently produced in Auckland, Hamilton, Christchurch, and Invercargill.

  1. Ministry of Economic Development, supra note 6, at 96.
  2. Parliamentary Commissioner for the Environment, Wind power, people and place (PCE, Wellington, 2006) 16.
  3. Ministry of Economic Development, supra note 6, at 91. 83 Ibid, at 96.
  4. Ibid, at 92.
  5. Ibid.
  6. Ibid.

Solar energy in New Zealand is primarily used for hot-water systems and passive solar heating in buildings. Solar photovoltaic technology is widely used in New Zealand to recharge batteries for power supply systems at remote sites — for example, in parks and reserves, and by farmers for remote electric fences.87

Cogeneration is a method of generating energy by producing electricity at the same time as creating heat and steam for industrial purposes (such as drying timber in kilns). The main types of cogeneration in New Zealand are open-cycle gas turbines and steam turbines. Cogeneration operates at the Fonterra plant in Te Awamutu and Carter Holt Harvey pulp and paper mill in Kinleith.

3.3 Role of Renewables

Renewable energy plays a significant role in New Zealand’s electricity generation as shown in Figure 5. Renewable electricity generation capacity in New Zealand at the end of 2007 was 6,253 MW out of a total of 9,133 MW, equating to around 67 per cent of New Zealand’s total electricity generation.88 This was an increase from 6,058 MW in 2006, with most of this increase in renewable capacity being attributed to a 50 per cent increase in wind generation in 2007.89 At the international scale, New Zealand has the third-highest percentage of renewable primary energy supply of all OECD90 countries, behind only Norway and Iceland.91

  1. Ibid.
  2. Ibid, at 90.
  3. Ibid.
  4. Organisation for Economic Co-operation and Development. 91 Ministry of Economic Development, supra note 6, at 89.


Figure 5: Percentage of New Zealand electricity generation from renewable sources.92

As shown in Figure 5, New Zealand’s historically high level of renewable primary energy is primarily due to plentiful hydro supply, and to a lesser extent, geothermal resources. However, since the last large-scale hydro generation development in the 1990s, the percentage of electricity from renewable sources has been declining.


The natural environment has been the foundation for electricity development in New Zealand, providing the resources for, and absorbing the impacts of, electricity generation. While at its point of use electricity can be a relatively benign form of energy, there are always environmental impacts associated with electricity generation, transmission, and distribution. Table 3 provides a brief summary of key adverse impacts on the environment93 that are often associated with electricity usage, from generation to distribution at the local, regional, national, and international level. Local effects on the environment from electricity generation, transmission, and distribution are addressed to some

  1. Ibid.
  2. Definition of “environment” is that given in the Environment Act 1986, which includes people and communities.

extent under the Resource Management Act 1991 (“RMA”) through consent conditions.

An increasingly common approach in resource consent applications for new electricity-generating developments is to submit management plans to be required as conditions of consent. The purpose of the management plans is to address adverse effects such as those presented in Table 3. The Environment Court has confirmed the appropriateness of this approach:94

[19] In the end ... a management plan can be required to be prepared pursuant to section 108(3) of the Act, but its purpose should be to provide the consent authority and anyone else who might be interested, with information about the way in which the consent holder intends to comply with the more specific controls or parameters laid down by the other conditions of a consent. So, for example, in the case of noise, specific noise control limits can be laid down but the way in which these are to be complied with is for the consent holder who can be required to provide a management plan containing information about the method of compliance. However, because technology might change over time the consent holder should have the ability to change the management plan without having to go through the process of seeking a change to the conditions of consent.

[20] We accept this as an appropriate alternative to requiring management plans to form part of the conditions of consent ... .

Table 3: Potential environmental impacts from the electricity sector in New Zealand.95 Activity Local, regional, national, and global

Construction Fossil fuels (coal, gas, oil)

and Discharge of contaminants (oxides of sulphur, nitrogen, carbon Generation monoxide, and particulates) to air

Carbon dioxide emissions

Discharge of warmed water to waterways (used to cool generating units) Discharge of treated process water

Dust emissions from the storage of coal on land Disposal of ash

Aesthetic impact of a power station Transportation (coal) and flaring / fan noise (gas) Depletion of the ozone layer

Contribution to climate change from CO2 emissions and flaring


  1. Wood v West Coast Regional Council [1999] NZEnvC 274; [2000] NZRMA 193 (EC).
  2. Adapted from Parliamentary Commissioner for the Environment, Electricity, Energy, and the Environment: Making the Connections (PCE, Wellington, 2003) 31, and Parliamentary Commissioner for the Environment, Getting More from Less (PCE, Wellington, 2000) 14.


Activity Local, regional, national, and global


Construction Hydro

and Major change to land forms Generation Modified flow regimes

Reduction or modification of habitat of aquatic plants, insects, native fish, trout, and birds

Restriction of fish passage both upstream and downstream Erosion of lake and river banks, alteration of sediment regimes Reduction in recreational opportunities as well as amenity and

aesthetic values

Impact on natural character

Impact on Maori spiritual and cultural values Geothermal

Impact on water quality through the disposal of excess heat and

fluid directly to streams and rivers

Reduction in the number of surface features (i.e. geysers and hot springs) Land subsidence and hydrothermal eruption risk

Discharge of toxic gases into the atmosphere Depletion of geothermal field

Reinjection of cooled water Venting noise

Impacts on environmental taonga of tangata whenua Contribution to climate change from CO2 emissions Wind

Impact on natural character and amenity values

Noise and visual impacts Impact on recreational activities

Impact on Maori spiritual and cultural values Bird strike

Impacts on environmental taonga of tangata whenua Habitat disturbance


Risk of erosion

Impacts on water usage and water quality Impacts on habitats and biodiversity Degradation of soil structure and fertility

Impacts on environmental taonga of tangata whenua Transmission Habitat loss — pylon sites and access roads

and Visual impacts on rural landscapes Distribution Health concerns re: electromagnetic fields

Effects on taonga of tangata whenua

Safety concerns about high-voltage overhead cables Impacts on scenic and world heritage landscapes

Indirect impacts from resource use in making and transporting construction materials

Health concerns re: electromagnetic fields


The use of renewable sources such as wind power can make a significant contribution to a more sustainable electricity system. For example, using wind power over thermal generation reduces greenhouse gas (“GHG”) emissions and reliance on fossil fuels.


5.1 Overview

There are a number of statutory provisions and government policies that are relevant to the electricity industry in New Zealand. Aside from those already discussed, these include:

5.2 Policies and Provisions

A summary of the relevant legislation and policies is outlined below.

The Resource Management Act 1991 is the key piece of legislation controlling environmental impacts associated with the use of land, air, and water in New Zealand. Any electricity generation development on land or within the coastal marine area must be authorised in some form under the RMA, whether through permissive plan provisions, resource consent, or a designation.

The various s 104 and s 32 matters are all “subject” to Part II of the Act, which means that the single purpose (s 5) and principles (ss 6–8) are paramount. The purpose of s 5 is to promote the sustainable management of natural and physical resources.96 The Act defines “sustainable management” as

  1. Resource Management Act 1991, s 5.

managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing and for their health and safety while—

(a) Sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; and

(b) Safeguarding the life-supporting capacity of air, water, soil, and eco- systems; and

(c) Avoiding, remedying, or mitigating any adverse effects of activities on the environment.

Applying s 5 involves an overall broad judgement of whether a proposal would promote the sustainable management of natural and physical resources. Such a judgement allows for the comparison of conflicting considerations and the scale or degree of them, and their relative significance or proportion in the final outcome.

Sections 6 (matters of national importance), 7 (other matters, including having particular regard to “the efficient use and development of natural and physical resources”), and 8 (Treaty of Waitangi) of the RMA set out the principles to be applied in achieving the purpose of the Act and are intended to assist this broad judgement. The principles contained in ss 6, 7, and 8 are subordinate to the overall purpose of the Act set out in s 5. Each plays a part in the overall consideration of whether the purpose of the Act has been achieved in a particular situation. These matters are not an end in themselves but an accessory to the principal purpose.

In NZ Rail Ltd v Marlborough District Council 97 the High Court held that matters of national importance are subordinate to the Act’s purpose of promot- ing sustainable management, and are not an end in themselves. Regarding, in that case, the specific consideration of the effects of the proposed development on an unmodified coastal area of high natural character, the Court commented:

[The proposed development] is “inappropriate” from the point of view of the preservation of natural character, in order to achieve the promotion of sustainable management as a matter of national importance. It is however, only one of the matters of national importance and indeed other matters have to be taken into account. It is certainly not the case that preservation of the natural character is to be achieved at all costs. The achievement which is to be promoted is sustainable management, and the questions of national importance,

  1. NZ Rail Ltd v Marlborough District Council [1993] NZCA 327; [1994] NZRMA 70.

national value and benefit, and national needs must play their part in the overall consideration and decision.

This hierarchy applies to all of the matters set out in ss 6, 7, and 8 of the Act.

(a) Amendments to the RMA

In March 2004 the Resource Management (Energy and Climate Change) Amendment Act came into force. The Amendment Act makes explicit provision within s 7 of the RMA for all persons exercising functions and powers under the Act to have particular regard to:

ba) the efficiency of the end use of energy:


  1. the effects of climate change:
j) the benefits to be derived from the use and development of renewable energy.

These amendments seek greater alignment between local government plans and national energy objectives, and aim to ensure national benefits of renew- able energy developments must clearly now be considered against local environmental effects.

The extent to which climate change issues in relation to electricity develop- ments (for example, a discharge from a gas-fired power station) could be considered in an RMA process have been addressed recently by the Court of Appeal in Genesis Power Limited v Greenpeace New Zealand Incorporated.98 The Court of Appeal declaration in December 2007 was that the regional council must not have regard to the effects of air discharges from the proposed Rodney power station on climate change:99

In considering the application by Genesis Power for a discharge permit relating to the discharge into the air of greenhouse gases associated with the proposed Rodney power station, the Auckland Regional Council must not have regard to the effects of that discharge on climate change.

A further appeal has been heard in the Supreme Court and a decision is awaited. In the interim, following the direction of the Court of Appeal, no regard should be given to the effects of air discharge or any other factor on climate change in respect to such applications, and as such, many aspects of the 2004 provisions are yet to enter the decision-making frame.

  1. Genesis Power Limited v Greenpeace New Zealand Incorporated CA372/07. 99 Ibid, at para 44.

The Energy Policy Framework (“EPF”) 2000 was released in October 2000, and stated that the government’s key objective was:

To ensure the continuing availability of energy services, at the lowest cost to the economy as a whole consistent with sustainable development.

The expected outcomes from the framework included effective and efficient provision of energy services, incorporating environmental effects into decisions made by producers and users of energy, sustainable systems and structures, and application of research, science, and technology to energy provision.

The purpose of the Climate Change Response Act 2002 is to enable New Zealand to meet its international obligations under the United Nations Frame- work Convention on Climate Change (“FCCC”). This includes the obligation to “retire Kyoto units equal to the number of tonnes of carbon dioxide equivalent of human-induced greenhouse gases emitted from the sources listed in Annex A of the Protocol in New Zealand in the first commitment period”100 and its obligation to report back to parties to the Convention. Annex A sources include the energy sector, industrial processes, the agricultural sector, and the waste sector.

In January 2003 the government released the Sustainable Development Pro- gramme of Action101 discussion document outlining policies and objectives to guide government policy and decision-making to sustainable development. Energy has been identified as one of the four priority areas for sustainable development in New Zealand due to the importance of energy to our economy and its necessity in our lives and commercial interests.

The overarching goal of the energy component is:102

To ensure the delivery of energy services to all classes of consumer in an efficient, fair, reliable and sustainable manner.

  1. Climate Change Response Act 2002 (as amended by the Climate Change Response (Emissions Trading) Amendment Act 2008), s 3.
  2. Ministry for the Environment, Sustainable Development for New Zealand: Programme of Action (MFE, Wellington, 2003).
  3. Ibid, at 16.

In support of this overarching goal, the Programme of Action seeks to achieve the following three outcomes:103

Actions to achieve these outcomes are set out in the Energy Policy Framework, National Energy Efficiency and Conservation Strategy (“NEECS”), and the Government Policy Statement on Electricity Generation.104

The NEECS, as required under the Energy Efficiency and Conservation Act 2000, is the government’s primary means of achieving the outcomes sought in the Sustainable Development Programme of Action — Energy. The purpose of the NEECS is to facilitate the move towards a sustainable energy future for New Zealand by promoting energy efficiency, conservation, and a transition to the use of renewable energy sources.105

The NEECS identifies two key policy directions that support New Zealand’s movement towards a sustainable energy economy:106

Accordingly, the NEECS has two high-level targets:107

  1. Ibid.
  2. Ibid, at 18.
  3. Energy Efficiency and Conservation Authority, supra note 30, at 2. 106 Ibid, at 3.

107 This was originally recorded as 22–55 PJ of consumer energy from renewable sources but was refined to 30 PJ in October 2002 after analysis and consultation.

In March 2006 the government announced its intention to replace the current NEECS. A replacement NEECS has been proposed because:108

The current Strategy is outdated and lacks explicit focus on current priorities — as such it no longer provides an adequate policy or operational platform from which to promote energy efficiency and renewable energy developments in New Zealand. A bolder and more aggressive replacement Strategy is required, focused on current and emerging priorities.

The Energy Efficiency and Conservation Authority is currently working on a draft replacement NEECS.

In October 2007 the government released the New Zealand Energy Strategy to 2050 — Powering Our Future: Towards a Sustainable Low Emissions Energy System109 (“Energy Strategy”). The Energy Strategy sets out the government’s vision for a sustainable energy system and the strategic direction to accomplish this. The strategy aims to address two major issues: climate change and carbon emissions; and the issue of delivering secure, clean energy at affordable prices to support economic development whilst being environmentally responsible.

Section 4.6.1 of the Energy Strategy promotes the maximisation of cost- effective renewable energy and introduces a target for “90 per cent of electricity being generated from renewable sources by 2025”.110

The government has a stated preference in the Energy Strategy that all new electricity generation be renewable, except to the extent necessary to maintain security of supply. In response to this, the Climate Change (Emissions Trading and Renewable Preference) Bill was introduced on 4 December 2007, and enacted as the Electricity (Renewable Preference) Amendment Act 2008 (“ERPAA”) on 10 September 2008. The objective of the ERPAA is to complement the amendments under the Climate Change Response (Emissions Trading) Amendment Act 2008 which introduce a greenhouse gas Emissions Trading Scheme in New Zealand. The ERPAA amends the Electricity Act 1992. It states a purpose (s 62A) to reduce the impact of fossil-fuelled thermal electricity generation on climate change by creating a preference for renewable

  1. Energy Efficiency and Conservation Authority, Framework for a replacement National Energy Efficiency and Conservation Strategy (EECA, Wellington, 2006) 1.
  2. Ministry of Economic Development, supra note 4. 110 Ibid, at 22.

electricity generation by implementing a 10-year “moratorium” on new baseload fossil-fuelled thermal electricity generation capacity, except where an exemption is appropriate (for example, to ensure the security of supply).

The National Policy Statement on Electricity Transmission (“NPS-ET”) came into effect in April 2008 and recognises that the efficient transmission of electricity on the national grid plays a vital role in the wellbeing of New Zealand, its people, and the environment. There is only one objective in the NPS-ET, and this states:111

To recognise the national significance of the electricity transmission network by facilitating the operation, maintenance and upgrade of the existing transmission network and the establishment of new transmission resources to meet the needs of present and future generations, while:

The NPS-ET also contains 14 policies, that:112

The NPS-ET requires local authorities to give effect to its provisions in plans made under the RMA by initiating a plan change or review within four years of its approval.

The Proposed National Policy Statement for Renewable Electricity Generation (“NPS-REG”) was notified in September 2008 and sets out an objective

111 New Zealand Government, National Policy Statement on Electricity Transmission 2008, 3. 112 Ibid, at 3–4.

and policies to enable the sustainable management of renewable electricity generation under the RMA. The objective of the NPS-REG is:113

To recognise the national significance of renewable electricity generation by promoting the development, upgrading, maintenance and operation of new and existing renewable electricity generation activities, such that 90 per cent of New Zealand’s electricity will be generated from renewable sources by 2025 (based on delivered electricity in an average hydrological year).

The NPS-REG sets five policies to give effect to the objective, namely:114

Like the NPS-ET, the NPS-REG requires local authorities to give effect to its provisions in plans made under the RMA by initiating a plan change, proposed plan, or variation by March 2012.


6.1 Future Demand

The demand for electricity in New Zealand has steadily increased over recent years (since 1980 demand growth has increased at a rate of about 2.5 per cent per year).115 During 2002/03, electricity demand grew at a significantly greater rate and this, coupled with a protracted period of dry weather limiting hydro generation, gave rise, in part, to increased pressures on existing generation facilities and serious shortages of electricity. The present reliance on hydro generation (approximately 55 per cent of generation) and variations in inflows

  1. New Zealand Government, Proposed National Policy Statement for Renewable Electricity Generation 2008, 2.
  2. Ibid, at 2–3.
  3. Centre for Advanced Engineering, New Zealand’s Load Growth from 1974 and Expected Demand to 2025 (CAE and Bryan Leyland Consulting Engineer, Auckland, 2004) 7.

to hydro reservoirs means that in those periods of low inflows there can be significant risks to meeting the demand for electricity.

This situation has again been graphically highlighted this summer (2008) as a result of the following factors:

Even allowing for a considerable uptake of electricity efficiency gains, electricity demand is predicted to grow by at least 1.3 per cent nationally for the next 40 years.117 There will also be periods of much higher local growth rates in areas of higher economic activity.

6.2 Electricity Requirements

The Energy Strategy states118 that the projected growth in electricity demand is significantly lower than recent historic levels of growth (around 2 per cent per annum), with improved energy efficiency through the economy lowering the growth in demand. Other forecasts are predicting growth rates between 1.7 per cent and 2.3 per cent per annum.119

In order to meet the predicted growth rate of 1.3 per cent per annum, the Energy Strategy anticipates that approximately 3,900 MW of new capacity will be required between 2005 and 2030 (assuming the status quo situation remains in respect of existing electricity supplies), otherwise New Zealand will require more energy than can be generated (leading to power shortages).120

  1. Transpower NZ, HVDC Grid Upgrade Project Proposal Application for Approval, May 2008.
  2. Concept Consulting Group Limited, Annual Security and Reserve Energy Needs Assessment

(Prepared for the Electricity Commission, 2007).

  1. Ministry of Economic Development, supra note 4, at 72. 119 Centre for Advanced Engineering, supra note 115, at 7. 120 Ministry of Economic Development, supra note 4, at 72.

This projected generation requirement takes into account advances in energy use efficiencies and increased savings as more efficient electricity utilisation is commissioned.

6.3 Meeting Demand

In New Zealand it has become apparent that the traditional hydro and Maui gas electricity supply options cannot provide future electricity security in the face of continued demand growth. Most of the new hydro developments currently under consideration are less than 100 MW; for example, Meridian Energy — North Bank Tunnel Project on the Waitaki River, South Canterbury (200 MW); TrustPower — Wairau Scheme in Marlborough (72 MW); and Meridian Energy

— Mokihinui station on the West Coast of the South Island (65–85 MW). In the near to medium term, planned generation is sufficient to ensure adequate generation capacity.121

At present, 36 possible future electricity generation plants122 of 10 MW or greater have either been consented or are under consideration.123 If all plants were to be commissioned they would provide an additional 4,829 MW of generation capacity. Table 5 provides a summary of proposed future electricity generation by fuel type and shows that most of New Zealand’s proposed generation capacity is to come from wind or thermal energy sources.

Table 5: Possible future energy generation plants (10 MW or greater).124

Fuel Type
Number of proposed plants
Capacity MW

  1. Ibid, at 62.
  2. Ministry of Economic Development, supra note 6, at 107. 123 Not all projects will be consented or constructed.

124 Ministry of Economic Development, supra note 6, at 107.

The Minister for the Environment has recently started to make more use of the “call-in” provisions125 of the RMA for applications for resource consent for renewable electricity generation projects such as the Te Mihi geothermal plant. Contact Energy made an application to the Taupo District Council and Waikato Regional Council for resource consent to establish a new geothermal power station in the Te Mihi area of the Wairakei steamfield. The application was called in by the Minister for the Environment in December 2007, pursuant to ss 141B(1) and 141C and referred to a Board of Inquiry in accord with ss 140 and 150AA of the RMA. In the public notice announcing the Minister’s direction, the Minister stated that one of the reasons for calling in the matter was “... the proposal’s contribution towards the achievement of the target of 90% of electricity generation to be from renewable energy sources by 2025 as set out in the New Zealand Energy Strategy to 2050 ...”. The Board of Inquiry

granted consent, subject to conditions, on 3 September 2008.

The Minister has also called in Transpower’s North Island grid upgrade (construction of a 400 kV transmission line from Whakamaru, near Lake Taupo, to Otahuhu, South Auckland), Unison Networks Ltd’s Te Waka wind farm (34 wind turbines near the Te Waka Range in Hawkes Bay), and Contact Wind Ltd and Contact Energy Ltd’s Hauauru ma raki wind farm (180 wind turbines along 34 km of coastline on the west coast of the North Island).

Nuclear design has substantially improved the safety of nuclear fission; however, concerns remain about the consequence of accidents, earthquakes or terrorist attacks, the disposal of radioactive waste, and the use of nuclear materials in weapons. The Electricity Commission addressed the potential for nuclear power as an option for meeting New Zealand’s electricity needs and concluded that “nuclear power is the wrong choice for New Zealand”126 due to the following reasons:

125 RMA, ss 140 & 150AA.

126 <>.

be required, necessitating an unreasonably large amount of back-up generation on standby.

For the foreseeable future, New Zealand looks set to remain “nuclear free”.

6.4 Towards a Sustainable Future

A core component of sustainable development127 is addressing the efficiency of resource use to both reduce the amount of resource use and corresponding amounts of waste emissions.

Increasing New Zealand’s supply of electricity from renewable resources is seen by the New Zealand government as an essential aspect of New Zealand’s ongoing sustainable development. There has been significant legislative and judicial endorsement in recent years for policies and provisions promoting and facilitating the use of renewable energy sources in electricity generation. It is one of the explicit goals of the NEECS and the NZES, and is clearly established through the Climate Change Response Act 2002, the 2004 amendments to the RMA, the Sustainable Development Programme of Action, and GPS- EG. Further, the newly released NPS-REG highlights that the contribution of renewable electricity generation, regardless of scale, towards addressing the effects of climate change plays a vital role in the wellbeing of New Zealand, its people, and environment.

The government’s objectives in relation to renewable electrical energy are that:

127 Sustainable development is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

The NZES highlights129 that a greater reliance on renewable generation has implications for the way security of supply is managed. In this regard, gas will continue to play an important role in meeting New Zealand’s energy supply requirements as the transition is made to a sustainable energy future where supply is increasingly met by renewable sources. Thermal plants such as Huntly will continue to play a critical role in New Zealand’s electricity system providing necessary security and versatility to both the provision of energy and the stability of delivery (voltage and frequency).

Section 4.6.1 of the NZES recognises that renewable electricity generation can have adverse environmental effects. For example, some people believe wind farms have more impact on the environment than gas-fired thermal plants of equivalent output. It is therefore important to balance the climate change benefits of increasing renewable electricity against the potential impact on the local environment. The government aims to support these issues by giving consent authorities guidance on the various trade-offs involved in generation projects.

Table 6 shows the potential electricity generation available from renewable sources by 2030, based on current technology and resource information.

Table 6: New Zealand’s renewable electricity potential (indicative).

Primary Energy Source
2007 Energy Supplied
Economic potentials


Sources: a Ministry of Economic Development, supra note 6. b Ministry of Economic Development, supra note 4.

When considering the potential contribution of renewable generation to a sustainable energy future, factors to take into account include, among others — the requirement for a robust transmission grid as many renewable sources will be located far from major load centres, and the acceptance that wind generation

  1. New Zealand Government, Government Policy Statement on Electricity Transmission

(Wellington, 2008) 14.

  1. Section 4.3.3.

is less reliable due to its intermittent nature. Further renewable energy sources such as marine energy are not considered in Table 6 but may contribute to electricity supply in New Zealand in the future.

(a) Marine energy technologies

The potential of extracting energy from the oceans has been under consideration since the oil price shocks of the 1970s.130 Significant research and development efforts to devise technologies to extract energy from waves and tides have been under way internationally for some time. The pace of domestic research into marine energy has increased in recent years, with at least 24 domestic marine energy projects (ranging from conceptual ideas to university research projects to deployment projects) proposed in the last four years.131

Of all the marine energy sources, wave and tidal/ocean current energy have been identified as having the most potential for providing electricity to New Zealand in the future.132

(i) Wave energy

Wave energy is separated into two potential extractable sources — open ocean swells and breaking waves.133 Devices which extract energy from waves are known as oscillating water column devices (“OWCs”) or overtopping devices. New Zealand is surrounded by a large ocean with waves (exceeding 100 kilowatts per metre) generated by the Roaring Forties winds in the Southern Ocean and Tasman Sea hitting the western and southern coasts of the country.

Therefore the potential for extraction of energy from waves is substantial.

(ii) Tidal energy

Tidal devices extract energy from either tidal rise and fall or tidal currents. While New Zealand’s tidal range is generally less than two metres, some of the larger harbours on the west coast of the North Island experience significant movements of water as the tides rise and fall, and in a number of locations (generally between islands) where there are significant tidal currents (for example, Cook Strait and Foveaux Strait).

  1. Power Projects Ltd, Development of Marine Energy in New Zealand (Prepared for the EC, EE&CA and GWRC, 2008) 2.
  2. Ibid, at 58.
  3. Ibid, at 1.
  4. Ibid.

(iii) Other marine energy sources

Further future potential sources of energy from the marine environment include:

The technologies to harness these energy sources are still at an early stage of development and are unlikely to be economic in New Zealand.

(iv) Domestic deployment projects

Of the 24 domestic marine energy projects proposed in the last four years, only two have progressed to the resource consent application stage — Crest Energy’s turbine project in the Kaipara Harbour and Neptune Power’s turbine trial in Cook Strait.

Crest Energy submitted a resource consent application to the Northland Regional Council in mid-2007 for deployment of an OpenHydro ring turbine device (an open-centred ring blade system with a separate generator on the circumference of the ring of blades) in the Kaipara Harbour. During the consent hearings in May 2008, the government announced a $1.85 million grant from the Marine Energy Deployment Fund to Crest Energy for the deployment of the first three devices, subject to the granting of consent.134 This project may provide valuable information on the development of New Zealand tidal resources for future renewable generation projects, if monitoring of its effects confirms the appropriateness of long-term operation.

In July 2007 Neptune Power submitted an application to the Greater Wellington Regional Council to establish a single trial turbine near Karori Rip off the south coast of Wellington within Cook Strait. Consent was granted in April 2008 to install a 1 MW single prototype device with an export cable connecting to the onshore Vector distribution network.135

(b) Growth forecast of marine energy

The development of marine energy in New Zealand is dependent upon the ingenuity and capabilities of device developers, and an array of external

  1. Ibid, at 59.
  2. Ibid.

factors such as national uptake of renewables, government assistance, funding mechanisms, industry developments, and investor confidence.136 The international and national growth of wind energy has been reviewed as a template for the potential growth of marine energy.137

Sinclair Knight Merz undertook a study between 2006 and 2008 to forecast the potential total capacity for marine energy in regional coastal areas of New Zealand.138 Three study areas remain outstanding (East Coast, Wairarapa, and Southland) but the 11 reports produced thus far estimate a cumulative total of over 6,000 MW of wave energy potential and low hundreds of MW of tidal energy.139 Carnegie Corporation forecasted 30,000 MW of wave potential based on coarse grid-mapping.140

Advantages of marine energy include:

Most marine device deployments will be close to shore (within 50 m water depth and the “12-mile limit”) and therefore will be covered by the RMA and possibly the new Foreshore and Seabed Act 2004.

Potentially accessible marine energy resources in New Zealand are significant, but the cost and difficulties of accessing and harnessing those resources are high, particularly while marine technologies remain immature and the supply chain is yet to develop.141 However, such technologies could play a significant part in New Zealand’s future renewable electricity generation.

As outlined, due to the fundamental importance of electricity in New Zealand society it is essential to achieve an electricity system that promotes stability

  1. Ibid.
  2. Ibid.
  3. Sinclair Knight Merz, Regional Renewable Energy Assessments 12 Consultants Reports for EECA (SKM, Auckland, 2006–2008).
  4. Ibid.
  5. Power Projects Ltd, supra note 130, at 63.
  6. Ibid, at 62.

and security.142 The term “security of supply” is commonly used to define the problem of monitoring access to adequate generation capacity and fuels (i.e. that electricity demand is something that can only be responded to). However, an increasingly accepted view is that demand can be managed and modified to match available supply capacity.143

Improvement in consumer energy efficiency provides significant benefits to both the environment and security of supply.144 The GPS-EG recognises this and states (para 34):145

The Commission should ensure that it gives full consideration to the contribution of the demand side as well as the supply side in meeting the Government’s electricity objectives.

Electricity efficiency and demand side management help reduce demand for electricity, thereby reducing pressure on prices, scarce resources and the environment.

Demand-side measures are recognised as a critical component for boosting the security of electricity systems in an increasingly energy-constrained future.146 Energy security therefore requires a balance of both supply and demand. Potential for demand management in New Zealand requires identifying physical inefficient demand and selectively increasing its efficiency. This reduces the need for investment in both generation and transmission with minimal impact on users who increase the physical efficiency of their demand. Such measures can have a discernible impact on global energy demand and carbon emissions. Options for managing demand for energy through improving energy efficiency include:147

  1. Parliamentary Commissioner for the Environment, supra note 2, at 46. 143 Ibid.
    1. J P Rutherford, Linking consumer efficiency with security of supply (2007) 35 Energy Policy


  1. Ministry of Economic Development, supra note 31, at 12.
  2. Parliamentary Commissioner for the Environment, supra note 2, at 46. 147 Rutherford, supra note 144, at 3030–31.

reductions at peak times and interest-free loans for installation of solar heaters.

The New Zealand Treasury identified that there is considerable potential for achieving load reduction via energy efficiency measures (representing around


New Zealand’s electricity generation system is under pressure as electricity demand and consumption rises each year. Maintaining security of supply while improving environmental outcomes and economic efficiency forms the basis of modern energy policy. Today, 67 per cent of electricity generation in New Zealand is from renewable sources. Increasingly, legislation and policy are facilitating and encouraging renewable energy generation, and decision-making under the RMA is recognising the benefits of wind, and more recently, marine, energy as a renewable resource. To meet the government’s target of 90 per cent renewable electricity generation by 2025, a number of changes to electricity generation development in New Zealand are required, namely: reducing the long lead time on resource consent approvals for renewable electricity genera- tion proposals; increased utilisation of the call-in provisions of the RMA for renewable energy projects of national significance; the advancement of new renewable energy technologies such as wave and tidal generation; and improved consumer efficiency. These steps will provide significant benefits to both the environment and security of supply.

148 The Treasury, Demand-side Management (The Treasury, Wellington, 2005) 2. 149 Ibid, at 34.

150 Parliamentary Commissioner for the Environment, supra note 28, at 17.

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