Published in The Dominion Post.
Tina Schirr is the BusinessNZ Energy Council executive director.
Over the next few years, Kiwis are likely to notice the price of power going up. During a cost-of-living crisis, high inflation and a general sense that everyone wants just a little bit more from you than they did this time a year ago, people are feeling like they’re spread thin financially.
Some things are within our control, like how we choose to use our appliances. Others are out of our control, including where your money goes when you pay your power bill.
So, let’s take a look at the reasons why the price of power might increase, and why it might just pay off (in the long term).
It’s a sign of progress towards a more sustainable and stable energy future
The way we consume energy is changing and the expected increase in electricity costs is part of a bigger picture. New Zealand is growing our capacity to generate renewable electricity as demand continues to increase.
Investing in diverse renewable sources like geothermal, hydro, wind, solar, biofuels, hydrogen, and storage is about more than just going green. It’s about building a system that can withstand the ups and downs of a changing weather environment, as well as the global energy market.
So, how are we doing on the renewables front? About 87% of our electricity is already coming from renewable sources.
But the truth is, change isn’t painless. Significant investment is needed if we’re going to truly transition to an environmentallyfriendly country using clean energy. Some of this investment will come from the likes of distribution grid companies and generators, but like everything else, some cost will inevitably be passed on to the consumer.
As our renewable electricity infrastructure matures, we can expect more stability in electricity prices. This will not only benefit our wallets but also the environment.
By investing in renewables now, we are essentially protecting ourselves from future volatility from global markets, ensuring more predictable energy costs in the long run.
Moreover, the transition to renewable energy sources creates numerous jobs and stimulates economic growth. The sector offers opportunities in construction, engineering, service, maintenance, and technological innovation. These are high-quality jobs that can provide long-term benefits for communities across New Zealand.
We have an issue with reliability
A reliable electricity network is something that we have taken for granted for too long. Recent scares have put in perspective just how precarious our situation can be.
Let’s switch providers for a moment and look at the very present woes of Wellington’s water infrastructure. Delayed maintenance and upgrades have led to a cascade of costs and complications. This is a stark reminder of the high price of inaction, highlighting the need for timely investments to avoid similar issues.
The tale of Wellington’s water reflects the potential fate of our energy system – a system that demands proactive investment to avoid a similar dilemma.
Today and over the coming years, the network has ageing assets that require replacing and upgrading. All the while we’re seeing increased demand from more EVs on the road and more electricity demand during peak hours.
Those tasked with building and maintaining poles, wires and transmission lines face increased costs from inflation to the impact of extreme weather events. We have a choice invest now to keep up, or kick the can down the road (which could be even more expensive).
Investing now has a cost on already strained wallets. However, when it comes to water infrastructure, the use of measures such as water meters has detected leaks, saving water and reducing the need for more built capacity. We can do something similar in electricity. Innovations in flexibility services have the potential to lower demand during peak hours, which ultimately means building fewer poles and wires.
Building what we need, while minimising the need itself, can make sure we avoid another calamity and the likelihood of future fingerpointing in the face of infrastructure woes.
A sign of the times
Inflation is something that finds its way into every aspect of society. The cost of energy is no exception. However, it’s worth noting that over the past five years, the average household electricity bill in New Zealand has risen by 6.5%, which is modest compared to the overall inflation rate of 20%. During the same period, food costs increased by 28%, transport by 20%, and housing by 37%.
Ultimately, we all seek a balance between comfort and caring for the environment. Investing in efficient energy solutions is a step towards maintaining this balance, with minimal impact on our treasured natural surroundings.
Sustainable energy not only meets our current needs but also ensures that future generations inherit a world where they can thrive without the spectre of energy shortages or environmental degradation.
At the end of the day, this is about more than just energy; it’s about New Zealand’s commitment to resilience and forwardthinking. It’s a collective narrative that we are all part of.
Every dollar we invest in renewable energy today is a step towards a more secure, prosperous, and sustainable future for our nation.
While rising energy bills are another burden for us to stomach, they are also a sign that New Zealand is making the necessary investments in its energy future.
By embracing renewable energy and modernising our infrastructure, we are building a resilient energy system that will serve us well in the decades to come and avoid higher potential costs that would arise from shocks down the line.