Energy sector upgrades unaffordable, unachievable, trade association says

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A group of experts recently estimated it would cost around $150 billion over the next 26 years to cover the anticipated increase in regulated energy network and lines charges and the renewable energy generation required to meet New Zealand’s 2050 zero emission target.
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Major energy users say New Zealand needs to challenge current thinking on how best to meet carbon emission targets, which are not achievable given the current cost estimates and capabilities of the workforce.

Major Energy Users’ Group chair John Harbord said a group of experts recently estimated it would cost an average of $5.7 billion a year, or $150b over the next 26 years to cover the anticipated increase in regulated energy network and lines charges, as well as the renewable energy generation required to meet the 2050 zero emission target.

He said that was in addition to another $150b consumers and businesses would need to upgrade their homes and premises with such energy-saving improvements as double glazed windows, solar panels and battery storage.

“That’s just eye-watering numbers for households and businesses, especially small businesses,” Harbord said.

“We need to get all of our really smart people together to try and think about how we go about doing it.”

Consumers and businesses are also facing costs of $150b to upgrade their homes and premises with such energy-saving improvements as double glazed windows, solar panels and battery storage, Harbord says.
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He said the Commerce Commission should do more to ensure regulated network and lines improvements were absolutely necessary before approving unaffordable upgrades.

In addition, Harbord said New Zealand did not have the workforce to carry out that level of infrastructure development, considering the size of the existing infrastructure deficit.

“It’s not a question of the level of ambition. It’s just the practical realities of the sheer number of skilled people required to build $5.7 billion worth of infrastructure – just in the electricity sector – just doesn’t exist in New Zealand,” he said, adding there was stiff international competition for the skilled workers required.

“So it’s very hard to see where that workforce comes from at the moment.

“There’s a great many economies around the world that are also trying to electrify … and many of those countries can pay higher than New Zealand can.”

He said there were a number of big challenges and some alternatives to 100 percent renewable energy, such as using natural gas to back up the renewable energy network in dry years.