New Zealand will spend roughly $1.3 trillion meeting its energy needs between now and 2050 no matter which direction the economy takes, according to modelling released on Friday by the Energy Efficiency and Conservation Authority and the BusinessNZ Energy Council.
The number comes from TIMES-NZ 3.0, the third version of a model that covers the entire energy system, from fuel supply and electricity generation through to the power used in homes, factories, farms and vehicles. EECA said the total cost of meeting energy demand from 2023 to 2050 is roughly $1.3 trillion, or approximately $45 billion annually, which it noted was about 11 percent of a gross domestic product that stood at $393 billion in 2023.
Energy is one of the largest standing bills the country has, and most of it gets paid whether or not anyone plans for it. BusinessNZ Energy Council policy advisor Ben Young made that point in a statement released with the model.
“Whether we plan for it or not, new modelling indicates we will spend around $1.3 trillion meeting future energy demand as we power our homes, transport and the economy. The question is whether we can make informed decisions now to deliver a more secure, affordable and sustainable energy system for decades to come,” Young said.
The most immediately useful finding for households and businesses is about flexibility rather than generation. The modelling suggests that spreading out when electricity gets used, backed by batteries, could cut between $5.4 billion and $20.8 billion off what users pay over the next 25 years. The everyday version of that is a hot water cylinder that can drop its draw for short periods, or a smart appliance that shifts its work away from the early evening peak when power is most expensive to supply.
EECA chief executive Marcos Pelenur said batteries and other technologies that enable flexible electricity use, including smart home appliances that can shift demand away from peak periods, “become even more important as New Zealand moves to higher rates of renewable electricity generation”, interest.co.nz reported. Wind and solar produce when the weather allows rather than when demand peaks, so anything that moves demand to match supply reduces the amount of expensive back-up capacity the country has to build and keep idle.
Rather than produce a single forecast, the model runs two scenarios. The one called Steady describes a country that keeps looking much like it does now, with farming exports finding growing markets, manufacturing holding its place, clean technology prices falling slowly, car travel growing about 30 percent by 2050 and imported liquefied natural gas filling the gap as domestic gas reserves decline. Carbon prices settle at $52 a tonne by 2035.
The one called Shift describes a more electrified economy that leans less on meat and dairy exports, where solar, wind, battery and electric vehicle costs fall faster, data centres and advanced manufacturing grow quickly, no LNG is imported and carbon prices climb to $260 a tonne by 2050.
Total energy demand falls in both, which is a striking result given the population and the economy keep growing in each. Demand drops 10 percent by 2050 in Steady and 22 percent in Shift, and the deeper fall comes in the more electrified scenario, which is the pattern you would expect given electric motors and heat pumps turn far more of the energy they draw into useful work than the engines and boilers they replace. Shift comes out around $42.7 billion cheaper across the whole period, about $1.6 billion a year, which EECA attributes to cheaper clean technology, more technology options and better energy efficiency.
Those two futures were built around four things the model’s users said they most wanted tested. Whether the economy stays anchored in the primary sector or tilts towards technology and advanced manufacturing, how quickly clean technology gets cheaper, how willing households and governments are to make investments that pay back slowly, and what happens to gas, where domestic reserves fall sharply in both scenarios and the difference is whether imported LNG is available.
BusinessNZ director of advocacy Catherine Beard said the value of the exercise was in seeing how the pieces connect. “TIMES-NZ 3.0 does not try to predict or prescribe a single pathway. It helps us understand how economic, technological and policy choices interact across the entire energy system,” she said.
Independent energy researchers gave the work a cautious welcome while pointing out what modelling of this kind can and cannot do. Massey University emeritus professor Ralph Sims, a former EECA board member, told the Science Media Centre the scenarios were “not forecasts or predictions but give a ‘what if?’ view of the future”, and that their outputs depend on assumptions about technology uptake and behaviour change that are particularly hard to assess.
He offered a useful test of humility. “The two EECA Scenarios look forward 25 years to 2050. If an energy scenario had been done 25 years ago in 2001, it would not have accurately predicted the major changes in energy technologies and systems achieved since then,” Sims said. He added that the work still gave a reasonable indication of where energy investment should be directed in the near term.
Victoria University professor Alan Brent, who chairs sustainable energy systems there, told the same service that New Zealand was “at a critical juncture, with decisions made today shaping the trajectory of the energy transition and influencing the future energy system for generations to come”.
The model landed in the middle of an argument about power bills that is unlikely to quieten before November’s election. Consumer NZ, which is running a petition on electricity prices, said in a report covered on 31 July that household electricity costs have risen around 177 percent since the 1999 industry reforms, nearly twice the rate of inflation, and that a quarter of households had trouble paying a power bill in the past year. The Electricity Retailers’ and Generators’ Association pointed in response to a construction boom, saying Transpower has 17 new projects connecting to the grid, adding more than 3000 megawatts of wind, solar, geothermal and grid-scale battery capacity, and that its members have $10 billion of planned generation investment over the next decade.
What TIMES-NZ 3.0 adds to that argument is not an answer about who is right on market structure. It is a reminder that the largest single lever on the bill may be one that gets far less attention than new generation does, which is simply using the electricity the country already has at better times of day. The model, its assumptions, the underlying data and the accompanying insights report are all published and free to download, including the source code.
Have you shifted your hot water heating, charged a car overnight or put in a battery to trim your power bill, and did it actually work? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job π
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