Contributed by: Tom Hunt and Georgia Bellett
Published on: February 17, 2021
The New Zealand Infrastructure Commission, Te Waihanga, is the Minister for Infrastructure's key advisor. Te Waihanga last week released a new discussion document that examines the state of play in New Zealand's energy sector – the latest in a series of discussion documents that focus on specific key infrastructure sectors. These discussion documents will inform the development of Te Waihanga's new 30-year infrastructure Strategy Report – the first draft of which is due to be presented to the Minister for Infrastructure in September 2021.
New Zealand's energy sector is extensively regulated due to its use of natural resources and the safety impacts of extracting and transporting energy. The discussion document notes that, compared to other OECD countries, the sector performs well when it comes to balancing price and access against security and sustainability.
The discussion document highlights the role of renewable energy in the transition to a low carbon economy, but also notes that the Government's goal of achieving 100% renewable electricity by 2030 needs to be considered in the context of dry year risk and pursued in a way that preserves private sector incentives to build additional hydro-firming sources of energy. This is particularly relevant given the consultation underway relating to the first package of independent advice to the Government released by He Pou a Rangi, Climate Change Commission. He Pou a Rangi predicts that the demand for electricity will increase as buildings and process heat transition from fossil fuels and it notes that such an increase will necessitate the expansion of transmission and distribution infrastructure. You can find our more detailed update on that advice here.
A combination of public and private capital will play a crucial role, with the source of investment depending on where the investment requirement falls in the value chain. The discussion document also notes that the timing of decarbonisation will be important and it is essential that the sector balances energy equity (prices and affordability), energy security, and environmental sustainability during the transition.
December 2020: Te Waihanga released its first two reports in a series of discussion documents that focus on key areas of infrastructure in New Zealand. The first report, "Infrastructure under one roof", sets out a framework for analysing infrastructure. The second discussion document "State of Play: Telecommunications" describes the current state of the telecommunications sector and the challenges it faces, as well as those it needs to prepare for.
February 2021: The discussion document "Sector State of Play: Energy" was released on 11 February. There is no formal consultation process set in relation to the discussion document, but Te Waihanga has stated that it would welcome feedback.
Early 2021: Te Waihanga intends to release discussion documents focusing on the "state of play" in the water, waste and resource recovery, transport, and social infrastructure sectors over the next few months.
May 2021: Public consultation will begin.
September 2021: Following consultation, the 30-year infrastructure strategy will be presented to the Minister for Infrastructure. The Minister and Te Waihanga will then have opportunities to amend the strategy.
Although there is no formal consultation process on the discussion documents, Te Waihanga has stated that feedback now on the "Sector State of Play: Energy" discussion paper (and the earlier discussion papers released) will contribute significantly to the development of an evidence base for its infrastructure strategy. Please contact one of our experts for more detail on what the strategy might mean for your business and how you can become involved.
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