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Delivering renewables in Aotearoa New Zealand: reflections from Building Nations 2023

Home Insights Delivering renewables in Aotearoa New Zealand: reflections from Building Nations 2023

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Contributed by: Mei Fern Johnson and Kendra Wilson

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Published on: July 05, 2023


It is widely accepted that renewable energy needs to be a bigger part of Aotearoa New Zealand's energy mix, but what are the commercial drivers to delivering greater generation from renewable sources and what are the current road blocks?

This is the topic discussed at Building Nations 2023, by a panel comprising Brendon Mahood (Director, Specialised Finance and Institutional at ANZ), Judy Nicholl (Chief Executive at Counties Energy), Nathan Turner (Country Manager New Zealand at BlueFloat Energy) and Gary Holden (Managing Director at Lodestone Energy).

Our key takeaways from that discussion are:

Regulatory certainty

To attract overseas investment, we need certainty in New Zealand's regulatory framework and policies, to enable investors to assess the risk profile of investing in New Zealand. Investment in renewables can be a multi-million dollar investment and currently the landscape in New Zealand is uncertain, including as a result of the Resource Management Act reform, the future of Tiwai, and awaiting the offshore renewable energy framework. This is stymieing investment.  

The Ministry of Business, Innovation and Employment (MBIE) is progressing the development of a regulatory framework for offshore renewable energy, which it anticipates having in place by 2024. The objectives of the framework include addressing the certainty issues noted above and ensuring New Zealand remains competitive and can secure access to offshore renewable energy technology in a timely way. MBIE and the Ministry for the Environment also issued consultation documents seeking feedback (which has now closed) on the proposed new policy statements for Renewable Electricity Generation and for Electricity Transmission, read more here

Local experience and PPAs

To manage construction risks, financiers need developers and consultants with deep sector experience locally to assist with managing delays and cost escalations, along with knowledge of developing technology. One option to assist with securing investment and financing is locking in power purchase agreements (PPA). PPAs are still in the early stages in the New Zealand market, but given financiers'/investors' requirements (including to attract long-term, low cost of capital, investment based on a revenue stream that has a degree of certainty) and reverse enquiries from large electricity users, it is likely that there will be more and more PPAs entered into going forward (these will likely be structured as "virtual" PPAs or a contract for difference, which in substance convert the project's merchant power pricing into a fixed price for the term and agreed volume of the contract).

Economic growth

The benefits of investing in renewable energy extend beyond decarbonisation, and includes broader economic development, including in the regions. The significant supply chain involved in delivering renewable energy projects poses an opportunity for New Zealand businesses and the local workforce, including engineering, procurement and construction, all the way through to the operation and maintenance, and eventual decommissioning, of the facilities.

Stakeholder engagement

Renewable energy project developers know the importance of engagement with stakeholders with credible interests in the project. Those stakeholders may be unfamiliar with the contractual arrangements involved. They may also have different incentives in relation to the project, resulting in different focus on different aspects of the project. This means that significant effort is required to ensure there is appropriate and meaningful engagement with stakeholders, including during the period where the developer is also engaging with the regulatory consenting process. This is time-and-effort intensive for the developer and can present as a deterrence for new investment. However, as the players in the market grow their local experience, there should be a much smoother path for newcomers to the sector, as local practice in this space is established and efficiencies are created.

Cost efficiencies

Even with a shifting focus towards "green energy", surveys indicate that the number one driver for electricity users is still cost, with only around 20% being fully committed to being "green" and making lifestyle choices associated with this. The question for retailers then becomes how they can offer "green energy" at a cost that is not prohibitive to customers. Cost efficiency is therefore key, although this may become a moot point given the Government's policy to achieve 100% renewable electricity generation by 2030.


The discussion was interesting as it reflected the different facets of renewable energy development, and illustrated some of the challenges faced by new developers becoming familiar with the New Zealand context. These challenges are no different from the challenges of developing projects in other jurisdictions and we expect developers that are well-connected in the sector locally, and are well-advised, to increasingly be able to quickly and smartly navigate these circumstances.

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