New Zealand Heads for 100% Renewables!

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Last Updated on: 20th March 2025, 01:45 am

In an exciting new announcement, the New Zealand Electricity Authority predicts that their electricity grid will be 100% renewable by 2040. New Zealand has four major energy suppliers — Meridian, Contact, Genesis, and Mercury. According to the NZ Electricity Authority, “New Zealand is transitioning to a highly renewable electricity system. This change will require increased and accelerated investment in new electricity generation to match demand growth and the retirement of thermal power plants.”

As Meridian is the largest electricity generator (and a significant supplier) with a focus on renewables, I contacted them for comment. They very graciously provided the photos in this article and much of the content.

From their half yearly report, we learn of the challenges faced by a country that relies on hydropower for 60% of their electricity. New Zealand (NZ) experienced a drought from May to August 2024, then excessive rain from September to November. With drought returning in December, the outlook for 2025 looks dry. National storage levels are within normal levels, giving Meridian 15 weeks of generation.

As well as drought conditions, NZ is facing a “combination of system rules and consent restrictions [that] means the market can’t count on that additional hydro generation, even in extreme circumstances.” There are more hydro resources physically available, but government regulations have not caught up with the changes in rainfall. Loosening the restrictions is the lower-cost option. Meridian is calling on Transpower to increase the South Island storage buffer.

Transpower is both the national grid owner and the system operator. “There are two parts of our business: National Grid owner (looking after the assets that keep the electricity flowing) and System Operator (managing how electricity gets from the point of generation to homes and businesses in real-time and in the future).” You can watch the video here.

More than NZ$10 billion has been invested in renewables in NZ in the past 15 years, lifting the renewable penetration from 65% of the market to 88% in normal conditions. This investment has been driven purely by economics, in the absence of demand growth and government incentives, unlike in many other advanced economies. “Actual demand growth as the economy transitions to electric will invariably incentivise and pull through even more investment,” Neal Barclay, Meridian’s Chief Executive, adds. “Despite the challenges last year, the system burned less thermal fuel than we have in any previous and mostly less severe droughts.”

Some of that demand growth will come from the takeup of electric cars. In February, sales were coming back up to give a penetration rate of about 15%. The New Zealand EV market is slowly recovering from the government changes which led to a market crash mid last year. There were expectations that NZ might become the Norway of the Pacific.

Meridian is part of the fossil fuel powered vehicle to EV transition process. “At Meridian we’re passionate about the planet and want to make sure it’s around for generations to come. That’s one reason we reckon the future is electric. It’s no secret we’re excited about electric vehicles. Our passenger fleet is 100% fully electric and we are well on the way to converting our other vehicles. We currently provide charging solutions for homes and businesses, too. Our next step is bigger and better — creating a network of chargers across Aotearoa New Zealand. This network is called Zero, giving a nod to the types of cars they’re designed for — cars with zero tailpipe emissions.”

By 2021, Meridian Energy achieved a 100% fully-electric light passenger vehicle business fleet. “Faster decarbonisation of transport is a key focus for Meridian, for our own fleet and for Aotearoa (NZ). We wanted to prove that electrifying a diverse fleet is possible,” Meridian Chief Financial Officer Mike Roan says.

“We also knew we couldn’t take any shortcuts on our journey, it needed to be achieved with no additional fleet investment so our model is scalable for any New Zealand organisation.”

Procurement and Property Manager Nick Robilliard says, “When I presented at Drive Electric events and to local councils around New Zealand, my first warning is always that kiwis have a bit of a ‘thing’ for cars.”

“You can’t replace a ute, even if it never goes off road, with a hatchback. But your team’s ears will prick up if you turn up with an electric crossover, it’s as much about the culture fit as it is the technical specs.” Fleet conversion was expedited by using GPS data to measure and record trips, setting up charging infrastructure at Meridian’s thirteen sites, and sourcing and testing a mix of the right vehicles.

The final and most difficult challenge was the last 20% — remote workers. “The Meridian Agriculture sales team travel up to 250km in a single day on rural roads, without getting back to the office for an overnight charge. For the transition to electric vehicles to be successfully implemented in this environment, Meridian created a New Zealand first, a turn-key solution for home-based charging for staff,” Robilliard says. “It does require a mindset shift to look at fleet management as more than a short-term plan, but converting your business passenger fleet to zero emissions is possible, right now, and in less than three years.”

They are currently tackling one of the country’s most complex charging spots: Springs Junction (South Island West Coast region).

Data presented at Meridian’s half-year results presentation indicated that electricity prices in NZ compare well with other like countries, it enjoys good energy security and is a leader in sustainability. New Zealand is performing well in the global transition to a low-carbon future. New Zealand added 5.5 TWh in new electricity generation projects from 2022 to 2023. Meridian alone plans to add another two TWh in the near future.

From Concept Consulting’s Generation Investment Survey, we learn that a pipeline of potential developments indicates that an annual output capability on completion will rise from 2,600 GWh to nearly 5,000 GWh. “This is slightly more than the amount of generation required to displace the uneconomic thermal generation on the system.” Wind and solar projects are expected to provide an annual generation capability 20,800 GWh, from the current 12,700 GWh within the next three years. Solar projects include utility-scale projects, but also growth in mid-scale and small-scale. There appears to be a small interest in batteries.

Demand-led growth can be hard to predict, investors will need to be nimble and governments must be willing to streamline processes and review policies that may hinder approval and future grid connection. The driver of renewable investment is shifting from thermal displacement to demand. Costs for developers are increasing due to tight markets for equipment and labour. The soft $NZ is not helping.

There exists a need for more public information to reduce friction with local communities. In short, the New Zealand energy sector faces similar issues to most other countries. As I look across the ditch, I am envious that NZ has been able to take such great advantage of one of its natural energy resources — hydro — while Australia, bathed in sunshine, is still fighting about whether to push for more renewables or move into nuclear generation! Either way, the future is bright and electric.