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Navigating The Net Zero Emissions Challenges and Opportunities

New Zealand's ambitious goal of achieving net zero emissions by 2050 presents both challenges and opportunities for Electricity Distribution Businesses (EDBs) and the national grid. As the country transitions to a low-carbon economy, some of the specific challenges for the National Grid are as follows:


  • The transition to net zero will require a significant increase in renewable energy generation. The International Energy Agency (IEA) estimates that global renewable energy capacity will need to triple by 2030 to meet net zero targets in 2050. This will necessitate upgrades to the national grid to accommodate the influx of intermittent energy sources. 
  • The cost of upgrading the grid is significant. The Boston Consulting Group estimates that $22 billion will need to be spent on distribution infrastructure by 2030 to assist the transition 
  • New Zealand's electricity consumption is expected to grow by 70% by 2050, according to Transpower’s Te Mauru Hiko report. However, other sources expect much larger growth. This growth will be driven by several factors, including population growth, economic growth, and the electrification of process heat and transportation. 

 

EDBs play a crucial role in ensuring a reliable, affordable, and sustainable electricity supply for consumers and businesses. An EDB is a company which owns the network that transports electricity – essentially a lines company. There are 29 lines companies in New Zealand – some are privately owned, some owned by local councils, and others owned by consumer trusts. EDBs are heavily regulated in New Zealand so that supply and pricing for electricity is equitable. But like any business managing supply and demand is critical to survival, and forecasting plays a crucial role.

 

Think about a dairy company that produces specialty cheese and cream. At Christmas time they can experience significant increases in weekly sales of cream, and camembert all within a 10-day period as people prepare to celebrate the holiday season with their cheeseboards and favourite desserts. Now a dairy company will have sales data from the previous 10-15 years to forecast production in advance and have the shelves stocked and ready for consumers.

 

Translate this concept into the electricity market. The next few years can expect to see consumers (retail & commercial) switch their behaviour to electrification options for heating, transport, business and general household energy consumption. Renewables like solar and wind options will come on stream – but these options often require electrification boosts. 


solar panels and wind turbines in a field at sunset

A 70% increase in electricity consumption by 2050 is a significant market change - how does an EDB Forecaster know what to estimate for in this rapidly changing environment where technology changes are ramping up progress. Specifically some of the impacts on EDBS are;

 

  • EDBs will need to adapt their infrastructure and operations to support the growth of distributed energy resources (DERs), such as rooftop solar panels and battery storage systems. Currently, 58 MW of distributed solar is installed in New Zealand; this is expected to grow to 535 MW by 2030 – effectively nine times the current level. 
  • EDBs will need to manage the increasing complexity of the grid. The integration of DERs and renewable energy sources will create new challenges for EDBs, who will need to ensure the stability and reliability of the electricity system. 
  • Supply shortage may cause long lead time for critical components such as transformers. New Zealand is going to have to compete with other centres around the world that will also be upgrading their distribution networks. Transformer supply shortages could limit the ability of EDBs to upgrade their networks when required. 

 

And what about managing the demand growth due to the increased intensity of electrification expected over the next few years?

 

Process Heat and Transport are two areas where there are significant opportunities to reduce greenhouse gas emissions by switching to electrification alternatives.

 

Process heat electrification refers to the conversion of industrial processes that currently use fossil fuels to generate heat, such as steam or hot water, to use electricity instead. This is a key opportunity to reduce greenhouse gas emissions, as electricity can be generated from renewable sources. However, process heat electrification will also lead to an increase in electricity demand. 


an electric car is being charged at a charging station

From the boiler database work that DETA have undertaken, - we’re expecting the load growth in some EDB’s to be up to 40% more than the current demand across the entire network – due only to process heat. Much of this load will come online before 2030, especially in the South Island which is coal intensive, that’s without looking at transportation – which adds further complexity to the equation. It is estimated that as much as 50% of the current installed process heat boiler stock will need to be replaced or retrofitted within the next 15 years to meet future emissions targets.

 

When it comes to transport, in the modelling that DETA have undertaken for specific EDB’s, the additional transportation load is estimated to increase demand by up to 150% for some feeders and GXPs (Grid Exit Points). The transport sector is New Zealand’s second-largest source of greenhouse gas emissions. Strengthening the charging infrastructure is paramount to making the shift to electric vehicles a business case for light and heavy vehicles. There is still work to be done on clarifying the responsibility and accountability for this, but in the meantime the EDBs will have to prepare for the load. New Zealand currently imports more than $8Bn in fossil fuels, making it not only an economic imperative to switch to locally generated renewable energy but also a key focus for energy consultants working to reduce greenhouse gas emissions.

 

It remains to be seen how this will all play out, but the general opinion is there will be significant economic, regulatory, and public pressure for industry to accelerate energy transition as soon as possible. As they say – “failing to plan is planning to fail”. And that’s where DETA can help. We’re working with EDB’s to develop their forward load estimates, and then take this into the Asset Management Planning process. We’ve got deep expertise across our team – from leadership and strategy for EDB’s, down to network planning.

 

We’re looking forward to sharing our stories of success with you as the projects unfold – getting our EDB’s prepared and ready to respond to the electrification challenge. 

Proactive Solutions for New Zealand’s Gas Challenges

by Anne-Maree Ward • 13 December 2024
Energy Efficiency and Conservation: Navigating New Zealand's Gas Challenges New Zealand’s energy market is undergoing a dramatic transformation. Rising gas prices, a steady decline in local gas production, and the country’s ambitious decarbonisation targets are creating significant pressure for businesses to adapt. The era of cheap, reliable gas is fading, and for industries that rely on it, the time to act is now. Businesses need to move beyond merely coping with the changes and start embracing practical, forward-thinking solutions that drive efficiency, reduce costs, and align with New Zealand’s sustainability objectives. While the pressure to reduce fossil fuel dependency grows, there’s an opportunity for businesses to innovate. By adopting energy-efficient technologies and lower carbon alternatives, companies can gain a competitive edge while managing the immediate impacts of the gas crisis and preparing for a future with more sustainable energy sources. The evolving gas landscape: what’s driving the change? New Zealand’s gas sector is in a state of flux, with local production dwindling and no imported natural gas available. On top of this, the government’s commitment to achieving net-zero emissions by 2050 is placing additional pressure on businesses to reduce their carbon footprint. For many businesses, continuing to rely on gas is no longer a sustainable long-term strategy. Now is the time to take a step back and consider alternative energy solutions that provide greater stability and long-term value. The path forward involves shifting away from traditional fossil fuels, investing in energy-efficient technologies, and exploring lower carbon energy alternatives. Energy efficiency: the key to resilience While facing such uncertainty in the energy market, energy efficiency is more than just a cost-saving measure—it’s key to building resilience. By reducing energy consumption, businesses can mitigate the financial impact of rising gas prices, all while contributing to New Zealand’s decarbonisation goals. Achieving energy efficiency means not only cutting down on costs but it also positions businesses as leaders in sustainability, supports the uptake of a continuous improvement mindset across the business, and reduces environmental impact. But considering energy efficiency alone isn’t enough. The real challenge lies in the broader energy supply-demand balance across New Zealand. As businesses look to transition away from gas, the energy must still come from somewhere and the market has to react. This is a massive challenge for NZ Inc but many businesses are looking at ways to be innovative and creative with their energy usage and procurement utilising tools like storage, flexible operation and long term contracts to not only create maximise value for their organisations but also to support New Zealand's energy transition.

Measuring up: the importance of energy audits in business

12 December 2024
Historically, auditing has been seen as an undesirable expense with little perceived value for businesses. With organisations failing to see the benefit of examining the finer details of their operations, and with staff assigned to prepare for the audit feeling like they've drawn the short straw, audits have never been fun. Until now. This is when energy audits enter the room to great fanfare. The shift towards sustainability , driven by environmental, social, and governance (ESG) factors, is reshaping how businesses approach energy consumption, waste management, and carbon footprint, and crucially, their relationship with audits. Energy audits are the one type of audit that delivers positivity; they are one of the most effective tools to help businesses reduce their environmental impact while boosting their bottom line through optimised processes and reducing costs. For organisations across Aotearoa New Zealand, Australia, and the Pacific , understanding the significance of energy audits and how they lead to long-term cost savings, improved efficiency, and enhanced sustainability is fundamental to business success. Unpacking energy audits: the key to unlocking sustainability An energy audit is a comprehensive evaluation of a business's energy use and efficiency. Its primary goal is to uncover areas where energy is being wasted and identify opportunities for energy savings. This process is essential for any business aiming to improve its sustainability, reduce operating costs, and meet carbon reduction targets. Whether you are operating a small enterprise or managing a large industrial site, an energy audit provides actionable insights to reduce the environmental impact of the business and improve energy management. There are different types of energy audits, from Lite Audits offering a quick, low-risk assessment, to Detailed Energy Audits, which provide a more thorough and long-term analysis of energy use across the facilities. Both types of audits help you understand current energy consumption patterns and reveal the potential areas for energy efficiency improvements. From insight to action: why energy audits are a business game-changer Energy audits are not just about identifying problems; they are about identifying opportunities for improvement. By performing regular energy audits, businesses can benefit in the following ways: Cost savings One of the most immediate, attractive and tangible benefits of an energy audit is the potential for significant cost savings through the identification of inefficiencies that are costing the business or organisation money. For example, a company may be using outdated lighting or HVAC systems that consume excessive energy. Through equipment upgrades and optimisations , these inefficiencies can be corrected, leading to significant savings on utility bills. Energy audits are also adept at identifying unexpected bottlenecks in industrial processes and are often the first to highlight the potential for process optimisation, improving a business’s overall efficiency and profitability. 
Two construction workers are looking at a blueprint on a construction site.

From concept to completion: achieving industrial projects with sustainable agendas

12 December 2024
In today’s world, the intersection of industrial progress and sustainability has become a critical focus. As businesses and industries expand their reach, the importance of embedding sustainable practices into project management is no longer optional - it’s essential. By integrating sustainability principles from the early stages of a project through to completion, organisations can achieve not only economic gains but also valuable long-term environmental and societal benefits. The role of sustainability in industrial project management Sustainability in project management involves adopting practices that address environmental, social, and governance (ESG) considerations throughout the project lifecycle. This shift reflects a growing recognition that industrial success isn’t just about profitability; it’s about creating enduring value for communities and the ecosystems on which we rely. Industries across New Zealand and Australia are increasingly collaborating with sustainability consultants and ESG consultants to align their projects with global sustainability standards. These professionals guide organisations in setting and achieving ambitious goals, whether it’s reducing carbon footprints, improving resource efficiency, or enhancing social responsibility. For instance, energy consultants in NZ play a pivotal role in industrial projects by conducting energy audits and offering insights into energy-efficient designs, ultimately lowering operational costs and environmental impact. Key strategies for embedding sustainability in industrial projects Implementing sustainability isn’t just about compliance - it’s about innovation. Here’s how industrial project teams incorporate sustainability into their processes: 1. Defining clear sustainability goals Every successful project begins with a clear roadmap. Sustainability goals should align with both organisational values and broader environmental targets, such as the UN’s Sustainable Development Goals (SDGs). Collaborating with energy efficiency consultants and process engineering consultants helps businesses define measurable objectives, such as achieving specific reductions in energy consumption or waste. For example, organisations in the manufacturing sector can work with energy management services in NZ or Australia to develop energy audit services to pinpoint inefficiencies and identify greener alternatives. 
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