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Members of Generation Zero outside parliament (Photo: Supplied)
Members of Generation Zero outside parliament (Photo: Supplied)

BusinessJune 11, 2018

We’re an electricity retailer, and we’re backing the Carbon Zero Act

Members of Generation Zero outside parliament (Photo: Supplied)
Members of Generation Zero outside parliament (Photo: Supplied)

Within the next decade New Zealand will achieve at least 90% renewable energy. So we have nothing to fear from the Zero Carbon Act other than opportunity, argues Meridian Energy CEO Neal Barclay.

While New Zealand remains small in global terms we can’t underestimate how powerful it is to work as individuals, organisations and as a society to be part of the solution and act on climate change.

As a nation we’ve never been shy about taking a leadership position on key issues of the time, from leading the charge on votes for women and going nuclear free, so moving our nation to zero carbon seems eminently possible.

That’s why Meridian Energy is one of many businesses supporting a Zero Carbon Act. Showing our support means we believe we can and must act on the opportunity to create a prosperous future for our customers, communities, our country, and the planet.

The act, which includes establishing a Climate Commission (and the subsequent targets that will be put in place), needs to chart what we all must achieve to be carbon neutral by 2050. This framework, if managed well, will support research and development and allow for competition of ideas and innovative solutions that are cost-effective, and will deliver a sustainable future for everyone.  

It’s an exciting time to be a leader in the electricity industry and there’s much that we can do. At Meridian, a key part of our role is to grow the proportion of renewable energy in our electricity system, and encourage the use of that clean energy to decarbonise the wider economy. Our sector can show how renewable energy can help all our customers play their part in a clean energy future, and radically transform other sectors, particularly transport and industrial heat processes.

The combination of the foresight of those who have gone before us, the huge renewable resources available to us, and the skill and commitment of the women and men working in the industry today, means the New Zealand electricity market is recognised as a world-leading success story. It delivers a secure and reliable supply of electricity from generation that is powered by around 85% renewable (mainly hydro, wind and geothermal).

We also have many of the key ingredients to work towards a zero-carbon future: a mature wholesale market that enables new renewable technologies without government subsidies, a regulatory framework that aims to encourage competition, a huge number of retail brands (40) for consumers to choose from, and good investment signals that tell us when the time is right to introduce new generation.

Over the last decade the make-up of New Zealand’s electricity generation has been built on a base of hydro-electricity (MBIE says 56% on average over a decade). As new technology costs have decreased, particularly wind technology, more renewable generation has been built and ageing fossil fuel-powered (thermal) plant retired. We’ve gone from 65% renewables to 85% renewables in just a decade, without missing a beat.

In fact, we project the current market will increase renewable energy into the mid-90%s within the next decade. This is possible because hydro, our ‘super’ renewable foundation, ramps up and down swiftly and seamlessly to enable our system to accommodate large amounts of ‘intermittent’ renewables that, for example, only generate when the wind blows or the sun shines. This flexible hydro base has been, and will continue to be, essential to the future pathway we forge as we integrate more renewable energy and new technology into our system.

It’s not a perfect story, of course – a hydro dam in a river system does impact the river ecosystem – and that impact needs to be mitigated. So there are few, if any, large hydro scheme opportunities left in New Zealand. Our market still requires some back up from thermal sources to make up for the shortfall in years when the lakes are low from lack of rain, so for the foreseeable future, some thermal will be needed to cover those dry years. Looking at this in terms of the broad opportunity for a cleaner energy future though, this is a very minor impact that can be managed.

Working together on the transition

I believe it’s important to build on all the advantages we currently have, and to move on the opportunities that have the broadest impact on our carbon neutral goal, to reduce our impact on the climate. Being aware of the impact of our actions across sectors, and how it affects New Zealanders, is essential to our collective success.

Companies like Meridian are actively looking for innovative solutions. We do expect to build more wind and solar capacity and believe the technological advances in the coming decades will help keep electricity affordable for New Zealanders.

We agree with the Productivity Commission that we need to be wary of changes in the electricity sector that have the unintended impact of driving price increases, slowing down the electrification of transport and the transformation of thermal-powered industrial plant in this country.

The issue of affordability is deeply personal to many households and important to our economy. We know electricity generators, distributors and retailers have a part to play in enabling Kiwis to keep their homes warm without breaking the bank. Pricing reform in the transmission and distribution sectors is needed to ensure that the costs of maintaining our lines networks are not unfairly loaded onto those least able to afford it.

Creating a healthy housing stock will be imperative to our long-term prosperity. The knock-on positive benefits of better quality housing are key to a healthier future that will reduce the costs in other sectors, particularly health, also means more efficient use of electricity for all.

In the future we will see New Zealanders being provided with the right incentives to better insulate their homes (and rental properties) and heat them more efficiently, as well as access to new technology that will further improve all our lifestyles.

We will see technology costs come down, such that solar solutions and batteries better support customers to supplement their energy use, and large commercials will lead the way integrating new technology.

Transportation and the way we think about getting around will undergo a revolution. Electric vehicles will rapidly become more accessible, in terms of price and range and charging infrastructure providing us with a cleaner and healthier transport sector.

Agriculture will continue to innovate to thrive and we expect to see high-value opportunities emerging in the form of low carbon footprint products, advanced farming practices and a focus on regenerating the land, improving water quality and an increase in forestry programmes. As a retailer to a large farming customer base, we see a real willingness from the farming sector to evolve and innovate to meet the future climate challenges.

Incentives to live with a smaller footprint overall will be many and varied and will flow through to the individual consumer.  And with the support of a framework proposed by a Zero Carbon Act, we believe we can make this transition to a zero-carbon future that sees equity for all, with no one left behind.  

To me it is critical the act, and the regulatory frameworks that support its objectives, need to provide clear targets so that businesses and individuals can invest with confidence. They also need to allow competition and innovation to flourish, which will ultimately find the most efficient solutions for New Zealand.

Looking at these broad opportunities, companies like Meridian have huge scope to make a difference. We are conscious of the responsibility we have and believe that a Zero Carbon Act is a key tool in providing a framework to take us all forward. We’ve got the Kiwi ingenuity to solve the problems, and the skills to test solutions and collaborate. The time to lead is now.

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