Energy Policies of IEA Countries: New Zealand 2017 Review

Since the last IEA in-depth review in 2010, New Zealand has further developed its energy policy, as reflected in its energy strategy to 2021 and new rules for more competitive electricity markets. With its unique resource base, New Zealand is a success story for the development of renewable energy, notably hydro and geothermal, without government subsidies. Geographically isolated, New Zealand has developed robust policies for security of supply. Outside of its largely low-carbon power sector, managing the economy’s energy intensity and greenhouse gas emissions while still remaining competitive and growing remains a challenge. This review highlights the areas that are critical to the success of the energy policy agenda in New Zealand. To support sustainable growth in line with the Paris Agreement, the government should facilitate technology opportunities for renewable energy and energy efficiency, in buildings, industrial heat, transport and agriculture. The government has ambitious plans to boost the share of electric vehicles and renewable energy. The country has a flexible power system, but future growth requires fine-tuning of market rules in favour of even more flexibility, demand response, smart and effective electricity retail and distribution. While security of supply is well ensured by effective markets, an energy-constraint system can benefit from market-based risk managements tools, including a safety net for dry years as well as access to global liquefied natural gas markets. This review analyses the energy policy challenges facing New Zealand and provides recommendations to help guide the country towards a more secure, sustainable and affordable energy future.