Rewiring Aotearoa’s policy manifesto, which was released last year, included ‘support residential and commercial gas phase-out’ as part of a wider National Electrification Plan.

“Our research shows that there is latent demand for electrification - both at a business and residential level - but upfront costs and complexity are two of the biggest barriers,” says CEO Mike Casey. “Research also shows around one third of gas users could transition economically right now with a low-interest loan scheme like this, another third may need a subsidy but could also be helped with this policy, and the last third have no options to transition - yet.”

As we have seen recently, domestic gas stocks are depleting faster than expected, so a pro-active move was needed, he says.

"This isn't just about economics anymore. It's also about business continuity. If I was among the one third of business owners that could get off gas economically now with a loan, I’d be moving quickly. And the more businesses that do it, the more domestic gas we’ll have for those in the last third.”

The scheme will see the Government invest $48 million to guarantee 80% of the eligible loans. Businesses that use over 1000 gigajoules a year will be able to borrow a maximum of $50 million.

“The GIDI fund tried to do the same thing with grants before it was canned, while groups like Business NZ, the New Zealand Green Building Council and Auckland Business Chamber have also floated the idea of Government support for electrification due to the gas shortage and ensuing price rises. We’re glad Nicola Willis and the rest of the Government listened, took some action and recognised that a relatively small Government investment could unlock billions in loans.”

Casey says the Government should now be looking to support households in a similar way.

“A $7 million Government investment into the Ratepayer Assistance Scheme would unlock billions in loans that could help private households to get off gas and invest in solar and batteries. That would add up to billions in savings across the country.”

An additional $5.9 million for EECA to work with businesses exploring options to transition away from gas is also a good move.

“We will be sharing our thoughts with EECA on how the investment can deliver maximum results for New Zealand industry and communities and we believe a ‘hit squad’ could be set up to actively support big gas users to upgrade. This could include advice on the best options, help negotiating with lines companies, or help to figure out the best way to meet their energy needs.”

Electrifying businesses is generally more complicated than electrifying homes, which is why Casey says we also need a pragmatic plan to make sure we can invest in the network upgrades required to connect more large industrial electricity loads.

“It needs to be coordinated and investment needs to be mandated. A centralised fund could be an option if we want to speed things up and the Ultra-Fast Broadband programme is often suggested by the industry as a funding model that could be replicated.”

Associate energy minister Shane Jones announced another policy that will require the industry to provide more accurate estimates of remaining gas reserves.

“But that won't change the fact that gas has no future in New Zealand,” says Casey. “It’s running out, it’s worse for the environment and, increasingly, it can’t compete with electricity on price. We’ve had a good run with cheap, accessible gas, but it’s clear we cannot rely on more gas being found. There have been plenty of attempts and lots of money spent with very little to show for it. Fortunately, we’re very good at making renewable electricity, so our strategy needs to be based around New Zealand-made Energy running through more efficient electric machines.”

Energy minister Simeon Brown said an LNG import terminal was part of the response to the domestic gas shortage, but it is even more expensive than domestic gas.

“Energy independence doesn’t come on ships. Expensive gas won’t stop the deindustrialisation we’re seeing as a result of high energy prices. And we can’t make cheap electricity with expensive fuel. If those businesses still want gas, they should pay for the LNG terminal themselves, not lump electricity users with it.”

Casey says batteries big and small have been eating into the share of gas for peak times electricity generation in other markets like Australia and California, so there is an argument for more support in this area.

The hydro lakes are our battery for the longer term and solar and other renewables can help keep it charged, rather than burning stuff when they get low, he says.

"If LNG is, as the Government says, about solving the dry year issue, there are other cheaper options, as we will discuss in a soon-to-be released report in conjunction with Sapere. We already have world-class renewable resources, much more in the pipeline, and a national grid to transport that energy. Changes to the way hydro is used, more wind and geothermal, and grid-scale and rooftop solar and batteries closer to where they need to be can also give us the energy we need at the times we need it.”

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