27th August, 2024: A new paper from Rewiring Aotearoa shows that swapping fossil fuel hot water heating, space heating, cooking and vehicles for electric equivalents and powering them with renewable electricity from the grid, rooftop solar and batteries could save billions in unnecessary imported fossil fuel costs and avoid millions of tons of unnecessary carbon emissions.

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Dr Saul Griffith, Rewiring Aotearoa’s chief scientist and founder of Rewiring America and Rewiring Australia, says ‘Investing in Tomorrow’, which was co-written with Paul Conway, the Reserve Bank of New Zealand’s chief economist, and peer reviewed by Parliamentary Commissioner for the Environment’s chief economist Geoff Simmons, clearly shows that climate action does not have to be considered a cost. Instead, it is an opportunity to save money on cost of living for New Zealanders and bring with it serious energy productivity gains. 

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“Combined, New Zealand homes and businesses are currently spending around $55 million every day or $20 billion per year on fossil fuels, most of which are imported. Approximately two-thirds of New Zealand’s total energy needs are met by burning these expensive fossil fuels. But this country is one of the first in the world to cross an ‘electrification tipping point’, where the cost of buying and financing electric machines is cheaper over the long run than using fossil fuels. That leads to savings for individual households and it could lead to huge savings for the country as a whole.” 

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Previous analysis in Rewiring Aotearoa’s ‘Electric Homes’ report suggests the average New Zealand household could save around $1,500 per year by investing in much more efficient electric machines and solar and batteries. 

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‘Investing in Tomorrow’ shows that these benefits at the household level add up to a significant national opportunity and estimates that by 2030, New Zealanders could be saving $9 million per day or $3.2 billion per year. 

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By 2040, if the necessary adoption rates are met for technologies like electric vehicles and electric hot water heating, those savings will rise to $29 million per day or $10.7 billion per year (this is around half the current education budget). Cumulatively, this would equate to savings of around $95 billion by 2040. 

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“This is an opportunity to help New Zealanders access the savings that electrification can provide primarily because of increased efficiency, swap some of the world’s most expensive imported fossil fuels for renewable electricity generated in New Zealand, and meet the climate crisis head on with strategic investment in the future of energy use in New Zealand.”

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The price of grid electricity and fossil fuels has increased at above the rate of inflation, and recent news has highlighted the increasing price of wholesale electricity during a dry year, but the paper shows how the prices of rooftop solar and batteries have gone in the opposite direction and could help to bring down the cost of electricity for all New Zealanders. 

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“Because the costs have declined so quickly, rooftop solar is now the cheapest form of delivered electricity available to New Zealand homes and it augments a lot of the savings electrification offers through efficiency. Buying solar panels also locks in a stable price of energy for the lifetime of those panels, while batteries can help reduce strain on the network during peaks. These technologies will also improve New Zealand’s energy security and resilience.”

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Electric machines are more expensive up front than fossil fuel equivalents but have lower ongoing bills. And this means the opportunity to electrify can only be realised by enabling finance that allows all households to access the immediate savings. 

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“Historically, energy infrastructure has been thought of as large power plants and lots of poles and wires. Because this was seen as critical it received favourable finance. New technology has allowed households, small businesses and farms to generate and store electricity, so we would argue that customers also need to be seen as a critical part of the energy infrastructure and should also receive favourable finance.”

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The idea that we cannot afford to address climate change is clearly wrong, Griffith says. As this paper shows, we can reduce emissions while saving money for the average New Zealander.

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“Every new fossil machine basically puts us in more fossil fuel debt for the lifetime of that machine and the price of the fuel is likely to keep going up. In most cases, financing electric machines is now cheaper than the fuel and much better for the environment. It’s a real win-win.”  

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Griffith believes New Zealand has an opportunity to lead the world.  

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“New Zealand has a long history of electrical innovation - from the southern hemisphere’s first public electric street lights in Reefton to the first all-electric house near Tauranga - and excellent centralised renewable energy resources. That puts the nation in a great position to facilitate an energy transition that will be beneficial to every Kiwi. Now we need action.”

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ENDS

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Download the paper here.

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NOTES TO EDITORS: 

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Rewiring Aotearoa is an independent charity working on energy, climate, and electrification research, advocacy, and supporting communities through the energy transition. The New Zealand-based team consists of energy, policy, and community outreach experts and it is funded by New Zealand-based philanthropists including Sir Stephen Tindall, Urs Hölzle and the Whakatupu Aotearoa Foundation. 

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Paul Conway’s contribution to this paper does not constitute an official endorsement from the Reserve Bank of New Zealand, nor does the contribution of Geoff Simmons constitute an official endorsement from the Parliamentary Commissioner for the Environment. 

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