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The OECD has just released its 2026 report on New Zealand's economy. And when it comes to energy, it basically gave us a 'must try harder' grade. On the proposed LNG terminal - which, remarkably, is still not dead yet despite all evidence suggesting it should be - the OECD said, as we have said, that it would not serve its intended function of lowering prices.
LNG was not a long-term affordability solution, it risked locking in fossil‑fuel dependence and would further exacerbate New Zealand’s already high vulnerability to liquid fuel import stoppages and price volatility.
"In addition, it would create a single-point-of-failure risk because there is only one viable port of entry in Taranaki."
Countries that are less reliant on gas for electricity have been able to keep their electricity prices low. It suggested energy security could be achieved by rapidly scaling non‑gas seasonal (dry-year) firming, such as batteries, biomass, pumped hydro, geothermal and demand response.
And we also believe solar needs to play a role as it will help keep water in the hydro lakes.
In conjunction with more large and small-scale renewable generation, part of our New Zealand-made Energy plan is about helping gas users transition to electricity and the OECD agrees that's crucial.
"Many medium‑sized industrial users can technically switch to electric boilers and heat pumps, but face upfront investment and network upgrade hurdles. Targeted support, such as concessional loans or accelerated depreciation, may be justified where electrification has a viable business case."
This is a far better option than sneaking in LNG, making electricity users pay for it and hoping for more domestic gas, which the OECD says is unlikely to be found.
The report also found that the gentailers’ financial strategies are not aligned with the country's needs. And while the gentailers have said publicly that they are building more now than during 'Think Big', the OECD says they are paying out far too much in dividends ($12 billion over the decade to 2025) and not investing enough in generation.
To date, it says the Government has helped by offering to participate in equity raises.
"Gentailers have consistently paid out 90–240% of net income in dividends ... Financial analysts would normally consider payout ratios of above 80% as too high, endangering the financial health of companies with significant investment needs."
The gentailers are not going to lower bills. LNG is not going to lower bills. But Energy Impact Loans through the Ratepayer Assistance Scheme will. As we head into winter, many families are in for another shock. So why is this Government not pushing it through?
Find out more about the scheme here⚡ https://loom.ly/Kowww4c
Rewiring Aotearoa always fights for the people who use the energy. The new Electricity Authority chair John Harbord has been doing the same thing for a while now, albeit at the big end of town, so we’re excited to see what he brings to the table because there’s a lot that needs to change.
Read moreDownloadThe only way is up for solar as New Zealand hits 1GW (but the powers that be still keep underestimating its appeal, as they have done consistently and almost comically around the world); the only way is down for bills in electric homes, as the Eye Surgery in Hastings and financial commentator Frances Cook explain; veteran environmentalist Bill McKibben talks to Ezra Klein about the economic forces pushing the world towards solar - and what's slowing it down; Pitcairn Island ditches the diesel, while the Vatican aims to get all its energy from heaven, rather than hell; and can you run an off-grid workshop with old vape batteries?
Read moreDownloadSpecial report: EV batteries could store all the power we need in a day. How can NZ unlock that energy to slash bills and keep the lights on? As QEA and Rewiring Aotearoa's Josh Ellison says about the potential: “You’re getting a battery for less than $1000/kWh and it comes with a free car. Or really, what is more realistic is that people are buying a car for car reasons. They need a car. And it’s coming with a battery that can then give them all these other financial benefits, like lowering their bills.”
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