Jul 29, 2025
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Power Games: who will pay to keep the lights on, prices down and businesses running?

BusinessDesk investigates the energy sector, the role of Huntly, the lack of domestic gas and its impact on business and electricity prices. What it doesn't talk about, however, is the role that solar could play in the system to keep our lakes high and our prices low.

When you combine cheap electricity and the efficiency of electric machines you can make the whole economy more productive. Households can save thousands, businesses can save millions, and countries can save billions.

Our Investing in Tomorrow report showed what's on the table for New Zealand and it adds up to combined savings of $29 million per day.

So how do we keep a lid on prices?

South Australia is currently showing what cheap electricity can lead to. Low wholesale prices in the middle of the day, in large part due to so much solar in the system, are now attracting large industrial users who see an opportunity to get their hands on cheap, reliable and renewable energy.

As a recent story in Renew Economy said, "there are more than three dozen companies that have made inquiries about setting up major business in the state and connecting into the state grid, with the specific requirement to source zero emissions and low cost wind and solar. ElectraNet says the combined load of these 37 big industries amounts to astonishing 15 gigawatts, more than 10 times the current average load in the state, and five times the maximum demand. Far from killing industry, the state’s transition to renewables is sparking a rebirth."

South Australia now has one of the world's most renewable grids. New Zealand is right up there, too (although our overall energy system is not particularly renewable because around two thirds of our total energy still comes from fossil fuels), but high wholesale prices and volatility are hampering business, not attracting it.

One big difference is that New Zealand has a world-leading hydro scheme that we should be using as a battery. Currently, we burn expensive, imported fossil fuels when our lakes are low when we could instead keep those lakes topped up with more solar and batteries, something we explored in a 'Watt Now?' explainer.

More solar in the system is highly unlikely to cause any network problems until there is much higher adoption rate here and those issues have already been addressed in Australia.

It's also increasingly clear that these technologies can help defer or avoid expensive upgrades to the poles and wires, which make up around half the cost of electricity to households and are likley to make up the biggest chunk of bill increases in the coming years.

New Zealand is a decade behind Australia on solar installs. It is clear we should go as fast as we can to catch up. That will put downward pressure on prices and allow us to make better use of our existing infrastructure. And that's a good thing for industry, for consumers, and for New Zealand Inc.

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