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Current pressures and trends

Total consumer energy demand

Energy consumption cannot simply be thought of in terms of the amount of energy used to fuel our cars and to heat and light our homes. Before reaching us, many forms of energy are converted from their initial state (primary energy) into a more convenient, useable state (consumer energy). This process is called energy transformation.

Approximately one-third of New Zealand’s primary energy is ‘lost’ during the transformation process. Where conversion involves heat (for example, converting geothermal steam into electricity), large amounts of energy are lost as waste heat.

Further primary energy is diverted into non-energy products (for example, the production of urea fertiliser and methanol from natural gas). As a result, our total primary energy consumption is far greater than the amount consumed by end users suggests.

Figure 5.2 shows consumer energy demand by fuel type for 2005. Just over half of New Zealand’s consumer energy demand was met by oil (51 per cent) and nearly a third (27 per cent) by electricity. The remaining demand was met by gas (9 per cent), other renewables (biogas, wind, wood, and solar) (7 per cent), coal (4 per cent), and geothermal (2 per cent).

See ‘Electricity generation’ later in this chapter for more information about fuel consumption for generating electricity.

Figure 5.2: Consumer energy demand by fuel type, 2005

Note: ‘Other renewables’ includes solar water heating and electricity generation from wind, biogas, and wood.

Source: Ministry of Economic Development, 2006.

Text description of figure

Consumer energy demand by fuel type

  • 51% oil
  • 27% electricity
  • 9% gas
  • 7% other renewables
  • 4% coal
  • 2% geothermal

Figure 5.3 shows that between 1995 and 2005, consumer energy demand increased 21 per cent, from 407 petajoules to 494 petajoules. Consumption of coal and geothermal energy decreased by 15 per cent and 29 per cent respectively, while consumption of oil increased by 28 per cent, gas 26 per cent, electricity 20 per cent, and other renewables by 28 per cent.

Figure 5.3: Consumer energy demand by fuel type, 1995–2005

Figure 5.4 shows consumer energy demand by sector for 2005. Domestic transport accounted for the largest share (43 per cent) of New Zealand’s total energy consumption, while industry had the second largest share, at 30 per cent. The balance was made up by the residential (13 per cent), commercial (10 per cent), and agricultural sectors (4 per cent).

Figure 5.5 shows that between 1995 and 2005, consumer energy demand increased 21 per cent. The greatest growth was seen in the commercial sector, which increased 32 per cent. This was closely followed by the domestic transport sector, whose share increased by 30 per cent. The domestic transport sector also accounted for the largest share of energy consumed during this period.

Figure 5.4: Consumer energy demand by sector, 2005


(1) The industrial sector includes primary industry not accounted for in the other sectors; food processing; textiles; wood, pulp, paper, and printing; chemicals; non-metallic minerals; basic metals; mechanical/electrical equipment; and building and construction.

(2) Domestic transport includes land transport (road, off-road, and rail), coastal shipping, and national air transport. It also includes transport fuel that could not be accurately allocated to the agricultural, industrial, commercial, or residential sectors.

Source: Ministry of Economic Development, 2006.

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Consumer energy demand by sector:

  • 43% domestic transport
  • 30% industrial
  • 10% commercial
  • 13% residential
  • 4% agriculture

Figure 5.5: Consumer energy demand by sector, 1995–2005

 See figure at its full size (including text description).

Total primary energy supply

In 2005, New Zealand’s total primary energy supply was about 740 petajoules. About two-thirds of this (494 petajoules) was used as consumer energy. The remaining third was used or lost during energy transformation and distribution of the energy to consumers.

New Zealand’s primary energy supply has been and still is, dominated by fossil fuels – oil, natural gas, and coal. In 2005, 72 per cent of New Zealand’s energy supply came from these sources. Of the total primary energy supply, oil accounted for 39 per cent, gas for 20 per cent, and coal 13 per cent (see Figure 5.6).

Renewable energy sources accounted for the remaining 28 per cent of New Zealand’s primary energy supply in 2005, comprising a mix of hydro (11 per cent), geothermal (11 per cent), and other renewable sources, including solar, wind, biogas, and wood (6 per cent).

A small amount of energy is generated in New Zealand from waste products such as used oil and methane gas. Refer to box ‘Local action: waste-to-energy’ for an example of a successful project.

Local action: waste-to-energy

There is a growing awareness in New Zealand of opportunities to produce energy from waste. Waste-to-energy projects have benefits for the environment, including reduced greenhouse gas emissions and reduced reliance on fossil fuels.

Christchurch City Council has turned waste into a resource by capturing gas from the closed Burwood landfill to heat and power the QEII Park swimming pool complex. Using landfill gas at QEII Park will replace 1.5 million litres of liquid petroleum gas each year, helping to reduce the Council’s reliance on fossil fuels. The project also has benefits for reducing greenhouse gas emissions, because methane gas is captured instead of being released into the environment.

Through the Projects to Reduce Emissions programme, Christchurch City Council was allocated 200,000 carbon credits by the Government for the project. The carbon credits will be transferred to Christchurch City Council in return for emission reductions from 2008 to 2012.

Methane gas from the former Burwood landfill heats the Queen Elizabeth II swimming pool complex in Christchurch.

Source: Courtesy of Christchurch City Council.

Figure 5.6: Primary energy supply, 2005

Note: ‘Other renewables’ includes solar water heating and electricity generation from wind, biogas, and wood.

Source: Ministry of Economic Development, 2006.

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Primary energy supply

  • 36% imported oil and oil products
  • 20% gas
  • 13% coal
  • 11% hydro
  • 11% geothermal
  • 6% other renewables
  • 3% domestic oil

Since 1974, New Zealand’s primary energy supply has increased by 89 per cent, from 392 petajoules to 740 petajoules. Changes in the mix of fuels that contribute to our energy supply have also occurred over that time (see Figure 5.7). For example, the development of the Maui gas field off the coast of Taranaki in the 1970s resulted in an increase in the amount of gas available for use from the early 1980s on. As New Zealand’s gas and oil reserves declined over the 10 years between 1995 and 2005, there was a 40 per cent decrease in the primary energy supply of domestic oil. To maintain security of supply, New Zealand increased its imports of oil and oil products by 38 per cent during the same period.

From 1995 to 2005, New Zealand’s primary energy supply increased by about 10 per cent, from 675 petajoules to 740 petajoules. The sources of energy supply varied during this time, with the most notable trend being a 100 per cent increase in the amount of energy supplied by coal.

The split between renewable and non-renewable energy sources has remained relatively constant during the period 1995 to 2005, with fossil fuels contributing about 70 per cent and renewable sources about 30 per cent of the primary energy supply. The share of renewable energy varies from year to year, depending on water inflows to hydro-electricity lakes and consumer demand for energy.

Figure 5.7: Primary energy supply, 1974–2005

 See figure at its full size (including text description).

Consumer energy demand compared to gross domestic product

From 1990 to 2005, New Zealand’s total consumer energy demand increased by 37 per cent. Over the same period, the size of the New Zealand economy, as measured by gross domestic product (GDP), increased by 56 per cent. This increase suggests the economy is reducing its reliance on energy, at least to some degree. As shown in Figure 5.8, the relationship between energy demand and economic growth has varied during the period.

Figure 5.8: Consumer energy demand compared to gross domestic product (percentage change, 1990–2005)


Text description of figure

Figure 5.8 shows the relationship between consumer energy demand compared to gross domestic product (percentage change between 1990 and 2005). From 1990 to 2005, New Zealand's total consumer energy demand increased by 37 per cent. Over the same period, gross domestic product increased by 56 per cent. This indicates that the economy is reducing its reliance on energy, at least to some degree.


Electricity generation

Over the last decade, New Zealand’s electricity industry has gone through a process of reform to establish a competitive market.

New Zealand’s electricity is produced at generation stations connected at high voltage to the national transmission network, known as the national grid. Transpower New Zealand Limited owns and operates the national grid, which connects most of the major power stations around the country to local distribution lines.

Electricity in New Zealand often has to travel a considerable distance from where it is generated to the end user. This results in comparatively high transmission losses, by international standards.

The Electricity Commission was established in 2003 to regulate the industry. It regulates the operation of the electricity industry and markets to ensure electricity is generated and delivered to consumers in an efficient, fair, reliable, and environmentally sustainable manner (Electricity Commission, 2005).

New Zealand’s fuels for electricity generation

In comparison to many countries, New Zealand generates a high proportion of electricity from renewable sources. In 2005, renewable sources accounted for 66 per cent of New Zealand’s electricity generation, with hydro-electricity providing 56 per cent of that amount. Geothermal (6 per cent), wind (1 per cent), and others (biogas, waste heat, and wood) (2 per cent) are the other renewable sources contributing to New Zealand’s annual electricity generation (these figures add up to 65 per cent due to rounding). (See Figure 5.9).

Most of New Zealand’s renewable electricity is generated by hydro-electric power stations in the South Island. The amount varies from year to year, depending on water inflows to storage lakes from rainfall and snowmelt. In dry years, such as 2005 when storage lake levels were low due to lack of rainfall, fossil fuels (coal and gas) are relied on to make up the shortfall in generation. (See Figure 5.10).

Figure 5.9 shows that in 2005, fossil fuels (coal and gas) provided 34 per cent of New Zealand’s total electricity generation. This is an increase from the previous year, when coal and gas made up 27 per cent of the total.

Wind has played an increasingly important role in electricity generation, contributing 1.5 per cent of total generation in 2005, compared with 0.9 per cent the previous year (discrepancies between text and figure are due to rounding). New Zealand currently has eight wind farms in operation, capable of generating more than 228 megawatts in total. This is enough energy to power about 100,000 households (assuming the wind farms are operating 40 per cent of the time).

Figure 5.9: Electricity generation by fuel type, 2005

Note: ‘Others’ includes electricity generation from biogas, waste heat, and wood.

Data source: Adapted from Ministry of Economic Development, 2006.

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Electricity generation by fuel type:

  • 57% hydro
  • 21% gas
  • 13% coal
  • 6% geothermal
  • 1% wind
  • 2% others

Figure 5.10: Electricity generation by fuel type, 1974–2005

Efficiency of fuel types for electricity generation

Energy efficiency means doing more with the same amount of energy, or doing the same thing using less energy. By using more efficient fuels to generate electricity, New Zealand can minimise the amount of energy we need to produce and use. The efficiency of each fuel type for generating electricity is calculated as the difference between the primary energy use and the net amount of electricity generated by each fuel type.

Figure 5.11 presents a ‘snapshot’ of energy flows within New Zealand’s electricity system (based on 2005 data). It shows the fuel types used to generate electricity, how much electricity they generate, and where it is used.

The process of generating electricity from primary energy (for example, burning coal to drive turbines) generates a lot of heat that cannot easily be harnessed to generate electricity and is therefore lost. This lost energy is an example of the ‘transformation losses’ that occur during the process of converting primary energy, such as coal, into a more useful form of energy, such as electricity.

A small proportion of the generated electricity is used within power stations for lighting and heating (a quantity referred to as ‘own use’). Some of the electricity is also lost from power lines in the form of heat and faults while being transmitted to consumers (referred to as ‘transmission losses’). Completing the balance are ‘statistical differences’, which are small reporting errors that may occur in processing this information.

Figure 5.11 shows that in 2005, the total primary energy supply for electricity generation was 293 petajoules, while the net amount of electricity generated was 149 petajoules, which represents an average efficiency of just over 50 per cent. The remaining 144 petajoules were lost as heat when transforming the primary energy sources into electricity, and also used as electricity within power stations (‘own use’). In 2005, 132 petajoules of the electricity generated were used by the consumer once further losses in transmitting and distributing the electricity and statistical differences were taken into account.

Figure 5.11: Relative efficiency of fuel types for electricity generation, 2005

 See figure at its full size (including text description).

On average, hydro and wind are the most efficient forms of energy for generating electricity in New Zealand, at almost 100 per cent efficient. By convention, geothermal generation is around 15 per cent efficient. In general, the efficiency of thermal fuels (coal and natural gas) ranges from 30 to 50 per cent. While thermal fuel may seem relatively inefficient compared with hydro and wind, thermal fuels are important, at least at present, for meeting our energy needs at times of peak demand, or in dry years.

It is important to note that these efficiencies reflect national averages and some generation plants may be more efficient than others. In addition, while the use of geothermal energy for electricity is relatively inefficient, the direct use of geothermal energy (for example, for heating water) is much more efficient than converting that energy to electricity.

Government action on energy efficiency and conservation

Several government programmes have been developed in recent years to raise community awareness about energy efficiency and provide businesses and households with the tools to improve their energy choices. Energy efficiency initiatives include the following programmes:

Solar Water Heating programme

The Solar Water Heating programme promotes the uptake of solar water heating in homes, which in turn reduces the demand for electricity and gas. In 2006, the Government announced an investment of $15.5 million over the first three-and-a-half years of a five-year programme to increase the use of solar water heating. The New Zealand Energy Efficiency and Conservation Strategy has set a target of 15,000-20,000 solar water heating units to be installed by 2010 (Energy Efficiency and Conservation Authority, 2006).

As of June 2006, about 35,000 solar water heating systems were installed in New Zealand homes and commercial buildings.

Source: Courtesy of the Energy Efficiency and Conservation Authority.

The Minimum Energy Performance Standards programme

This programme reduces energy consumption by ensuring products such as fridges/freezers, hot-water cylinders and air conditioners comply with specific minimum standards for energy efficiency.


Emprove is a suite of management tools to help businesses cut energy costs by adopting an energy management plan to control the amount of energy used. The Energy Efficiency and Conservation Authority encourages businesses to regard energy as a variable cost, rather than a fixed overhead, assisting them with energy audit grants and advice to identify opportunities to reduce their energy use.

Energy Intensive Businesses programme

This programme offers cash grants to help businesses adopt energy saving technologies, which may not be widely adopted in their sector. It is aimed at companies in nine energy intensive sectors which spend more than 5 per cent of their business costs on energy.

EnergyWise Home Grants scheme

This scheme retrofits the homes of low-income households with better insulation, leading to health and energy-saving benefits. As of March 2007, more than 30,000 homes have been retrofitted in this way.

Source: The Energy Efficiency and Conservation Authority.