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16 June 2023

Fair comparisons needed for major electricity investments

The Parliamentary Commissioner for the Environment, Simon Upton, today released the results of modelling that illustrate what four different future electricity system pathways might mean for New Zealand electricity consumers.

The alternative pathways chosen were based on some of the options that are currently being debated: business as usual; closure of the Tiwai Point aluminium smelter; large-scale green hydrogen production; and pumped hydroelectricity storage at Lake Onslow.

The Commissioner has released the modelling results in the interests of improving the quality of debate that will inevitably surround finalisation of the Government’s energy strategy.

He hopes it will spark discussion and criticism, “which can only lead to more robust decision making, provided everyone is held to the same standard,” he says.

“There is no perfect solution to today’s decarbonisation challenge. None of us can predict the future of technology or the shape of the economy in a warming and climate-disrupted planet.

“The scale of investment needed, no matter which path we choose, will be immense. That is why we need a better way of weighing up the options.”

Mr Upton says that all major investments with potentially system-wide impacts should endeavour to use similar assumptions.

“Once we are using common assumptions we should be able to fairly compare the options on the table.

“The most we can hope for, and expect, is high-quality decision making based on even-handed treatment of the options.

The Government is currently working on its energy strategy, “which will be a pivotal document given the scale of the change ahead,” the Commissioner says.

“Decisions of this nature demand openness and transparency about the assumptions and analysis that we are presented with.” 

“The process of developing this strategy should enable industry participants, the consulting and academic sectors and the wider public to ensure that key investment decisions made with either regulatory or fiscal support are indeed – as the Electricity Industry Act puts it – ‘for the long-term benefit of consumers.’”

Read the Commissioner's note on future electricity system pathways for New Zealand

Desert road, russellstreet, flickr

Desert Road, russellstreet, Flickr