Energy crisis: What New Zealand needs to deliver cheaper electricity to Kiwi families – Shane Te Pou

The turbulent period for our energy grid has caused prices to rise so much that many of our major producers have reduced production and some have closed down altogether.

This means job losses in communities across Aotearoa and further weakening of our economy. In the 21st century, affordable energy is key to economic growth and our current energy policies are not delivering.

Yet the big electricity producers are sitting back, raking in huge profits. Meridian, which essentially operates by letting free water flow through dams built and paid for by taxpayers decades ago, has seen its profits rise from $95 million last year to $429 million this year.

The government’s plan—pray someone finds new natural gas and hope someone builds a terminal to import it in the meantime—is not enough. In addition to emissions, being locked into importing expensive natural gas would be a multibillion-dollar drain on the economy, making us poorer and more vulnerable to international supply disruptions. And good luck getting a company to speculate on a billion-dollar natural gas exploration program when the last billion dollars of drilling has turned up nothing.

The truth is that our energy system is broken.

Gentailers are supposed to be the lifeblood of our economy. The problem is that gentailers don’t want cheap power. Their job is not to provide affordable, reliable electricity to the country. Their job is to generate profits for shareholders. They focus on how much profit they can make – even if it hurts our producers.

Partial privatisation has only made matters worse. Winter power crises and skyrocketing electricity prices used to be rare; now they happen every other year. Retailers are not accountable to anyone. Deputy Energy Minister Shane Jones has sulked and snorted about speculation, but has the government actually done anything about it? No.

ANDand there are things they could do.

There is no shortage of electricity generation potential in this country – there is plenty of wind and plenty of sun.

Retailers are sitting on approvals for projects across the country that they have decided not to build. As the price of solar panels, wind turbines and grid batteries has plummeted in the past few years, the opportunities for cheap electricity have expanded. We now lag far behind other countries in adopting these breakthrough technologies.

Retailers have carefully maintained a deficit in electricity generation because it helps their bottom line. Even though most of our energy comes from renewables at almost zero cost, they are paid the price of the most expensive unit of electricity generated in each 15-minute block. So it is in their interest to keep expensive gas and coal plants running.

If all our energy came from cheap renewables, their profit margins would evaporate. This happens already at night, when wind and water can meet demand on their own: the price of energy drops to almost zero.

So retailers are not going to flood the market with cheap renewables and replace the fossil fuel plants that are making them money. This not only makes electricity more expensive, but it also increases the likelihood of power shortages and blackouts because the system is running out of spare capacity. And the electricity regulations we have allowed them to do that.

It’s time for a change.

I’ve mentioned the KiwiPower idea before – a publicly owned power generator whose goal is not to make a profit but to reduce the cost of energy for our economy and households. It would have the ability to take those approved projects that the gentailers refuse to build and do it for them. It would have long-term contracts with companies that want to build offshore wind farms and large solar farms but need to know that they will get a fixed return on investment to make it worthwhile.

An avalanche of new generation would lower the price of electricity, allowing energy-hungry producers to expand their operations. More supply from a variety of renewable sources, with batteries to back up and shift demand, would help prevent shortages in drought years. It would also mean we have enough electricity to power the transition to electric transport.

Poking around the edges of a broken electricity market won’t solve its fundamental problems. And neither will importing expensive liquefied natural gas. We need a government that disrupts the comfortable status quo of the gentailer. We need a white knight in the electricity market, whose goal is cheap power for Kiwi families and businesses.

Is this government brave enough to do something like that? Or will they just tinker ineffectively while the gentailers suck every cent they can out of the country?