![New Zealand's electricity transmission system [source: IEA's New Zealand 2017 review]](http://gastopower.co.uk/media/k2/items/cache/599fb29aa9701270b6a9ff19f1902a35_S.jpg)
Economic growth and an expanding population are going to pose a challenge for New Zealand from an energy perspective, requiring increased efforts in terms of both technology and policy, the International Energy Agency said.
In its latest New Zealand 2017 review of energy policies in the country, IEA stressed that despite New Zealand having long been “a global leader in developing effective energy markets, renewable energy and establishing robust policies for electricity security”, over the past decade its growing energy needs have “outpaced improvements in energy efficiency, mainly because of the country’s expanding economy and growing population.”
That means the country is now faced with a “technology and policy challenge” in order to remain competitive while limiting greenhouse gas emissions.
New Zealand set “ambitious goals” to cut its greenhouse gas emissions to 30% below 2005 levels by 2030, IEA said, adding that “to be in line with the Paris Agreement, it will have to adopt policies supporting the energy system transformation, encouraging greater energy efficiency, electrified transport and expanding renewable energy in the buildings, heat and industry sectors.”
On the other hand, the IEA praised New Zealand for its new initiatives such as the electric vehicle programme and the update to the New Zealand Energy Efficiency and Conservation Strategy.
“Government policies, including targets and standards, are needed to open up the potential of energy efficiency in industrial heat, buildings and transport” said IEA's executive diretor, Fatih Birol, adding that “strong standards and policies will guide technology innovation and growth.”
He added that “New Zealand is a world-class success story for renewables and has excellent opportunities for using even more renewable energy in heat, but also in power supply and for the electrification of transport.”
Security of supply “cannot be taken for granted”
IEA said New Zealand “serves as a model for effective energy markets and secure power system operation.”
Nevertheless, it stressed “security of supply cannot be taken for granted, and can be strengthened through a strategic reserve auction.”
Moreover, the country’s “unique hydro-based power system brings challenges for maintaining physical security of supply” as “a purely market-based system may not provide a timely or fully effective response to low water levels at all times.”
Security of supply will also be strengthened by boosting investment in the country’s large oil and gas resource base, the report found. The role of gas has grown in the residential sector, in power generation, and industry. However, New Zealand is not connected to the global LNG markets and does not have long-term visibility for natural gas demand and supply, IEA underlined.
On the other hand, the IEA applauded New Zealand’s electricity and gas market reforms while encouraging the market regulators “to continue on this path.”
Despite ownership changes and partial privatisations “the electricity sector has only a few large players in combined retail and generation markets” it stressed. However, the retail market is developing with smaller companies gaining ground across the country, it added.
As the energy sector becomes more decentralised and local, with greater shares of wind, solar, battery storage and electric vehicles "the government should make sure that consumers and market participants are encouraged to build a smart system” IEA also said. “The widespread deployment of smart metering and the emergence of new technologies in New Zealand provide excellent opportunities for more efficient, innovative and competitive electricity retail and distribution” it said.