Contributed By Russell McVeagh
Current Energy Mix
The current share of renewable energy in New Zealand’s energy mix is higher than in most OECD countries. In 2023, approximately 43% of primary energy supply and 30% of final energy consumption came from renewable sources, according to the Ministry of Business, Innovation and Employment (MBIE).
The share of renewable energy in electricity generation is significantly higher than this. In 2023, renewable energy accounted for approximately 88% of the electricity generated in New Zealand.
This high proportion of renewable energy generation is, in large part, representative of the favourable geography of New Zealand, which includes consistent rainfall and wind and access to geothermal resources.
The Energy Transition Ahead
Against this backdrop, the focus of New Zealand’s energy transition in the coming years is likely to involve the following:
New Zealand’s Net Zero Target
New Zealand set a domestic “Net Zero by 2050” target under the Climate Change Response Act 2002 (CCRA) for all greenhouse gases other than biogenic methane. Under the CCRA, the government is required to prepare five-yearly emissions budgets and produce emissions reduction plans that set out the proposed policies for meeting each emissions budget.
Sector-specific emissions reduction targets are decided by the government of the day as a matter of policy. In relation to this, the precise targets to be pursued by the current coalition government are to be confirmed through the publication of the second emissions reduction plan, which is due in December 2024. In relation to renewable energy, the current government has committed to doubling generation from renewable energy sources by 2050.
Oil and Gas
The role of oil and gas in New Zealand’s energy future is a matter of debate across the political spectrum. The current government plans to reverse the previous government’s ban on new oil and gas exploration. The cited reasons for the reversal include the need to address energy security challenges and regional economic development opportunities.
The vast majority of electricity in New Zealand is generated from renewable sources (88% in 2023). See 3.1 Electricity for a breakdown of generation between different renewable energy sources.
Hydroelectric and geothermal generation are hugely important to New Zealand’s current generation capacity. Looking ahead, as electricity is increasingly used in place of fossil fuels and electricity demand increases generally, MBIE predicts that significant new generation capacity will be required. New wind and solar projects are expected to play a large role in helping to meet this increase in demand.
In addition, activity in battery energy storage systems (BESS) and green hydrogen projects is also expected to increase. See 1.3 Renewable Energy Market and Recent Developments and 4.1 Electricity for further information.
Tiwai Point Long-Term Agreements
The May 2024 announcement of new long-term agreements to supply 572 MW of renewable energy to the Tiwai Point Aluminium Smelter (“Tiwai Point”), New Zealand’s sole aluminium smelter, was an important milestone for developers in New Zealand’s renewable energy market. Tiwai Point, which is owned by New Zealand Aluminium Smelter (NZAS), is the largest user of New Zealand’s electricity and accounted for 12.14% of New Zealand’s annual demand in 2023.
For some time, there had been material uncertainty as to whether NZAS might ultimately carry through with past threats to close Tiwai Point. The signing of the 20-year agreements with NZAS has brought comfort to renewable energy developers regarding the continued existence of a large proportion of New Zealand’s total load. Meridian Energy Limited (“Meridian”), Mercury Energy Limited (“Mercury”) and Contact Energy Limited (“Contact”) were the providers of the new agreements.
Demand Response
Meridian and Contact also entered into demand response agreements with NZAS, under which NZAS may be called upon to reduce electricity consumption up to an agreed limit.
The risk of electricity shortages in New Zealand increases during long periods of low rainfall, given the resulting impact that this has on lake inflows for New Zealand’s hydroelectric dams. Large demand response agreements such as these can help to alleviate the level of stress on the system, and/or reduce the quantity of coal reserves that may need to be burned, during such times.
Development of BESS Projects
There has been a significant recent increase in the development of grid-scale BESS in New Zealand. WEL Networks and Infratec announced in October 2023 that their 35 MW Rotohiko BESS had entered the commissioning phase. Meridian is constructing its 100 MW Ruakākā BESS, with commissioning expected by December 2024.
Corporate PPAs
New Zealand does not have any subsidy, tax deduction or contract for difference regimes for renewable energy projects. Accordingly, the sourcing of a power purchase agreement (PPA) for power offtake is a critical workstream for many developers. Corporate PPAs are becoming more common in New Zealand, as to which see 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements.
Legal and Regulatory Framework
The principal laws and regulations governing the energy market in New Zealand are summarised in broad terms below:
Upcoming Legislative Changes
The Fast-track Approvals Bill was introduced on 7 March 2024 to establish a permanent regime to “fast track” consents for nationally and regionally significant projects, including energy projects. This regime is intended to provide shorter consenting timeframes for major projects with appeal rights limited to points of law only. This is in contrast to standard processes under the RMA which allows initial council decisions to be appealed to the Environment Court “de novo”, which means a consent applicant has to start the process over again in the court, delaying implementation and increasing costs for projects.
As of August 2024, the government intends to introduce a Resource Management Amendment Bill later in 2024 to further support the consenting of renewable energy projects. This is expected to reduce consent processing timeframes for most renewable energy projects to within a year, extend lapse dates for renewable energy, transmission and distribution projects from five to ten years and increase default consent durations to 35 years for renewable energy consents (where subject to a duration). A new National Policy Statement for Infrastructure (to enable a range of energy and infrastructure projects) is also being produced and is expected to follow a similar timeframe as this proposed Bill.
The government has also indicated its intention to reform the RMA system over the next two years to create a more efficient system that better enables infrastructure (including renewable energy projects).
The government is developing a new regulatory framework for offshore renewable energy (see 6.2 Offshore Project Development).
MBIE is New Zealand’s primary government department overseeing and delivering regulation and policies for the energy sector (including renewables). The Ministry for the Environment (MfE) advises the government on environmental matters and related legislation such as the RMA.
Regulatory and quasi-regulatory agencies and authorities in the energy sector include:
The regulatory enforcement powers of certain of the above authorities (not including the Gas Industry Co or the EECA) are outlined below:
Resource Consenting
The use and development of physical and natural resources in New Zealand is regulated under the RMA. Territorial, regional and district authorities implement regional and district plans which operate as “rulebooks” for land use, including for energy and renewable energy activities (eg, solar farms or wind farms). Generally, resource consent is required for renewable energy projects in New Zealand, although this can differ between regions or districts.
Land use consents for solar and wind farm projects are generally granted for indefinite periods. On the other hand, renewable energy projects using hydro, geothermal or marine resources have limited duration consents of up to 35 years (meaning that consent renewal is required for the continuation of operations beyond consent expiry).
Other Approvals and Registrations
In addition to the RMA, renewable energy projects may require approvals or registration under other legislation, such as:
Hydrogen is an approved hazardous substance with controls enforced by the EPA and regulated under the HSNO Act and the Health and Safety at Work Act 2015. Similarly, most biogases, such as methane, are categorised as approved hazardous substances that are also subject to controls as enforced by the EPA.
Onshore Renewable Energy Assets
There are no specific restrictions on the types of persons that may own onshore renewable energy assets in New Zealand, although certain restrictions and/or requirements may be triggered on the transfer of ownership interests in such assets. In particular:
Offshore Renewable Energy Assets
In terms of offshore renewable energy assets, the details of the proposed permitting regime will become clearer when legislation is introduced to Parliament, likely at the end of 2024. See 6.2 Offshore Project Development for further details.
OIO Consent Requirement
Investment in the renewable energy market in New Zealand by foreign investors may trigger a requirement for consent under the OIA. The OIA sets out New Zealand’s regulatory regime for investment by “overseas persons” in “sensitive land“ and/or “significant business assets”, and which investments must be approved by the OIO.
A foreign investor will be an “overseas person” under the OIA if they are a person or an entity that is domiciled, or owned by a person or an entity domiciled, outside New Zealand. New Zealand-registered entities are also classified as overseas persons where more than 25% of their ownership or control interests are held by overseas persons.
Renewable energy transactions that involve the following factors are likely to trigger the requirement for OIO consent:
OIO Consent Pathways
The following OIO consent pathways apply where consent is required under the two bullet points above:
Strategically Important Businesses
Notification to the Minister of Finance, via the OIO, can also be mandatory or voluntary for certain transactions that are less than the NZD100 million threshold but involve “strategically important businesses”. The Minister of Finance can also call-in such transactions relating to strategically important businesses (which include a business involved in electricity generation with a total capacity exceeding 250 MW) for review, and to block, impose conditions on, or unwind, if the Minister of Finance considers the transaction poses a significant risk to New Zealand’s national security or public order.
Renewable Energy Generation
Generation from renewable energy in New Zealand is concentrated in the following sources:
The proportions of generation represented by onshore wind and solar respectively are expected to increase in the coming years, as new wind and solar projects are constructed in response to the anticipated growth in demand for electricity.
Renewable Energy Generators
The generation of electricity from renewable sources in New Zealand involves the following generators:
Regulation
Electricity generation in New Zealand is regulated primarily by the Electricity Industry Act and the Code. See 5.1 Electricity and 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements for information in relation to New Zealand’s electricity wholesale market, electricity futures market and private PPA market.
Renewable Gas
New Zealand’s current production of gas from renewable sources is at an early stage and is concentrated into four main sources:
Regulatory Regime
Gas Industry Co jointly develops, with the government, the regulations and rules governing the gas market in New Zealand. In the Gas Transition Plan Issues Paper from August 2023, the Gas Industry Co reported it was considering work to develop a regulatory framework and monitoring regime for renewable gas certification providers.
Geothermal
There are significant geothermal resources in New Zealand; however, geothermal is predominantly utilised for electricity generation.
Hot water and steam from geothermal sources (including as a by-product of electricity generation) is to some extent used as process heat directly for industrial processes. The Kawerau Industrial Complex in the Bay of Plenty has industrial users located nearby to geothermal resources to make use of geoheat.
Geothermal resources are managed by the environmental consenting regime under the RMA. The RMA requires that no person can take, use, dam or divert water (including geothermal water) or, heat or energy from geothermal water (or from the material surrounding geothermal water) unless expressly allowed by a national, regional or district planning document or permitted by a resource consent. There are no current express allowances under any national planning documents, although some limited exceptions may apply under regional or district planning documents for small offtakes.
Heat From Other Renewable Sources
New Zealand does not have large-scale district heating schemes within its urban areas. Some small-scale district heating schemes are operated, including in Christchurch. The Washdyke Energy Centre, which supplies steam to local industry in Timaru, transitioned to 100% sustainable biomass in April 2023. The Dunedin Energy Centre was also converted to run on biomass in 2023.
Green Hydrogen
New Zealand does not have a well-established industry for the production of green hydrogen. Nevertheless, considering the availability of renewable energy in New Zealand (and the highly renewable generation system), New Zealand is well-placed for such an industry should markets for green hydrogen and ammonia offtake develop.
The government is actively working to improve the regulatory framework for green hydrogen. MBIE prepared the Interim Hydrogen Roadmap (released in August 2023) and has undertaken market consultations in relation to the roadmap and other considerations related to the role hydrogen should play within New Zealand. See 4.5 Hydrogen and Other Biofuels and Renewables for further information.
Hiringa Energy Ltd (“Hiringa”) is a key player in green hydrogen in New Zealand. Hiringa is in the process of constructing green hydrogen production and refuelling infrastructure across New Zealand for hydrogen-powered trucks.
In August 2024, Meridian announced that its Southern Green Hydrogen Project, a proposed large-scale green hydrogen and ammonia facility, had been put on hold. Meridian concluded its partnership with Woodside to develop the project and noted that markets have been slow to resolve the gap between the cost of producing green hydrogen and potential customers’ willingness to pay for it.
Biofuels
New Zealand’s biofuels industry is small. There are, however, a number of key players across different industries that are looking to use biofuels to decarbonise their operations, with a particular focus on biofuel production using residue from existing forestry and wood processing. Air New Zealand is exploring the use of sustainable aviation fuel in its operations.
Small-scale generation of renewable energy for own or domestic use in New Zealand is regulated on a district-by-district basis through district plans. Any restrictions will often depend on the size of the structure and the zoning of the land where it is located. As a rule of thumb, small-scale, behind-the-meter solar or wind generation can be undertaken without resource consents. However, the need for a resource consent can depend on factors such as size and mounting specifications for solar and type of turbine (with reference to speed and noise produced) for wind. Often, building consent will still be required, for example, if solar panels or wind turbines are mounted on an existing building.
Additional compliance requirements need to be met should a small-scale energy producer connect to the Grid or a Local Network to sell power.
Transportation
In New Zealand, electricity is transmitted via the Grid and distributed to end users via Local Networks.
The Grid is managed by system operator and state-owned enterprise, Transpower. Transpower is required to operate and maintain the Grid and oversee the transmission of electricity across New Zealand, including to ensure that electricity transmission is safe, reliable and cost-effective.
The Local Networks in New Zealand are owned and managed by 29 electricity distribution businesses (EDBs).
Transpower charges the EDBs (and other users of the Grid) a fee to use the Grid. This fee is typically passed on from the EDBs to the retailers, together with distribution pricing that the EDBs themselves charge in respect of their own networks. Retailers pass these costs onto the end users via the electricity price they charge.
The Commerce Commission regulates the maximum revenue that Transpower and the EDBs (other EDBs that are consumer-owned) may earn over a set period (typically five years).
The Electricity Authority regulates the way in which Transpower charges its customers and the reliability and service levels required to be maintained by Transpower. The Electricity Authority is also responsible for ensuring that EDBs comply with the Code, and publishes the distribution pricing principles that EDBs are required to follow.
Storage
It is expected that BESS will become increasingly relevant as New Zealand moves closer to 100% renewable electricity generation. The Electricity Authority has determined to improve current market settings to better facilitate the development of BESS. In particular, the Electricity Authority had identified that:
Following a consultation on these topics (among others), the Electricity Authority issued its decision paper in July 2024, in which the Electricity Authority outlined its decision to (i) enhance BESS participation in the wholesale and instantaneous reserves markets, and (ii) build additional value streams through BESS participation in ancillary services.
Security of Supply and Winter Peak Demand
Security of supply in New Zealand’s power system is an increasingly relevant topic, in light of the continued transition to higher proportions of intermittent generation.
During winter months, it can at times become challenging to co-ordinate generation resources to meet peak demand in New Zealand. Managing this issue is a focus area for the Electricity Authority, which in July 2024 released its decision paper on potential solutions for peak capacity issues. The Electricity Authority decided to develop a range of solutions, including to reduce barriers to the development of BESS (as more particularly outlined in 4.1 Electricity).
In the event that Transpower (as system operator) considers that the electricity market is (or will soon be) unlikely to match supply and demand, and that unplanned outages are likely if planned outages are not implemented, Part 9 of the Code allows Transpower to make a “supply shortage declaration”. When this declaration is in force, Transpower may require mandatory curtailment by directing specified participants (eg, EDBs) to contribute to achieving reductions in the consumption of electricity by implementing outages or taking any other action specified, and those specified participants must comply.
Transpower can also issue different notices to encourage voluntary curtailment where it foresees a potential supply emergency (eg, for potential shortfalls, low residuals, forecast deficits, or real-time deficits).
Grid Congestion
The Grid is operated on open access principles, which allows developers to request to build and connect at any location on a “first ready first served” basis and means that Transpower may connect subsequent generation in the same area (provided that Transpower’s ability to operate the power system is not compromised). Developers of new projects are, therefore, required to consider the risk of other nearby projects coming online in a manner that might contribute to congestion on relevant transmission infrastructure, and assess how Transpower would likely seek to address such issues.
Managing Intermittent Supply
The Electricity Authority released a consultation paper in February 2024 on the future operation of New Zealand’s power system, which considered potential solutions for managing intermittent supply and electricity capacity issues. Proposed solutions included:
New Zealand’s bulk natural gas transmission network is privately owned by First Gas Limited (“First Gas”) and includes over 2,500 km of gas pipelines. First Gas, Powerco Limited and others also own gas distribution networks for the distribution of gas to end users in the North Island. These networks are not currently used to transport renewable gases (as of August 2024), but work is underway by industry leaders to enable the transport of both natural gas and biogas. First Gas is also working with Ecogas to inject biomethane from Ecogas’ organics processing facility into First Gas’ gas network by late 2024.
As noted in 3.3 Heat, there are no large-scale district heating or heat grids operated in New Zealand. Small-scale district heating regimes are typically privately owned, with customers being supplied steam and other services under individual supply contracts.
Green Hydrogen
New Zealand does not have a meaningful transportation network for green hydrogen.
MBIE’s Interim Hydrogen Roadmap outlined several options for the future transportation and storage of hydrogen. In relation to transportation:
Key players in the hydrogen-fuelled vehicle sector include Hiringa (see 3.4 Hydrogen and Other Biofuels and Renewables) and H.W Richardson (HWR). HWR is New Zealand’s largest privately owned transport business and is invested in dual-fuel hydrogen technology with a particular focus on dual-fuel truck fleets and a hydrogen refuelling network. Fabrum Solutions Limited is also well respected as a leader in liquid hydrogen liquefaction storage and fuel tanks in small to medium volumes.
As mentioned in 3.4 Hydrogen and Other Biofuels and Renewables, the regulatory framework for green hydrogen is being developed, however, in the meantime, the current regime for renewable energy generation will be relevant (see 2.1 Governing Law and Upcoming Changes) and the HSNO will apply (see 2.3 Regulated Activities).
Biofuels
Generally, the transportation or storage of any biofuel classed as a hazardous substance, such as bioethanol or bio/mineral diesel blends, is subject to controls and requirements that are regulated under the HSNO Act and the Health and Safety at Work (Hazardous Substances) Regulations 2017.
Wholesale and Retail Markets
The trade of electricity (including renewable electricity) between generators and retailers in New Zealand occurs via the wholesale market. In order to participate in the wholesale market, generators must make offers to the system operator (being Transpower) to supply a certain amount of electricity, at a particular pricing node, at a proposed price in auctions run at 30-minute intervals in the future. Transpower will select the lowest cost offers that can satisfy demand whilst ensuring reliability of supply, taking into account a range of factors (including distance between the location of the generator and the electricity demand). All generators that are dispatched receive the same clearing price.
Electricity retailers purchase electricity at wholesale prices and supply their customers with the electricity they need. The cost that retailers charge their customers for electricity typically includes the costs of transmission and distribution.
Electricity Futures Market
Market participants are able to hedge their financial risk of electricity price movements (over up to the next three calendar years) via the electricity futures market, operated by the Australian Securities Exchange. This market allows participants to enter into electricity futures contracts against the Ōtāhuhu Grid reference node and the Benmore Grid reference node on a cash-settled basis.
PPAs
Subsidies or contracts for difference are not available to generators in New Zealand to support the development of new renewable energy projects. Accordingly, if developers require long-term pricing certainty for all or any part of the electricity to be produced by a proposed project, they must independently procure and negotiate a satisfactory offtake contract themselves (see 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements).
New Zealand does not have a significant market for the trade of renewable gas.
While some landfills use the renewable natural gas produced to generate electricity that is injected into the Local Network, the large majority of renewable gas is used by the producers themselves, generally to fuel their industrial plants.
The domestic market for the supply of heat from renewable sources is largely limited to individual supply contracts between generators and consumers.
Hydrogen
As mentioned in 3.4 Hydrogen and Other Biofuels and Renewables, Hiringa is in the process of developing a green hydrogen refuelling network across New Zealand, which will allow heavy-duty transport vehicles to use green hydrogen instead of fossil fuels.
HWR introduced the first hydrogen-diesel dual-fuel truck in the Southern Hemisphere and is trialling dual-fuel trucks in its fleet. In respect of its refuelling network, HWR is utilising Allied Petroleum’s fuel stop network to distribute hydrogen as an alternative fuel by adding this capability to existing and new sites.
Biofuels
There is not a significant domestic market for the trade of biofuels in New Zealand.
RECS
New Zealand does not have a mandatory or regulated market for renewable energy certificates (RECs). BraveTrace and Energy Market Services (owned by Transpower) are providers of RECs in New Zealand. BraveTrace administers the New Zealand Energy Certificate System upon which a form of RECs (referred to as “NZ-ECs”) can be acquired. Energy Market Services issues International Renewable Energy Certificates (referred to as “I-RECs”) in New Zealand, which are governed by the International Renewable Energy Certificate Foundation.
Corporate PPAs
Developers of renewable energy projects are increasingly seeking to source corporate PPAs as a means of reducing merchant power price risk and with a view to raising project debt. This is particularly the case for independent developers who, unlike New Zealand’s gentailer-developers, do not have their own retail books to service. A number of corporate PPAs were signed in New Zealand in 2023, including by Amazon, Microsoft, the Warehouse Group, New Zealand Steel and Ryman Healthcare.
Corporate PPAs are typically structured either as:
The key benefit of a PPA for a renewable energy generator is the revenue certainty it provides and the resulting de-risking of the investment case and ability to raise (or maximise the level of) project financing debt.
The key benefits of a PPA for a corporate buyer are as follows:
In recent years, the development of onshore renewable energy projects in New Zealand has predominantly been in wind, solar and geothermal. Development activity in BESS is also increasing and a number of solar developers are pursuing projects in a manner that allows for the option of a co-located BESS to be installed at a later date.
A significant change in the onshore renewable energy market in recent years has been the large increase in the number of independent developers that are pursuing new solar projects in New Zealand. New Zealand now has a substantial pipeline of solar projects at various stages of development.
The following parties play a key role in the development of onshore renewable energy generation projects in New Zealand (in addition to the providers of equity and debt capital to the project):
Proposed Regulatory Regime
The offshore renewable energy market is still in its infancy in New Zealand. In Taranaki, there is opportunity for offshore wind to supplement the transition away from oil and gas exploration.
MBIE has been leading the policy development for the regulatory framework to support offshore renewable energy technology, including wind, solar, wave, tidal and offshore transmission infrastructure. As of August 2024, the following indicative timeframes apply for the offshore energy regulatory regime being developed by the government:
In August 2024, the government announced its decisions on the design of the proposed regulatory regime. The framework will follow a developer-led approach (where developers will select the sites for their applications), with feasibility permits to be granted for up to seven years to undertake studies on the specified seabed area (on a “use it or lose it” basis). Feasibility permit holders will have the right to apply for a commercial permit to construct and operate the project. For further information, see the New Zealand Trends & Developments chapter for Renewable Energy.
Potential Locations For Offshore Wind
Researchers and developers have identified Taranaki, Waikato and Southland as prime locations for offshore wind, due to the quality offshore wind and the relatively shallow seabed. Several developers have begun engaging with local communities and undertaking early feasibility work to understand New Zealand’s operating landscape and environment.
Development Considerations
There are a number of considerations that developers are focused on in relation to the development of offshore energy projects in New Zealand:
Key Features of Project Finance Structures for Renewable Energy
The project finance structure for renewable energy projects in New Zealand is usually very similar to the project finance structure for other asset types. In particular:
Key Legal Considerations
Key legal considerations for financiers that apply to renewable energy projects specifically include:
There are no specific rules or regulations that apply to the project financing of renewable energy projects in New Zealand (as opposed to the project financing of other asset types).
Subsidies and Incentive Schemes for Renewable Energy
New Zealand does not have any direct government incentive schemes aimed specifically at renewable energy, such tax deductions, subsidies or contracts for difference. The government signalled in its August 2024 policy decisions for the proposed new offshore wind (and other offshore renewable energy) regulatory regime that it does not intend to offer price support or stabilisation mechanisms.
The Emissions Trading Scheme (ETS)
The ETS, introduced in 2008, is the primary legislative tool intended to incentivise emissions reductions in New Zealand. The ETS is a “cap and trade” system, that imposes a price on each tonne of carbon dioxide equivalent emitted by participants. The ETS applies to all sectors and all gases (although agricultural emissions are presently only reported and are not priced). The ETS operates as a domestic-only system.
Under the ETS, mandatory participants are required to “surrender” one New Zealand Unit (NZU) for each tonne of carbon dioxide equivalent emitted. The ETS operates as a “net” scheme, in that certain removal activities (most notably, forestry) can earn NZUs, with one NZU available for each tonne of carbon dioxide equivalent sequestered. Participants in the ETS can acquire NZUs to meet surrender obligations in a number of ways:
The particular activities that trigger a person to be a mandatory participant in the ETS and to incur surrender obligations are defined in legislation and are subject to minimum thresholds. They include a wide range of activities across the forestry, liquid fossil fuels, stationary energy, industrial processes, synthetic gases and waste sectors.
Impact of the ETS
Because the ETS is a net scheme with emissions and removals treated on a “like for like” basis, the ETS has incentivised high rates of afforestation, especially in exotic species such as pinus radiata. The credits awarded for these projects can then be sold to mandatory participants for use in meeting emissions liabilities.
A surplus of NZUs in the system has kept prices low, which plays into decisions on whether it is cheaper to meet the emissions liability under the ETS or invest in decarbonisation initiatives. Despite the ETS undergoing numerous reforms since it was introduced in 2008, there remain questions about its effectiveness in incentivising the energy transition.
The cessation of renewable energy activities is regulated under the conditions of resource consents granted under the RMA for those activities. Conditions generally include requirements for decommissioning and site rehabilitation within specified timeframes. Bonds may also be required to be provided to ensure decommissioning is undertaken.
For offshore wind (and other offshore renewable energy technologies), in its August 2024 policy decisions on the proposed regulatory regime, the government outlined that commercial permit holders will be subject to decommissioning obligations that must be backed by one or more financial securities. Feasibility permit holders will, when applying for a commercial permit, be required to provide a decommissioning plan, a decommissioning cost estimate and a proposal on financial securities. The quantum of the financial securities will be determined by the Minister for Energy, based on the risk profile of the developer, and the Minister may adjust these requirements over time if required.
In summary, the significant future developments of renewable energy policy in New Zealand include the following:
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