Transpower Report Highlights Continued Progress Towards Highly Electrified Future

Key indicators in Transpower’s latest Whakamana i te Mauri Hiko monitoring report show positive signs of electrification growth with increased generation connections and enquiries, growing investment in battery energy storage systems (BESS) and an uptick in electricity demand.

Executive General Manager Strategy, Regulation & Governance David Knight says approximately 14 GW of new generation projects have progressed to an advanced stage or later, representing over 45% of the total pipeline.

“The pipeline of total generation capacity being planned to connect to the grid continues to increase, reaching 32 GW – that's three times the current installed capacity of New Zealand.

“This is sufficient to exceed our report’s ‘Accelerated Electrification’ scenario of 22 GW total installed capacity by 2050. Of course, not all of these projects will be built, but it’s encouraging to see what is advancing with at least 438 MW of generation connecting to the grid in the last two years,” he said.

The report also shows innovation in flexible demand and large-scale BESS is also evident, with increasing grid connection enquiries for large-scale solar paired with BESS.

“There is currently approximately 800 MW of generation and BESS under construction. In addition, we have a further 6 GW in enquiries for combined large-scale solar and batteries (up from 2.3 GW in January 2023) with 630 MW now in the delivery stage. The trend of battery and solar pairing extends to residential solar, with around one in three household connection points installing a battery with a solar installation.”

Mr Knight said the report also highlights signs of national electricity demand growth, despite headwinds from industrial users.

“The residential sector is now the single largest electricity-using sector in New Zealand, overtaking the industrial sector for the first time. These signs of growth are set against a decline in industrial energy demand, notably from the wood, pulp and paper sector.”

Data centres are also expected to contribute to increased demand by as much as 5,000 GWh – similar to that of the New Zealand Aluminium Smelter (NZAS).

“Data centres, alongside low-carbon aviation fuels and green hydrogen, could materially shift the future of energy demand in New Zealand.”

As demand continues to grow, more investment in flexible demand is needed to help address peak capacity risks, which Transpower has identified as a key power system concern in its recently released Security of Supply Outlook paper.

“Security of energy supply risk was elevated earlier this year due to below average inflows into hydro generation catchments, gas supply constraints, higher electricity demand and lower wind generation. Compounding this was variability in other renewables such as wind and solar, to meet demand at peak times. It is expected peak demand will continue to rise as electrification ramps up. Both will continue as security of supply risks looking out to 2030 until sufficient investment in flexible resources and storage occurs.”

Providing further confidence to renewable developers and investors is the recent 20-year electricity supply agreement with NZAS for 572 MW of electricity – representing approximately 13% of national demand.

“Equally significant in the NZAS agreement is the demand response arrangement, under which the smelter can be requested to reduce its energy consumption by up to a total of 185 MW. These provisions will provide better dry year risk management to the sector as a whole.”

Mr Knight says this report, as well as other future energy sector analysis (1), reflects a broad consensus of the key contribution of electricity to Aotearoa New Zealand’s future energy system and net zero future.

“Our industry has a huge task ahead in preparing for the electrification of the economy while continuing to deliver the service and reliability New Zealanders depend on. It’s our job is to ensure the grid and power system are ready to meet the demands of the future – new generation and new load.”

Transpower has introduced a dedicated ‘Future Grid’ division to its business, with a singular focus on developing the grid of the future.

“The Future Grid programme of work will build on the success of our Whakamana i Te Mauri Hiko work and focus on what the future transmission network power system looks like out to 2050, and its role in enabling Aotearoa New Zealand’s energy transition.”

This report is part of Transpower’sWhakamana i Te Mauri Hikowork programme, which estimates a 68% increase in electricity demand by 2050 driven by underlying demand growth and electrification of transport and industrial processes.

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