Overall energy analysis

Players in the energy market are undertaking their planning in an environment of uncertainty. There are mounting concerns about the resilience of our energy supplies to severe weather events, climate change, natural disasters and demand-side changes. This uncertainty is not a new phenomenon, and the energy market has demonstrated its robustness in the past. The sector has ensured that there is sufficient energy to support growth in the dairy sector and there is continued evidence that the sector is managing uncertainty adequately. For example, the diversification of generation investment into non-hydro renewable energy should improve dry-year supply levels, vulnerability to international oil prices, and the carbon footprint of energy production.[92]

Figure 35: Consumer energy demand by fuel type

Source: New Zealand's Energy Outlook 2009 edition, page 4.

Transpower recently undertook consultation on its Transmission 2040 document, which outlined a number of different scenarios for the required capacity of transmission. Through this process it has been able to make some choices about investment over the long term. A key consideration is the need to ensure that the grid is operable under a number of different use scenarios.

The sector is also exploring investment opportunities in smart metering, smart networks, convergence and distributed generation. Despite the infancy of much of this technology, these investigations should improve the responsiveness of the sector, ensure that current capacity is being maximised, and improve the certainty under which investment to increase capacity occurs. The challenge for the Government is to ensure that the regulatory settings are appropriate.