Electrification Roadmap

In 2020, we published a report, Whakamana i Te Mauri Hiko – Empowering our Energy Future. It set out the required investment in new generation and transmission consistent with meeting emissions reduction commitments through electrification.

We found that, supported by the right actions across the sector, investment in ever cheaper renewable energy resources, such as wind and solar, could meet increased demand due to electrification. In addition, if delivered in a smart way that made the best use of intermittent renewables coupled with hydro, and flexible transmission and distribution infrastructure, such a system could be more resilient, reliable and deliver power at lower cost. 

In February 2021, we launched (via webinar) our Electrification Roadmap. It identified policy, commercial and consumer levers available to accelerate the decarbonisation of Aotearoa New Zealand’s transport and process heat sectors, consistent with meeting our 2030 Paris Agreement and 2050 net-zero carbon economy commitments.

The report finds that electrification and increased renewable generation can reduce New Zealand’s annual emissions by around 4.7Mt CO2-e while generating annual net benefits to the economy of around $500 million from 2030 building to 9.6 Mt CO2-e and $1.4 billion a year by 2035.

Driving down vehicle emissions

The transport sector accounted for 21% of total emissions in 2018 and 37% of those covered by our net-zero target. Our analysis has found that transport electrification provides one of New Zealand’s largest and most cost effective opportunities to reduce emissions. The technology including electric cars, vans, SUVs, utes and light trucks already exist, or are now coming to global markets.

Low emissions solutions for heavy trucks, shipping and aviation are in clear sight, but will take longer to become fully developed and widely available. As a result the primary focus in the 2020s should be on electrifying light vehicles and light duty trucks which represent 80% of transport emissions.

Regular electric vehicles are, in some cases, already cheaper on a total cost of ownership basis than their petrol or diesel equivalents, despite currently high up-front costs. Over three years, counting purchase price, fuel and re-sale value, a new medium sized fully electric car can be around $3,000 cheaper to own. Many fleet buyers already know this and have the finances behind them to overcome currently high purchase prices. But as has been proven internationally, with the right mix of policies, it is possible to put countries on an accelerated path to mass adoption. This can occur when electric vehicles are made more financially accessible to all new buyers and importers have the right settings in place to build strong supply chains. From here, a broad second-hand EV market can be developed.

As new electric cars, SUVs, utes and light trucks start to dominate the new vehicle market, the stage is set for their mass adoption through second-hand purchases three to five years later; because the only way to get a regular kiwi family into a $20,000 or $10,000 electric vehicle, is if somebody bought it new a few years before. The opportunity to start priming the pump for mass adoption through the second-hand market is now.

In addition to import standards and financial incentives, usage incentives around fringe benefit tax or road use or parking priority are options that could further incentivise additions. And this all needs to be supported through a revolution in the roll out of public charging infrastructure, both for rapid charging and to provide for those without off-street parking.

High technical standards and the right regulatory and market settings can also maximise the benefit of having millions of EVs connected to our electricity system to limit or reduce peak demand, optimise the uptake of variable renewable generation and reduce overall costs to consumers.  

With the right settings, outlined in the Electrification Roadmap, we could bring forward the mass adoption of electric cars, SUVs, utes and light trucks by five years, transforming our transport sector by the end of this decade. This could deliver net benefits to the economy of $600 million a year from 2030, even after initially higher up-front costs are taken into account. These settings can be transitional in nature as the economics for EVs rapidly improve and as purchase price parity is reached from the middle of the decade. After successfully kick starting EV adoption in the 2020-25 period, measures could be phased out across the 2025-30 period. Settings could then be refocused to decarbonise heavy trucks, trains, shipping and aviation.

Taking the climate heat out of process heat

Around 50% of process heat emission come from the low temperature applications where it's used in food processing and for space and water heating.

Medium temperature process heat is used in applications such as the production of milk powder while at high temperatures, it’s used in the manufacture of products like steel and cement.

Right now, by far the greatest opportunities for emissions reductions exist in the low to medium temperature end of the spectrum.

As we have seen in the transport sector, there is a spread of available, and cost effective, technologies to cut emissions. There are options at the low temperature end of the scale where the benefits already outweigh the costs; and much more can be achieved at carbon prices of around $50/t.

But as with transport, the major barriers are not all to do with the what is already, or is close to being, cost effective. Again, high up-front costs are a major barrier. So too is a lack of capacity in the sector to undertake audits, install and maintain low emissions systems.  

For space heating, hot water and to meet some manufacturing heat loads, high efficiency heat pumps can quickly pay-back their up-front costs and offer running cost up to 70% cheaper than fossil fuel equivalents. A lot is already being done, particularly within the public sector, to cut low temperature process heat emissions that can help build the capacity for more private sector action and can be extended to cover diesel, LPG and gas.

Medium grade opportunities, such as converting existing boilers in dairy factories, poses much more of a challenge. Again, high up-front costs are a barrier, even if from ETS prices of around $50/t, conversions begin to make economic sense.

On case by case basis, a hybrid solution may well be the most appropriate. This could start with maximising energy efficiency gains, then using high efficiency heat pumps for pre-heating leading to lower main boiler loads which may then be suitable for conversion to electrode boilers or co-firing with, or full conversion to, biomass.

Regional energy supply chain opportunities or constraints should also be considered in selecting the most appropriate conversion technology out of electricity, biomass or geothermal heat.

Again, as with transport, cost effective, solutions for the top end of the scale (e.g. high temperature applications like steel) are not yet readily available. While they are developed, it makes sense to focus on maximising the best of the opportunities that already exist. For low temperatures, including space and water heat, and medium temperature process heat, the potential is to reduce emissions by around 1.3 million tonnes CO2-e, at a net cost of $100 million, around $77/t, in 2035. 

Read more about how we are supporting the building of a highly renewable, low-cost electricity system to power Aotearoa New Zealand’s transition to a net-zero carbon economy here.

A recording of the Electrification Roadmap webinar hosted on 10 February 2021 is available to view below. 


Data tables, Feb 2021. [ xlsx 295.6 KB ]