Power sector in 2030
New Zealand benefits from a power mix with a relatively high share of renewables of 82% in 2019. The country has set the target of 90% renewable electricity generation by 2025 and 100% renewable electricity by 2035. A Paris Agreement compatible pathway requires New Zealand to be near 100% renewable power by 2030 and phasing out coal in the current decade and natural gas by 2031 to 2034 latest.
New Zealand would need to diversify its renewable energy mix in the power sector amid concerns about relying on hydro power as hydro generation declines during El Niño events. Coal and gas were used to meet the recent shortfalls of hydro generation in 2019 and 2021. Geothermal, wind, solar and storage technologies along with energy efficiency measures should be scaled up to meet hydro power shortfalls and replace fossil fuels. Current plans focus on wind, geothermal and gas-fired peaking plants. New Zealand is also investigating a pumped hydro storage project to manage dry years when lake levels are low, to replace the current backup for energy production largely coming from coal power plants.
Towards a fully decarbonised power sector
To align with a 1.5°C compatible pathway, New Zealand would need to reduce its power emissions intensity by 94% from 2019 levels by 2030 reaching 10 gCO₂/kWh by 2030 and 0 or below by 2040.
While negative emissions technologies such as BECCS require upfront investments, a later phase out of fossil fuel will result in a higher reliance on negative emissions technology.
Several scenarios show the phase out of unabated fossil fuels, displaced by renewable energy without the need for BECCS or fossil fuels with CCS. Considering New Zealand’s current high levels of renewable energy in the power sector, renewables with storage offers a more likely alternative path to decarbonise the power sector.