Each year, the MBIE publishes a report called Energy in New Zealand.* Energy is a crucial input in all parts of our lives, powering our transport and our cities. MBIE’s report starts with an infographic showing various energy facts and figures:
To pick up on one fact in this infographic, solar PV (photovoltaic, i.e. solar panels) generation in New Zealand is now equivalent to the demand for all the households in the Kaikoura District. This might be impressive, if not for the fact that Kaikoura only has around 1,500 households, about 1% of the nationwide total (and a much smaller share of our total electricity demand, which also includes demand from business, industry etc).
As we’ve covered many times, New Zealand is great at making electricity – and one of the top countries for renewable electricity generation. This is driven by our strong hydro resources, with geothermal and wind playing growing roles.
GWh = gigawatt-hours, a unit of energy. The graph in the report was labelled wrongly – I’ve fixed this up with the Excel data.
2014 was a good year for renewable generation – which varies from year to year depending on rainfall and wind – and almost 80% of all electricity came from renewable sources, the best result since 1996. These results were inevitably trumpeted by the Minister, who has actually done very little to influence those figures. Such is politics, but the government should be doing more to encourage renewables.
The other interesting trend from this graph is that total generation has been very flat for almost a decade. That’s partly because we’re using power more efficiently, and partly due to economic factors – industrial users (e.g. the smelter in Tiwai Point) and businesses are big power users, so changes in their activity can make a big difference to demand.
Electricity prices have also continued to rise, as I’m sure we’ve all noticed – up 3.8% for the year to March 2015, despite flat demand and very little inflation in the wider economy. However, these prices are still pretty reasonable to what people pay across the OECD – there’s a lot of variation between countries, but we’re just slightly above the OECD average on a ‘purchasing power parity’ basis.
There’s actually not much written on transport in the Energy in New Zealand report. However, consumption of oil products like petrol and diesel is mostly due to transport demand, so let’s take a look at that.
Petrol demand is still down on where it was in the mid-2000s, while diesel demand (mainly from commercial vehicles – trucks, vans and so on) has risen. As a quick factoid, the report estimates that buses use 4% of NZ’s transport diesel, and trains use 3% – those stats are for 2013, and will presumably drop now that Auckland’s passenger trains have been electrified.
The graph below shows ‘real’ (i.e. adjusted for inflation) prices for petrol and diesel over the last 40 years, showing that prices have fallen somewhat in the last year, and are lower than they were during the early 1980s.
There’s another graph in the report which shows that NZ has fairly cheap petrol prices by OECD standards – only Australia, the US, Canada, Luxembourg and Switzerland are cheaper. We’ve got cheap diesel, too, but that’s largely because diesel vehicles pay Road User Charges rather than being taxed at the pump.
Some quick thoughts on “energy intensity”, since it’s a topic close to Patrick’s heart. This is a measure of the energy used to create each unit of gross domestic product (GDP) – essentially, how much energy is needed to create a dollar’s worth of economic value.
According to the MBIE, “the overall energy intensity of the economy has improved in real terms by an average rate of 1.1% per annum” between 1990 and 2014, and now sits at 2.7 megajoules per dollar. This is ‘real’ improvement, i.e. adjusted for inflation.
This sounds good, but as the MBIE continues, “the most significant factor in this… has been the rapid growth of the commercial sector (low energy intensity) relative to the industrial sector (high energy intensity)”. That is, much of the improvement is just because our economy now looks different to 25 years ago, with less industry and more services.
Some people have pointed out that by switching to more “commercial”, service-based industries and importing manufactured goods instead, we’re simply outsourcing our energy use (or greenhouse gas emissions) to other countries. That’s true, but not a question with an easy answer. We can talk about ‘decoupling’ our economy from expensive and environmentally damaging energy use, but we haven’t actually gotten very far on it yet.
Where we can get a lot more efficient with our energy use is in transport. We can encourage public and active transport, and more efficient cars, and eventually electric vehicles. We shouldn’t do this just for the sake of it, and it’s not about the energy itself. Saving energy is a means to an end – reducing greenhouse gas emissions, or saving costs (e.g. of importing or producing the energy). So the thing to do is find cost-effective ways of achieving these goals.
* Follow the link for the report itself, as well as Excel tables if you want to see more of the stats in the report.