It might surprise you to learn that emissions from New Zealand’s electricity system are on the rise. In fact, Genesis Energy’s carbon emissions are up 82% compared to previous years. This is due to an increasing amount of coal being burned at Huntly power station which is currently responsible for about 5% of the country’s total emissions. 

Why are we burning so much coal? 

Well, we’re lucky in Aotearoa to have an electricity system based mainly on hydro generation. However, we have relatively low storage in our hydro lakes, which creates a “dry year challenge” meaning if we get poor conditions, like low rainfall, it significantly reduces the hydro lakes water level and therefore their ability to produce electricity. So, when we have a “dry year” we currently need to get our energy from somewhere else; Huntly gets switched on and coal is used to fill this gap. 

Could coal be phased out?

We know that the real issue is decades of under-investment in renewable energy. If there was more wind, solar and geothermal capacity, we would be less reliant on hydro and, by extension, coal. Aotearoa’s electricity market is made up of several large companies that both generate and sell power, i.e. ‘gentailers’. They generate power with their own facilities and sell that power themselves. This means that the big generators have an incentive to keep electricity supply scarce (i.e. not build more renewable generation). 

Is our electricity market designed to fail people and planet?

The reason for the lack of renewables investment ultimately comes down to how the wholesale market is designed. The spot price is determined by the last form of generation to bid into the market. Lower cost generation (hydro, wind, geothermal) bids in first, and more expensive generation (coal, gas, diesel) only bids in when demand is high enough to bring up the price. So far so good. The trouble is that every kilowatt hour generated receives the wholesale price. So, when Huntly is burning coal, generators make a sizable profit on the low cost kWhs they generated from hydro and wind. It’s against their financial interests to close Huntly and replace it with renewables. High emissions and high prices are correlated.

So while the big energy companies profits are going through the roof, residential electricity prices have risen 48% since 2000.

It was recently revealed that Genesis has no plans to build what would be NZ’s biggest windfarm despite receiving consent in 2013. And Meridian was accused of anti-competitive behaviour in 2020 when it spilled water that could have been used for generation. The result was that Huntly burned coal, pushing up emissions and wholesale prices (and, by extension, profits). 

The issues plaguing our electricity market are happening because of underinvestment in renewable alternatives and a market designed for profit-maximising businesses, not people.

How can we create a new electricity market that fits the 21st century and serves the planet and people? 

Aotearoa would benefit from building heaps of renewable generation, tackling energy poverty head-on and engaging communities in the process. We want new generation to be owned and managed by regular people and communities (literally putting power in the hands of the people). We know that the solutions exist, are in reach and will only be successful if we collectively push for change and become engaged in how we generate, distribute, and consume electricity in the future. Aotearoa can absolutely make it to 100% renewable energy, but it will take work and a system detached from profit prioritising. 

Written by Jasmine Walles and Alva Feldmeier

350 Aotearoa will continue to push for homegrown energy solutions across the motu, and, together, we can push our politicians to invest in affordable clean energy, and support energy sovereignty for people and communities.

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