Generation shortfall in the transition phase

Adding renewables and supplementing this power with distribution and storage infrastructure will have to be rapid and coordinated if energy security issues are to be avoided as fossil-fuel generation assets drop off the grid in the coming years.

DAVISON In Australia, there has been commentary that new renewables generation capacity is not coming online quickly enough to offset the exit of fossil fuel generation. This brings the risk of blackouts and energy insecurity. Could this affect the public’s commitment to the task?

SUTHERLAND Although New Zealand is not in the same position as Australia – we already have a lot of renewables and probably do not have the same tension as described – we have a similar challenge to Australia in the sense of resourcing the work that needs to be done. If we cannot find the workers or buy the transformers, wind turbines or solar panels, it is going to be a real hurdle.

As everyone globally is getting into renewables at the same time, it will be very difficult to purchase the resources and equipment required to complete the renewable transition – and it is going to be expensive.

HOWELL Along with mandatory reporting under the climate-related disclosures regime, New Zealand companies have really upped their game – particularly the energy companies. The five major gentailers’ level of sustainability reporting has gone from good to excellent. The work that has been done in reducing organisational emissions has also supported a particularly marked improvement in the last couple of years.

The next challenge will be getting a better grip of scopethree emissions. But there has definitely been an improved level of reporting on all fronts.

RAMAKRISHNAN One of the huge challenges in Australia is whether the cost of power can be brought down. This is a promise being made by political parties. But governments are already talking about extending the lives of coal-based thermal power plants to ensure adequate supply, which will come with a cost. In short, lower cost of power is not going to happen in the near-to-medium term.

The second aspect is the geopolitical situation and supply chain issues. It can lead to opportunities, such as Brookfield’s plans to develop wind and solar panel building capacity in Australia. But all these projects will take time, which will add to execution challenges and thus lead to delay in reaching interim targets. This will result in additional cost.

The whole world is moving toward transition. There is a lot of ‘push’, with the US being a good example. Everyone also wants energy security and localised production in the face of unpredictable geopolitical situations. These things can obviously add to cost, and in a scenario where interest rates are pretty high it can make investments unattractive. This will be a key challenge for Australia. There are opportunities, but there can be significant challenges if policy is not nimble enough to address the risks.

ZHOU I agree that ensuring transition happens while at the same time there is stable, affordable power for consumers is critical. There are a lot of hurdles and avenues for us to achieve this, but it requires us as an industry to be more creative.

For example, everyone agrees transmission is a big challenge because we need to rewire the country, and there are issues with supply chains and skill shortages. We simply do not have enough people to build the new transition lines even if we remove all other development hurdles such as NIMBY [not in my back yard] issues.

On the flip side, there is also a lot of spare capacity in the distribution network. Essential Energy says it has 2.5 gigawatts of capacity, for instance. We need to find a small-scale solution on a distribution level to create distributer generation to plug the gaps. We are trying to do this. I do not have a silver-bullet solution, but the industry needs to be more creative to find a way to make this work.


Along with mandatory reporting under the climate related disclosures regime, new Zealand companies have really upped their game – particularly the energy companies. The five major gentailers’ level of sustainability reporting has gone from good to excellent.