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Reflections from the 2024 NZ Offshore Renewable Energy Forum

The 2024 NZ Offshore Renewable Energy Forum, held in Hāwera on 20-21 March, brought together industry, Iwi, community, and key sector stakeholders to discuss opportunities to develop an offshore renewable energy industry in Aotearoa New Zealand.

Attending and speaking at the Forum, Te Waka General Manager Economic Development Rosie Spragg shares her reflections on the strategic position of the Waikato region in offshore renewable energy, the opportunity to transition to a clean energy-based economy, and the vision and leadership required to achieve this transformation.

What’s at stake

Renewable energy production is an area where the Waikato can take a strategic leadership position and develop a clean energy-based economy.

With nine hydroelectric stations, the country’s largest thermal power station, northernmost wind farm, and 90% of the country’s geothermal energy supply, the Waikato region is a leading energy generator blessed with physical, natural, and economic assets that position us strongly to drive New Zealand’s clean energy transition.

The NZ Offshore Wind National Impact Study, which was released at the Forum, sizes the potential economic, social and environmental impacts of a national offshore wind energy industry. The study’s mid scenario (‘Electrification Plus’) highlights the opportunity for the sector to generate $50 billion real GDP between now and 2050, create 10,000 jobs during the build-out phase, and a further 2,000 ongoing jobs. The report’s high-end scenario estimates a real GDP impact of $94 billion.

While the report does not estimate economic impacts at a regional level, in the context of the Waikato’s $34 billion per annum regional economy, the scale of the opportunity presented by offshore energy as an economic contributor is significant.

So too is the scale of demand growth. Transpower estimates that ~70% growth in generation is needed by 2050 to enable electrification and decarbonisation of our economy. However, the broader opportunity is to look beyond local market needs and explore international demand for decarbonisation solutions.

Hayden Mackenzie, Investment Manager at NZTE, provided a thought-provoking address at the Forum, speaking to the opportunity for New Zealand to export fuels produced using renewable electricity (such as ethanol, ammonia, methanol) to international markets that lack the natural assets and advantages we possess to produce clean energy at scale.

The export opportunity goes beyond low carbon fuels, with a wide range of opportunities to embed renewable electricity into high value exports discussed at the Forum, including silicon products, carbon capture, onshore aquaculture, wood and metal products, fertilisers, and data centres.

A fundamental change in approach is needed – the status quo will not deliver transformation

A step change in renewable energy generation and transmission is required to meet local demands and enable new export opportunities, and this is unlikely to occur without system change. Current system settings are not delivering increases in generation capacity at the pace needed, nor are we seeing investment in the types of flexibility or demand management tools seen in international markets to enable more efficient utilisation of existing assets.

Furthermore, if our ambition is to serve international markets with exports embedded with clean energy, significant investment is needed to develop these new industries and trading relationships.

From a Waikato regional perspective, we are conscious of the inter-dependencies between the development of the energy sector in our region and the investment needed in assets and capabilities in other regions, such as the critical role Port Taranaki will need to play in enabling development of an offshore renewable energy industry.

A fundamental rethink of the energy system and the incentives that underpin it is needed. This requires bold leadership at a central government level, akin to that of the telecommunications sector reforms that drove investment in the ultra-fast broadband network.

The coalition Government has set ambitious goals to double the value of our exports within the next decade and to double renewable electricity generation. We see a positive symbiotic relationship between these two goals, however, details on how the Government intends to achieve these outcomes is as yet unclear.

Ministerial addresses at the Forum indicated a preference from the Government for a relatively hands-off approach. It is fair to say that this messaging did not engender confidence in the room at the Forum, with many speakers highlighting the need for a more strategic approach from the Government that focuses on investment in enabling infrastructure and system design to incentivise the outcomes the Government wants to achieve.

Tough trade-off decisions must be made, requiring long-term vision and collaborative leadership

As echoed in our reflections on the 2024 NZ Economics Forum, there are difficult trade-off decisions to be made in the development of New Zealand’s energy industry. Decisions on the policy and regulatory frameworks underpinning the sector, on investment in different types of enabling infrastructure, on balancing consenting processes and environmental outcomes, on enabling Iwi and community involvement, on navigating the energy ‘trilemma’ of affordability, security and sustainability – to name a few.

We need a clear strategic framework for making these tough decisions, working towards a shared vision for what we want the energy sector to deliver for New Zealand. The ongoing absence of a national energy strategy is increasingly stark. We risk decisions being made in isolation – whether by central government, local government, or private investors – that take a short-term or siloed perspective, potentially inhibiting achievement of national goals and damaging the social license needed to transform our energy system.

This risk was made quite apparent at the Forum, with concerns raised about the potential for conflicting policy positions within Government on oil and gas, seabed mining, and offshore wind. A national energy strategy should help to guide trade-off decisions about managing competing interests such as these.

Social license was a key discussion topic at the Forum, with several speakers expressing caution at accelerating consenting processes if this is done at the expense of appropriate Iwi/Māori and community engagement. Achieving social license requires clear articulation of a vision and strategy for our energy system that will reduce energy hardship, genuinely enhance environmental outcomes, and create meaningful benefits for communities.

The opportunity is for central and local government, industry, and community leaders to work together on defining a vision and strategy for the NZ energy sector that can be delivered at national, regional, and local levels. Ideally, the vision and strategic direction would garner a level of bi-partisan support to enable investment certainty.

As the Waikato region’s economic development agency, Te Waka has a key role to play in facilitating connections at a regional level, engaging with industry, Iwi and community leaders to understand the opportunities and challenges in the energy sector, and advocating strongly for the development of an energy system that will enhance economic and social wellbeing for the people of the Waikato.

If you are interested in supporting Te Waka’s work in the energy sector, please get in touch.

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