New research shows New Zealand can meet its looming energy shortfall far cheaper and more securely by accelerating installations of hot water heat pumps and rooftop solar, rather than spending billions importing Liquefied Natural Gas (LNG).
NZ Green Building Council (NZGBC) research finds the Government’s plan to start importing LNG for electricity generation would cost households and businesses up to $8.3 billion over 15 years, drive up energy prices, and expose the country to another volatile global fuel market.
Download the report here
Experience in other countries has clearly shown that connecting to international gas markets, as the proposed LNG importing would do, significantly increases energy prices.
This will put even more pressure on our industries and households already struggling with high energy prices and will accelerate business closures and job losses.
Energy costs are a contributing factor to large reductions in production of some energy intensive industries. As an example, pulp and paper export volumes fell an astonishing 41% between 2020 and 2025.
The new research, reviewed by energy experts and launched today, finds that this LNG proposal is moving forward without proper examination of lower cost options like rooftop solar and energy efficient hot water systems that can be rolled out at scale for less cost.
Investing in hot water heat pumps and rooftop solar panels:
• lowers the cost of generating this volume of energy by $3b - $6b.
• saves Kiwi families almost $7b off their energy bills over 15 years.
• improves energy resilience for Kiwi families.
Key findings
The same electricity could be delivered with a $2.5b investment in rooftop solar panels and hot water heat pumps.
Solar panels and heat pumps are long life capital assets that reduce household bills, while LNG is an ongoing annual cost vulnerable to international price shocks.
“Levying billions of dollars of charges onto every New Zealand family and business to increase our dependence on overseas fossil fuels is crazy,” says NZGBC chief executive Andrew Eagles. “This gas is expensive. It locks in high prices when we could deliver that energy with modern solutions which lower costs for Kiwi families and improve resilience.”
Wholesale LNG fuelled electricity is expected to cost more than double that of new renewable generation. Add in the cost of the taxpayer-funded LNG terminal and the full cost ranges from $260-$540MWh. Residential natural gas prices could rise a further 25%, while many industrial users would become uneconomic.
“Adding one of the world’s most expensive fuels to New Zealand’s energy mix won’t solve the affordability crisis,” the report says. “It locks households into higher bills for decades.
“Rather than pay billions to lease an LNG terminal, the Government could better use that money to support households to install solar and heat pumps to lower their cost of living. Other countries, including Australia, Europe, the United States and Canada, are providing this kind of support to families.”
More NZGC energy research here:
Heat pumps could cut household energy bills by $1.5bn per year, help protect thousands of Kiwi jobs.