Electricity sector pathway to achieving net zero

Boston Consulting Group (BCG) is a global management consulting firm known for its expertise in business strategy and innovation. BCG has been at the forefront of addressing pressing global challenges, including climate change. Their report, ‘Climate Change in New Zealand: The Future is Electric’, highlights the pivotal role of the electricity sector in achieving New Zealand’s ambitious net zero carbon target by 2050. BCG’s insights and recommendations provide a comprehensive roadmap for decarbonising the energy system while enhancing equity and security for consumers. 

New Zealand is on a mission to achieve net zero carbon emissions by 2050, with the electricity sector playing a pivotal role. The sector is expected to contribute up to 70% of the necessary emissions reductions. By 2030, the country aims to transition to 98% renewable electricity, significantly cutting emissions. By 2050, the focus will shift to the rapid electrification of transport and heating, which could reduce emissions by 22.2 million tonnes of CO2-equivalent annually. 

This ambitious transition will require substantial investment in generation, storage, and network infrastructure. However, these investments could lead to lower household electricity bills because of improved energy efficiency and savings from electric vehicles. 

The 2020s are identified as a critical decade for taking decisive action. Early and rapid transformation is essential to meet the targets and secure a sustainable future. Supportive policies, regulations, and market settings are crucial to facilitate this transition. With the right measures, New Zealand can achieve faster and deeper emissions reductions than currently targeted. 

The electricity sector’s commitment to decarbonisation is vital. The report emphasises that exciting outcomes are within reach if action is taken promptly and at scale. 

Overall, the article underscores the importance of the electricity sector in New Zealand’s climate strategy and the need for immediate, substantial efforts to achieve a net zero future. 

 

BEC’s key findings: 

• The electricity sector in New Zealand has the potential to decarbonise the entire energy system. 
  
  
• Achieving a net zero New Zealand depends on substantial investments in generation, storage and network infrastructure. 
  
  
• This significant investment is necessary to add approximately 5GW of renewable generation capacity by 2030 and around 15GW by 2050. 
  
  
• Despite the large investments, a more electrified energy system, powered by renewable sources, will result in stable household electricity bills and decreasing overall household energy costs.
   
• To realise this decarbonised and more affordable energy future, four key challenge areas must be addressed: 
  
  
  • Accelerate the development of new renewable energy sources to keep up with demand 
    
    
  • Ensure there is enough flexible generation and capacity to handle rising peak demand 
    
    
  • Provide adequate flexible generation and energy reserves to manage dry years 
    
    
  • Expand distribution and transmission infrastructure, including smart virtual systems, to support new electrification, generation, flexible capacity and energy needs 

• The electricity system in New Zealand will need to undergo a rapid transformation to meet these challenges and deliver this future. 
  
  
• Policy, regulatory and market reforms are essential to facilitate this transition.