Government pursues long-term energy deals to boost generation

The Government is seeking to leverage public sector energy demand to drive new generation projects and increase national supply, Energy Minister Simon Watts says.

As part of its Energy Package, the Government is exploring long-term Power Purchase Agreements (PPAs) across the public service, starting with its three largest energy users — Health New Zealand, the New Zealand Defence Force and the Department of Corrections.

Following a Request for Information issued late last year, discussions are beginning with the energy sector, including independent generators and new entrants, on options to secure long-term supply agreements.

Watts says the focus is on increasing energy supply to ease pressure on power prices.

“We are focused on one clear outcome – increasing abundant and affordable energy to put downward pressure on power bills for households and businesses,” he says.

He says there is a strong pipeline of projects ready to proceed, ranging from large grid-scale developments to smaller, site-specific initiatives. Technologies under consideration include onshore and offshore wind, solar, geothermal, biogas, woody biomass, hydrogen and battery storage.

“The priority is simple: get more generation built, faster,” Watts says.

The Ministry of Business, Innovation and Employment is working with the three agencies on potential long-term PPAs that would commence once existing contracts expire.

Watts says securing long-term supply would provide developers with greater investment certainty while delivering improved value and price stability for taxpayers.

Solar generation is also expected to play a role, with officials directed to complete a rapid feasibility study into a streamlined procurement model aimed at accelerating the rollout of commercially viable solar across government properties.

The objective is to aggregate demand, reduce administrative barriers and bring installations online more quickly to increase supply and ease peak demand pressures on the grid.

MBIE is expected to report back by the end of May. If the proposal is considered viable, a Request for Proposals will be issued shortly after.