NZ grid operator wants more renewables and batteries to fill energy gaps caused by ageing gas and drought

New Zealand’s grid operator Transpower has warned of potential electricity supply shortages in the early 2030s if the accelerated investment and delivery of new generation and battery storage systems does not continue.

Transpower published a draft of its annual Security of Supply Assessment (SOSA), which aims to predict the balance between electricity supply and demand over the next decade in order to help guide investment decisions by the electricity sector as well as support management of security of supply risks.

The report says an influx of new renewable energy and storage projects is helping to counteract declining gas supplies and decreasingly reliable fossil fuel plants, but also calls on the clean energy sector to “lift the pace” of investment in new solar, wind and battery projects.

“Last year’s assessment identified emerging risks for electricity supply this winter due largely to the faster than expected decline in natural gas availability in recent years,” said James Kilty, chief executive of Transpower.

“The draft assessment we are now consulting on indicates that the sector has taken a meaningful step toward mitigating these risks with new generation and battery storage systems coming online and efforts to secure additional gas supply. 

“Immediate challenges remain around the potential for further reduced gas supply, risks around reliability of our ageing thermal generation fleet, and a repeat of the prolonged dry conditions we experienced in 2024 and early 2025, but the sector is working hard to stay ahead of them.”

Despite warning about New Zealand’s “ageing thermal generation fleet”, Kilty nevertheless split his key message between the need to maintain “the investment momentum” on the one hand while ensuring “existing thermal generation remains available and sufficiently fuelled to respond to near term risks.” 

Fossil fuel sources in New Zealand are relatively rare. According to the International Energy Agency’s (IEA) latest data for the year 2024, coal and natural gas only provide 5.3 and 9.7 per cent of the country’s electricity generation.

The lion’s share of New Zealand’s electrical generating capacity comes from hydropower, with 52.6 per cent. As such, one of Kilty’s key messages out of the draft SOSA report was that the country is heading into winter “with above average storage levels in New Zealand’s hydro lakes.”

But the report nevertheless also warned of potential risks over the medium-term, pointing specifically to supply concerns reappearing in the early 2030s even with the existing pipeline of projects.

Moreover, according to the draft report, “Project delays, reduced thermal generation availability, higher demand growth, lower gas supply and lower wind/solar generation can all bring forward the point at which” energy gaps begin to appear.

“This means the sector needs to lift the pace of new investment coming online over the medium-term, including committing earlier to new projects, to support increased demand growth and reduce our exposure to risks like lower gas supplies or ageing plant failure,” said Kilty.

Transpower isn’t excused from responsibility, though, and has promised to continue work on accelerating the connection and commissioning of new generation and batteries to the national electricity transmission grid and into local distribution networks.

According to Transpower, New Zealand’s energy sector is currently on track to commission a record of more than 1,100 megawatts (MW) of generation, batteries, and capacity upgrades in 2026.