Sustainable Business and Finance: How New Zealand businesses can cut energy costs and boost resilience

The Clyde Dam holds back the hydro-power storage reservoir of Lake Dunstan. New Zealand has exposure to dry year risk due to high reliance on hydro-power, says Adam Coxhead. Photo / Justine Tyerman

Since emerging from the tail-end of the Covid-19 pandemic, economically it’s been a bumpy ride for many New Zealand businesses. As strength in some sectors signals cautious optimism for a broader economic recovery, it’s a good time for businesses to consider fundamental dependencies that will underpin sustained success over the long run.

Energy as a driver of economic growth

Energy has always been a critical driver of economic growth. It’s the foundation of productivity, and is a key enabler of every major sector of New Zealand’s economy – from established sectors such as agriculture, to emerging ones including technology. The graph below, using data sourced from Our World in Data, illustrates the relationship between global energy use and growth in GDP since the industrial revolution, with increasing convergence over time as our use of energy becomes more economically efficient.

Competitively priced energy will underpin our ability to grow globally successful export industries and retain domestically focused industries competing with imported alternatives.

New Zealand’s shifting energy context

Like many countries, New Zealand’s energy context is shifting, albeit being an island nation with a somewhat unique energy mix, we have our own distinct set of challenges. Established gas fields are declining faster than expected resulting in material gas price rises, we have exposure to dry year risk due to high reliance on hydro-power (with limitations on storage), and growing demand for electricity as electrification increases across the economy. With these challenges come opportunities to set the country up for sustained success over time: invest in modern, efficient means of production; continued decarbonisation of New Zealand’s energy system building on a strong legacy of renewable energy production; replace imported fuels with domestically produced energy and improve our balance of payments.

The energy trilemma describes the competing objectives of affordability, security of supply, and environmental sustainability. It’s often said that it is only possible to achieve two out of three, however with technology development over recent years expected to continue, meeting all three objectives feels closer. The balance between these objectives will inevitably shift over the course of generational transition in the energy system, but it is important to acknowledge the criticality of price and security with regards to the sustainability of business over the long run.

Some industries more impacted

While no business is immune from the impact of high energy costs, some industries are disproportionately affected, in particular those with tighter profit margins and where energy is a relatively higher share of overall costs. Our manufacturing industries in particular tend to be those with higher relative energy costs, as shown by Infometrics in the chart below.

Energy is a top concern for New Zealand businesses. EECA’s Business Energy monitor report published earlier this year captures this sentiment with energy security and supply seen as an important risk by 6 in 10 businesses. Additionally, 55% of businesses support shifting away from non-renewable energy sources, and 31% say their customers are requiring them to operate more sustainably and reduce emissions. When asked to identify the most important aspect of the energy trilemma to their organisation, the New Zealand Herald’s Mood of the Boardroom Survey (September 2025) found that 33% of respondents identified availability/security of supply, 20% said price, 2% said sustainability/emissions impact, while 44% said they were all equally important.

Energy resilience actions for business

The good news is that information and support is readily available to businesses on how to better manage energy requirements. EECA (the Energy Efficiency & Conservation Authority) produces a range of guidance materials, case studies and offers co-funding packages for energy audits, feasibility studies and walk through assessments for gas users.

There are a number of “no-regrets” actions businesses can take to develop an energy management plan that enhances energy resilience and positions them well for the future:

· undertake an energy audit to understand where and how energy is used and track it over time. This may include installing additional metering or monitoring equipment to drill down on energy consumption hotspots;

· use data to identify opportunities for energy efficiency through plant and process optimisation and behaviour change;

· identify opportunities for fuel switching and developing the business case, considering asset age and condition, technology compatibility, fuel availability, and network capacity.

Once energy efficiency measures have been implemented, some of the key energy efficiency and resilience investments we see businesses making include boiler upgrades and fuel switching (e.g. coal or gas to electric or biomass), upgrading to more efficient HVAC systems using refrigerant gases with reduced climate impact, and installation of commercial solar systems designed to partially cover daytime energy use.

Adam Coxhead, head of Sustainable Finance at BNZ

BNZ customer Zealandia Horticulture is a young plant nursery business that employs 300 people across five locations in New Zealand and produces about 2.5 million plants per week, for which continuity of lighting, temperature, and water is crucial. Energy has been a key focus for the business since they experienced a gas price spike in 2005. They have fully transitioned away from coal (South Island) and gas (North Island), installing biomass boilers and reducing reliance on diesel for heating, while electricity powers automated processes, pumps, and transport within the glass houses. “Energy’s been front and centre for us throughout our transition. We’ve managed to reduce our cost of energy substantially alongside our emissions, while at the same time ensuring a secure supply of the energy we need,” says Vince Wylaars, managing director of Zealandia.

As investments are made, energy management strategies evolve, optimising usage of assets to take advantage of flexibility in energy requirements. For example this might be using daytime solar power to get hot water to the right temperature for use later in the day/evening.

Managing risk and financing investment

Increasingly volatile energy prices mean it’s sensible for businesses to develop policies to manage exposure to prices across all energy types, with options including simple fixing arrangements through retail contracts or potentially via a Power Purchase Agreement with a generator, which can provide a longer-term hedge and access to certified renewable energy to validate emissions reductions.

Economic returns and payback can be influenced by a number of factors so seeking input from a range of sources including installers, independent online calculators, and your bank can help you understand potential benefits.

Making new investments can involve significant capital expenditure so one of the key considerations is how to fund it. Where operational cashflows are not sufficient to support the investment, debt financing options can be feasible in many instances. For example, if structured in the right way, a business loan to cover the upfront cost of an appropriately sized solar system can potentially result in immediate cashflow benefits for a business, as the energy cost savings can outweigh the cost of servicing the additional debt (principal and interest).

Talk to your BNZ banker about insights, case studies and green financing options to support this.

BNZ is an advertising sponsor of the Herald’s Sustainable Business and Finance report.