He said Labour’s exploration ban had created sovereign risk in the energy sector, meaning firms were reluctant to invest in exploration because they feared a future Government would regulate against them.
Bishop announced Cabinet had moved ahead on “Electrifying New Zealand”, a National Party campaign promise.
That policy pledged to make it easier to consent for renewable energy and keep consents active for longer.
Bishop said the Government will legislate to reduce consent and reconsenting processing times for most renewable energy consents to be within one year, as well as extending the default lapse periods for renewable energy, transmission and local electricity lines consents from five years to 10 years.
He said the Government intended to increase the default consent duration to 35 years for renewable energy consents.
The changes will be in the Government’s second RMA amendment bill, to be introduced later this year.
Also promised as part of the Electrify New Zealand policy is an amended National Policy Statement for Renewable Electricity Generation. Bishop announced the Government would also amend the NPS-Electricity Generation and develop an NPS-Infrastructure.
He also promised a new bill to enable a new regime for offshore renewable energy to be in place by mid-2025 with the aim of opening a first feasibility permit about late 2025. This regime will give developers greater confidence and certainty to invest and will enable the selection of developments that will deliver the most benefit for New Zealand.
Consents might not actually be the problem. The NZ Wind Energy Association says 1551 MW of wind energy is currently consented or likely to be consented, but not all of it will be built because the consent holder is waiting for market conditions to be right.
The big unknown from the announcements is what will come of a review of the performance of the electricity market, which will be jointly conducted by the Commerce Commission and the Electricity Authority. Brown said details of this will be available in the coming weeks. Labour reviewed the electricity market on first coming into power.
Luxon and Brown repeatedly told media the energy crisis was ultimately one of “supply”, but one of the biggest losers of any surge in renewable investment by the gentailers could be the Government itself. In 2023, the Government owned 51% of the major gentailers following a promise by the Key Government to part-privatise them. The Government enjoyed dividends of $425 million from those companies in 2023.
Should the gentailers be forced to invest more in generation, the level of dividend paid to the Government would reduce, leaving it out of pocket when it is trying to climb out of years of deep deficits.
Labour leader Chris Hipkins laid the blame at the Key Government’s feet for the way the gentailers were privatised. Hipkins said there was “a lot of already consented renewable electricity that could be built right now in New Zealand that the large electricity-generating retailers are choosing not to build because it’s in their commercial interest to keep energy scarce and to maximise profits”.
“They have prioritised taking billions of dollars of dividends out of the sector rather than investing in new renewable electricity generation,” Hipkins said.
A November 2022 report from climate movement 350 Aotearoa and unions NZCTU and FIRST Union claimed that between 2014 to 2023, the four gentailers had collectively paid out $4.2 billion in excess dividends to shareholders. The report defined an excess dividend as occurring when the amount distributed in dividends to shareholders is greater than the after-tax profit generated by the company.
The report noted the gentailers had done a poor job at investing. In the decade to 2023, dividends totalled almost $10.8b. while investment on plant, property, and equipment totalled just $4.5b.
Green Party energy spokesman Scott Willis said, “Investing in fossil fuels in the middle of a climate crisis is like buying stocks in the Titanic.
“We should reinvest profits from gentailers into enhancing our energy efficiency and bolstering our supply of renewable energy. Delaying this is partly why we’re in this situation now – but it’s not too late to turn this ship around,” he said.
Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
