A major wild card is how soon Genesis Energy can stop burning coal to make electricity at its Huntly Power station, according to the ministry's report. Photo: Genesis Energy
Wind and solar are the "least cost" way to meet booming demand for electricity, according to a report from the Ministry of Business, Innovation and Employment.
The ministry's (MBIE) report looks at how demand for electricity will change as people adopt electric vehicles, electric heating, and other electric replacements for fossil fuels, and how demand will be met.
By 2035, the report expects New Zealand's electricity generation to be 92 percent renewable (hydro, wind, solar and geothermal), reaching 96 percent by 2050 - or as high as 98 percent, depending on how events play out.
That is slightly up on what the ministry expected five years ago, when it predicted about 95 percent renewables by 2050 in any scenario.
A major wild card is how soon Genesis Energy can stop burning coal to make electricity at its Huntly Power station, according to the analysis.
The ministry said most new demand for electricity would likely be met by building more wind and solar power, however, gas would still play a small role in generating power in 26 years' time. It said the country would need new gas peaking plants, which could switch on at times when supply was tight.
"The least cost solution to meet most new demand is onshore wind and solar generation," the report said.
"We also expect to see some new hydro and geothermal plants built."
The Commerce Commission uses these supply and demand reports when it decides whether to approve major investments in the electricity transmission grid by Transpower. Researchers and others use them to help predict energy trends.
The 2024 report said commerce and industry would drive growing demand for electricity in the short term.
In the 2030s, higher EV uptake will drive the trend.
Also contributing to a boom in demand in the 2030s will be new data centres built here by major computing companies, and coal and most gas exiting the electricity sector.
The ministry said it was uncertain how many people would switch to electric heating from burning fossil fuels such as gas, but this trend would also increase demand, especially at peak times in winter.
Under favourable economic conditions, by 2050, demand for electricity will rise 81 percent compared with today, from under 40 TWh (Terawatt-hour) to 72 TWh, the report concludes. If current trends continue, demand will grow to 62 TWh.
