High Renewable Generation Masks Mounting Deindustrialisation Crisis

New data from the Ministry of Business Innovation and Employment (MBIE) reveals that from October to December 2024, electricity generation recorded its lowest quarter since 2016.

Energy Resources Chief Executive John Carnegie says focusing on reduced quarterly emissions masks the impact of lower demand and higher prices, resulting in deindustrialisation. As a result, energy use decreased across most categories in Q4 2024 compared to Q4 2023.

"We have seen the lowest December quarterly generation numbers since 2016 in the electricity market. This indicates lower demand due to deindustrialisation rather than meaningful progress on emissions reductions."

Carnegie says continued deindustrialisation is not the way to a vibrant, prosperous economy that benefits all Kiwis.

Our industries face an increasingly uncertain future without natural gas or LNG. Deindustrialisation is rapidly occurring as industrial gas consumers, lacking viable alternatives, look to turn down production or leave New Zealand altogether. We urgently need investment to address the growing gas shortage and sustain the industrials that provide jobs for thousands of Kiwis."

Carnegie says competition for available gas supply is already fierce. MBIE figures show that continued low supply led to a 32% year-on-year decrease in total gas consumption.

"We now have a massive energy shortage - equivalent to around 80 petajoules of unmet annual demand. This is reinforced by Gas Industry Company data, showing demand for gas continues to exceed supply out to 2030."

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While ample gas is available in our fields, we need to invest rapidly in producing it. Unfortunately, the current market conditions aren’t favourable enough to make the necessary investments to ensure a secure supply."

Carnegie says the risks of further deindustrialisation are high due to a constrained energy supply in winter 2025 - this is what happens when you combine dry winter risk with a gas shortage.

"We’re facing another winter of high wholesale electricity prices. With reliable thermal capacity and fuel supply, the volatility swings we expect this winter wouldn’t be observed - or at least not dramatically."

Carnegie says the government should urgently focus on delivering the investment needed in the gas market to manage risks to the security of supply.

"We agree wholeheartedly with the Minister of Energy’s top priority of ensuring New Zealand can access reliable energy at internationally competitive prices - now we need to see the action needed to make this happen."

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