15 November 2021

Thermal Co: Enabling Aotearoa’s transition to 100% renewable electricity generation

Contact has released a report outlining the benefits of establishing of an industry-wide, market-based solution to manage the retirement of thermal electricity generation.

The ‘Crafting a path for New Zealand’s 100% renewable electricity market’ report supports a key pillar of the company’s strategy to lead the decarbonisation of New Zealand. It outlines what Contact believes is the most effective way to decarbonise thermal generation at the lowest cost.

New Zealand currently relies on thermal electricity generation from gas, coal and diesel during periods of peak demand or when there is insufficient water, wind and sun to meet demand from renewable sources.

Contact CEO Mike Fuge said the Climate Change Commission had highlighted the significant challenge ahead to reduce New Zealand’s emissions rapidly and meet our climate obligations.

“Renewable electricity has a key role to play in supporting decarbonisation across the economy. Electricity generation is currently responsible for five per cent of New Zealand’s carbon emissions.

“Our proposal focuses on how we can expedite the transition away from the current reliance on electricity generated from fossil fuels, without disrupting the secure, affordable supply of electricity to New Zealanders.

“We have proposed the establishment of a new, industry-wide entity which we have called ‘Thermal Co’. This could own, operate and retire all of New Zealand’s major thermal generation assets as new renewable generation is built, reducing carbon emissions into the atmosphere by 1.2 million tonnes per annum by 2030.” 

Mr Fuge said Contact’s view was that adopting a market-led, co-operative approach would result in significant benefits for New Zealand. 

“Getting the transition towards a fully renewable electricity system right could unlock a significant opportunity for New Zealand with benefits for the environment, people and communities. It will also deliver a competitive advantage for NZ businesses.” 

“And on the flipside, ad hoc and uncoordinated closures of thermal generation assets could be problematic and create a raft of potential issues. This includes market uncertainty which would delay investment in renewables at precisely the time when we need this to be proceeding with pace.

“We’re looking forward to constructive engagement from key stakeholders across the sector as we consider how best to deliver a low-carbon electricity system.”



Full report: 'Crafting a path for New Zealand's 100% renewable electricity market'

Exec summary: 'Crafting a path for New Zealand's 100% renewable electricity market'


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