Simeon Brown confirms LNG still part of the solution for an energy system ‘run on the edge’
Tuesday, 9 June 2026
The Government is progressing negotiations for an LNG import facility and will force power companies to take more responsibility for ensuring there is enough electricity during “dry years”, Energy Minister Simeon Brown says.
In an announcement notably tough in rhetoric on the power sector, Brown said LNG imports would be the fastest and cheapest way to “keep the lights on and protect jobs” when hydro inflows were low this decade.
But an import facility would not be funded by a levy on power bills, he said.
Instead, the Government would require the major gentailers foot the bill, he indicated, noting that they were highly profitable.
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“It ultimately becomes part of the cost of them operating their business.
“Responsibility for keeping the lights on sits squarely with the electricity sector, and that is the principle guiding our decisions on funding,' he said.
Addressing the Auckland Business Chamber, Brown said he had been advised the country could need 3 terawatts of electricity over three months — equivalent to about 7% of annual demand — to cover any gap in hydro power in a dry year.
Only half of that could be covered by coal generation at the Huntly Power Station and the rest was “not a gap that you can plug with a few days of stored water or a handful of batteries”, he said.
Importing LNG was “not a retreat” from the Government’s commitment to renewable energy and the alternative would be the “de-industralisation of New Zealand businesses”, he said.
In the longer term, there would be other solutions to the dry-year problem, “but right now we don’t have those”, he said, indicating the country could not wait until pumped hydro might be available from 2037.
In March, Brown had appeared to cast doubt on whether an LNG import terminal would still go ahead, saying the conflict with Iran had “changed everything”.
But he announced this morning that the Government had narrowed down the list of potential providers to two bidders, which were now being asked to respond to a Request for Proposals (RFP).
Former energy minister Simon Watts said in February that the Government aimed to sign a contract “mid-year” for a facility that he indicated might cost about $2 billion to build and operate over 15 years.
Brown said that the Government intended to sign a contract for the facility this year, which he still expected to be operational by the winter of 2028 — later clarifying he intended a contract would be signed before the election.
Labour Party leader Chris Hipkins has made clear he would not choose to proceed with an LNG terminal — which Brown confirmed would be located at the Port of Taranaki — if Labour won the November election.
But the party has clarified it has not committed to cancelling a contract if that was already in place.
Energy spokesperson Megan Woods said there were “real local alternatives” to LNG which should be examined, referring to her suggestion that Genesis could install a fourth Rankine turbine at its Huntly Power Station to burn wood waste.
Greenpeace said after Brown’s announcement that LNG would make electricity more expensive, polluting and unreliable.
Despite the abandonment of a levy, “ordinary New Zealanders” would end up paying for the terminal if it proceeded, its executive director Russel Norman predicted.
John Carnegie, chief executive of energy industry lobby group Energy Resources Aotearoa said LNG imports were necessary, given “growing fuel and flexible generation capacity shortages”.
Brown has not yet spelt out who, if anyone, would be required to import and pay for LNG itself.
But he signalled the Government intended to put responsibility for ensuring there was sufficient fuel to see the country through future winters squarely on the power sector.
Officials would start consultations today with major power companies and large electricity users on a new “Winter Energy Reliability Obligation” that would require them to “secure enough back-up energy ahead of a dry year”, he said.
That would include an obligation to keep the lights on and guard against a repeat of the “extreme price spikes that drove up power bills for families and businesses in 2024”, he said.
New Zealanders had been paying the price through higher bills and a greater risk of shortages for an energy system “run on the edge”, he said in his most direct criticism of the performance of the sector.
“This Government is fixing that by making the electricity sector take real, permanent responsibility for keeping the lights on.”
Large electricity buyers would be required to “lock in back-up supply well ahead of forecast dry winters”, he said.
“Power companies, particularly the large gentailers, need to face real consequences when they fall short.”
The sector would decide how best to provide winter cover, “whether through generation, demand-response, fuel procurement or storage”, according to Brown’s statement.
It did not provide details on exactly how the Winter Energy Reliability Obligation might fall on the individual generators or spell out whether they might be required to foot a bill for imported LNG itself.
James Kilty, chief executive of electricity system operator Transpower, said last month that the risk of power cuts was lower this winter than it had been for “many years”.
Transpower’s annual draft Security of Supply Assessment was also more upbeat the outlook beyond that, than last year’s study.
But it still described the outlook to 2028 as remaining fragile and flagged an emerging risk of power supplies falling short of what Kilty described as the “Goldilocks zone” by 2031.
Shares in Meridian, the country’s largest power firm, were trading down 1% soon after the NZX opened, but shares in Contact, Genesis and Mercury were little changed.