As the fuel crisis bites, politicians should go bold and fast on electricity
Friday, 27 March 2026
Margaret Cooney is chief operating officer of Octopus Energy.
OPINION: As fuel prices hit record levels and searching on Trade Me for an EV becomes commonplace, New Zealand First leader Winston Peters has elevated the party’s long standing promise to overhaul New Zealand’s energy policy.
And rightly so. New Zealanders should not accept middle of the pack performance when the country has been endowed with the renewable energy equivalent of Sam Ruthe’s running genes: lots of wind, water, sunshine and geothermal energy resources.
It is critical we do so soon, as we face the long-running crisis of sharply declining local gas supplies, and the latest energy shock caused by the war in Iran that has sent fuel prices to record levels.
As well as sending petrol prices soaring, the Middle East conflict is likely to undermine the case for establishing an LNG import terminal, which aims to shore up our electricity system and plug supply for reticulated gas users.
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That plan was predicated on a glut of global gas and vessels to carry it. But Qatar, one of the world’s largest exporters of gas, has suffered extensive damage to key infrastructure. Meanwhile Asian countries are reportedly securing long term contracts on ships to shore up their own supply.
The problem of dwindling domestic gas supply will only get worse. Leaving things to the market alone will cause continued de-industrialisation. We need to find a way forward. Part of the solution has to be rapidly shifting industrial energy usage from gas to electricity, and rapidly growing the electricity system to support this new demand.
Even outside of the Iranian energy crisis and our own domestic gas crisis, electrification presents the opportunity of the century for New Zealand households and businesses to reduce their energy costs and grow new industries driven by reliable electricity at a reasonable cost.
It has always been expensive to use imported fuels in New Zealand, so unlike many countries which have cheap fuels, electrification stacks up economically.
Resolving this crisis and seizing the opportunity requires a clear strategy and a willingness to shed the hands-off market thinking that has defined energy policy since the 1990s. Speed matters.
Complacency has narrowed our options, and some bridging solutions, imperfect as they may be, will be necessary to protect jobs, maintain supply security, and buy time for the structural changes that follow.
We should not expect the incumbent industry to lead this charge. The large gentailers are rational businesses: built for steady-state growth, managed risk and reliable dividends. There is nothing wrong with that, but it is no basis for the rapid transformation New Zealand now needs.
Their track record speaks for itself. Dry year risk went unmanaged. The decline of domestic gas supply went unplanned. Even the Huntly Firming deal, through which the major players fund coal storage for use when needed- a basic measure to shore up supply security - only happened under political pressure.
Waiting for incumbents to voluntarily disrupt their own profitable status quo is not a strategy. It is wishful thinking.
There is a need to address the shortcomings of the current electricity market design and ensure it incentivises outcomes that are in the interest of New Zealanders.
Three things need to change.
The market must reward those who build, not those who wait. Long-term contracts for new generation give renewable investors the certainty they need to commit capital and have successfully driven rapid build-outs in Australia and across Europe. New Zealand needs to adopt them without delay.
Competition settings need to be fixed so new entrants can genuinely challenge dominant incumbents. Requiring generators and retailers to deal with independent players on equal terms - as the UK has done - would break open a market that currently rewards scale and tenure over innovation and efficiency. Real competition drives investment and nimbleness. Right now, we don't have it.
Finally, we must embrace the digital energy revolution. Smart programmable devices - your heat pump, EV, dishwasher - combined with time-of-use pricing, rooftop solar, and home batteries fundamentally change what an electricity system can do and what it costs.
When an EV charges at 6pm it adds strain from the generator all the way through the transmission network to the wires feeding your home, driving costly upgrades across the entire value chain. The same EV charging at midnight draws on capacity that is sitting idle, adding almost no infrastructure cost whatsoever.
Vehicle-to-grid capable EVs will be able to go further still, feeding power back into the system during peak demand; tens of thousands of them can collectively replace expensive peaking infrastructure.
These technologies exist today. What's missing is a market designed to use them.
Politicians should go bold and fast on electricity.